September 11, 2012 / 9:03 PM / in 6 years

Peregrine Financial CEO Wasendorf signs plea agreement

CEDAR RAPIDS, Iowa (Reuters) - Russell Wasendorf Sr., the futures brokerage CEO accused of stealing more than $200 million from his customers and lying to regulators to cover his tracks, has signed a plea agreement in the criminal case against him.

The disclosure of the plea agreement was made during a court hearing in Cedar Rapids, Iowa, on Tuesday.

The agreement signals that Wasendorf has agreed to plead guilty to charges that he lied to federal regulators, likely in return for a reduced sentence. Details of the agreement were unknown, and the court hearing was ongoing.

Wasendorf attempted suicide on July 9 near the headquarters of his Cedar Falls, Iowa, firm, Peregrine Financial Group, and left a signed confession of his years-long fraud. Peregrine Financial filed for bankruptcy protection the next day.

Wasendorf was arrested on July 13 and indicted on 31 counts of lying to regulators a month later. He entered a not-guilty plea, and has been held at Linn County Jail in Iowa since his arrest.

He has been cooperating with the bankruptcy court receiver and law enforcement, the receiver said in a court filing on Monday.

The receiver, along with representatives from the Commodity Futures Trading Commission, Department of Justice and FBI participated in two in-person interviews with Wasendorf, totaling more than 12 hours, according to the filing.

The CFTC has filed suit against Wasendorf and his firm, saying the CEO misappropriated more than $200 million in customer funds over several years. Wasendorf, in his confession, said he spent most of the stolen money on building a new headquarters for his company and keeping his business afloat.

Peregrine’s 24,000 customers have had no access to their funds since Wasendorf was found, on July 9, incoherent but conscious in his car outside the firm’s headquarters, a hose hooked to the exhaust pipe and snaked in through the window.

Last week, Peregrine’s bankruptcy trustee said he plans to return $123 million to former customers of the futures brokerage, amounting to 30 percent to 40 percent of their funds. The CFTC over the weekend asked the court to delay that payout pending further examination of the company’s records, many of which the regulator says have been falsified.

Wasendorf himself told FBI agents that he had forged bank statements for years to fool regulators into thinking he was properly safeguarding customer funds, when all the while he was using them for his own purposes, according to the complaint in the criminal case.

Reporting by Ryan Schlader in Cedar Rapids; Writing by Ann Saphir and Tom; Polansek in Chicago; Editing by Tim Dobbyn

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