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. Bkcy.).
The U.S. 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 statements.
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 fraud.
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.
For all of your legal news needs, please visit www.lexisnexis.com/mealeys.
Lexis.com subscribers may search all Mealey Publications.
Non-subscribers may search for Mealey Publications stories and documents at www.mealeysonline.com or visit www.Mealeys.com.
Mealey's is now available in eBook format!
For more information about LexisNexis products and solutions, connect with us through our corporate site.