A man who stole approximately $200 million in customer funds from his commodity futures business pled guilty today in federal court in Cedar Rapids.

Russell Wasendorf, Sr., age 64, from Cedar Falls, Iowa, was convicted of one count each of mail fraud, embezzlement of customer funds by a person registered under the Commodity Exchange Act, making false statements to the Commodity Futures Trading Commission, and making false statements to a futures association registered under the Commodity Exchange Act. Wasendorf is the owner and former Chief Executive Officer of the now-bankrupt Peregrine Financial Group, Inc. (PFG); a futures commission merchant headquartered in Cedar Falls, Iowa.

In a plea agreement, Wasendorf admitted that, from about the early 1990s through about July of 2012, he stole at least $100 million from PFG’s customers. Wasendorf admitted he stole the funds, at least in part, by secretly withdrawing money from a customer segregated bank account, and then omitting the withdrawals and inflating the balances on forged bank statements purportedly issued by the bank. Wasendorf admitted that the forged bank statements overstated the amount of customer funds in the account by more than $200 million. Wasendorf admitted he prevented regulators from discovering his crimes by submitting false periodic reports, and forged bank account verification forms, to the National Futures Association and the Commodity Futures Trading Commission.

As part of the plea agreement, Wasendorf agreed to entry of a judgment of forfeiture in the amount of $100 million. He also agreed that he would be ordered to pay full restitution to the victims of his offenses, and that any proceeds from any publicity about his crimes would be assigned to the United States and applied toward his restitution.

Sentencing before United States District Court Chief Judge Linda R. Reade will be set after a presentence report is prepared. Wasendorf remains in custody of the United States Marshal pending a determination regarding whether he will be detained pending sentencing. Wasendorf faces a possible maximum sentence of 50 years’ imprisonment; a fine equal to the greater of twice the gross gain resulting from the offenses, twice the gross loss resulting from the offenses, or $3,250,000; $400 in special assessments; and twelve years of supervised release following any imprisonment.

The case is being prosecuted by Assistant United States Attorneys Peter Deegan and Matthew Cole and is being investigated by the Federal Bureau of Investigation with the assistance of the Blackhawk County Sheriff’s Office and the United States Postal Inspection Service.

Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is 12-MJ-131.

 

 

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