01/31/2013 04:45:10 PM EST
Russell Wasendorf Gets 50-Year Sentence for Fraud Related to Peregrine Bankruptcy
CEDAR FALLS, Iowa- (Mealey's) A federal judge in Iowa on
Jan. 31 sentenced Russell R. Wasendorf, the former CEO of bankrupt Peregrine
Financial Group Inc., to 50 years in federal prison for stealing more than
$215.53 million in customer funds while he operated his commodities futures
business (USA v. Russell R. Wasendorf Sr., No. 12-131, N.D. Iowa).
Peregrine filed for Chapter 7 bankruptcy in the U.S.
Bankruptcy Court for the Northern District of Illinois on July 10 (In
Re: Peregrine Financial Group Inc., No.12-27488, Chapter 7, N.D. Ill.
government sued Wasendorf in the U.S. District Court for the Northern District
of Iowa on Aug. 13 because that was the location of Peregrine's
headquarters.The government alleged that Wasendorf stole $215,530,547 from
customer funds under his control.
The government alleged that Wasendorf committed mail
fraud, embezzled customer funds while operating Peregrine and made false
statements to the U.S. Commodities Futures Trading Commission (CFTC).
In a plea agreement entered Sept. 17, 2012,Wasendorf admitted
that from the early 1990s until July 2012, he stole millions from Peregrine's
customers by withdrawing money secretly from a customer-segregated account and
then omitting the withdrawals from, and inflating the balances on, forged bank
Wasendorf said he prevented regulators from discovering
his crimes by submitting false periodic reports and forged bank verification
forms to the National Futures Association and the CFTC.
Judge Linda R. Meade sentenced Wasendorf
to the maximum prison term for which there is no parole.
The government sought the maximum sentence on grounds
that Wasendorf's fraud scheme was "far more sophisticated" than the typical
Wasendorf is represented by Jane Kelly of Cedar Rapids, Iowa.
The U.S. government is represented
by Acting U.S. Attorney Sean R. Berry and Assistant U.S. Attorney Peter E.
Deegan Jr. of the U.S. Attorney's Office in Cedar Rapids.
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