Business

Embezzlement, Lies, & Suicide: CEO Who Defrauded His Way to the Top Faces 155 Years in Prison

At one point, he couldn’t be stopped. He was a bright light in the business world and it looked like his prospects were endless. But now it appears everything about Russ Wasendorf Sr.’s business legacy was a fraud.

The founder of Peregrine, a now-bankrupt Iowa-based brokerage, was indicted by a federal grand jury Monday on 31 counts of making false statements to regulators in connection with a $200 million fraud scheme that allegedly spanned 20 years.

Wasendorf could face up to 155 years in prison if convicted on all counts, prosecutors said. His attorney didn’t immediately return a phone message Monday, and the date for an arraignment, where Wasendorf will enter a plea, has not been set.

Wasendorf, 64, was arrested last month while hospitalized in Iowa City following a failed suicide attempt outside Peregrine’s office in Cedar Falls. Authorities said Wasendorf left a detailed, lengthy, and remorseful suicide note in which he confessed to a 20-year scheme to commit fraud and embezzle customer funds.

Regulators said his company cannot account for more than $200 million in customer funds that it was supposed to be holding. Peregrine has filed for bankruptcy and is liquidating its assets, meaning more than 24,000 customers who used the company to invest in commodities ranging from corn to gold don’t have access to their funds.

They are waiting to learn how much they’ll get back.

The indictment alleges that Wasendorf submitted false financial documents for his company to the U.S. Commodity Futures Trading Commission that overstated the value of Peregrine’s customer money, which was supposed to be held separate from other funds, by “at least tens of millions of dollars.” The 31 counts represent the number of such documents that Peregrine submitted between January 2010 and May 2012.

The disgraced CEO was charged last month with lying to regulators in a criminal complaint, and he has been jailed in the Linn County Jail in Cedar Rapids. Monday’s indictment adds additional charges, but it was expected and provides few new details about the case.

Embezzlement, Lies, & Suicide: CEO Who Defrauded His Way to the Top Faces 155 Years in Prison

Photo: WSJ Screengrab

In his suicide note, Wasendorf allegedly said that he started forging bank records to prop up his struggling firm because his “ego was too big to admit failure.” He operated Peregrine for years in Chicago before relocating to Cedar Falls in 2009.

Wasendorf even admitted to using computer software, scanners, and printers to make convincing forgeries of bank statements, according to the FBI. Yes, he was that desperate and in that deep.

The case has led to criticism of the industry’s regulators, the National Futures Association and the U.S. Commodity Futures Trading Commission, for failing to catch the fraud and protect customers.

Follow Becket Adams (@BecketAdams) on Twitter

The Associated Press contributed to this report.

Comments (14)

  • JUSTANOTHEROPINION
    Posted on August 16, 2012 at 3:52pm

    He’s probably thinking, damn, if I would have gave some of that money to Obama this wouldn’t be a problem!! Damn!!!!!!!!!

    Report Post »  
  • Oneirishman
    Posted on August 16, 2012 at 3:48pm

    Now we know the regulators were supposed to be signing off on an independent audit of this company. They should be held criminally libel as well as the agency directors. I am so tired of the government discovering things 5, 10, 20 years after the fraud. And when will John Corrizine be charged? What a joke, unless your the people that lost there monies!

    Report Post »  
  • v15
    Posted on August 16, 2012 at 1:49pm

    Wasendorf is only sorry that all of this blew up in his face. If he could of kept it up, he would still be doing it.

    Report Post » v15  
  • Detroit paperboy
    Posted on August 16, 2012 at 12:34pm

    Fraud, embezzlement, lies……sounds like a green energy project……..or, the Detroit city council.

    Report Post »  
    • JRook
      Posted on August 16, 2012 at 1:20pm

      Or any number of the fine upstanding bankers on Wall Street or the ones behind the LIBOR fraud. We live in a world where ethics is replaced by CEOs who ask their corporate attorney’s how much the fines would be and consider it in the ROI calculation. Similar to the wonderful businessmen at Ford who participated in the Ford Pinto crime.

      Report Post »  
  • barber2
    Posted on August 16, 2012 at 9:47am

    The guy must not be a big shot Democrat. Looks like Corzine gets a free pass. Oh, the deals made being the scenes by the so-called “ transparent ” Democrats !

    Report Post »  
  • nothinghere
    Posted on August 16, 2012 at 9:28am

    i think i read something on this a few days ago,and the judge ruled that one of the big banks get to go to the front of the line ahead of private investors,an o’bama bankruptcy.
    these american investors have just been corzined,your money is gone,and probably re-invest several times since the judges ruling,in favor of the big banks.
    all this crap started with the auto bail-outs,bond holders,(owners of the companies) forced to take pennies on the dollar,while union workers(company workers),got their benifit,and retirement plans made whole.
    the constitution has been thrown out in this administration,through-out every level of government,and it’s agencies.
    every american working tax-payer that played by the rules before o’bama was elected,lost some or a lot of their freedom(the money you earned,or an asset you paid for).
    if you were’nt playing by the rules,you were rewarded.
    hopefully when o‘bama’s gone in nov.,there will be months if not yrs. of facts on how you lost that financial freedom, and how it was never reported on, or even looked into by the liberal american-press,then you will have the same ill-will towads these people as i do.
    this administration has zero trustworthyness,and i think voter fraud is the only way o’bama can be re-elected.

    Report Post »  
  • Individualism
    Posted on August 16, 2012 at 8:43am

    CEO’s are not respected as much now, now they seem to act like greedy pigs more so among the big companies and financial firms and just enjoy profit and bonuses after money saved by laying off workers. This needs to happen to more of them. I am sure there are many more CEO’s just like him out there committing crimes and John Corzine got away without anything.

    Report Post » Individualism  
  • johnjamison
    Posted on August 16, 2012 at 8:37am

    Obama has embezzled billions to line campaign donors pockets HOW MANY CENTURIES WILL HE BE SENTENCED.

    Report Post »  
  • EqualJustice
    Posted on August 16, 2012 at 8:34am

    I was SO hoping this story was about Corzine! What’s up with THAT? http://www.breitbart.com/Big-Government/2012/07/26/REVEALED-Corzine-s-MF-Global-Was-a-Client-of-Eric%20Holder-s-Law-Firm

    Report Post » EqualJustice  
    • johnjamison
      Posted on August 16, 2012 at 8:36am

      How many years will the fraud in the white house get when the truth comes out.

      Report Post »  
    • paul1149
      Posted on August 16, 2012 at 10:39am

      Corzine is connected. Don‘t expect anything from obama’s Justice Department. Hope and change, not.

      Report Post » paul1149  

Sign In To Post Comments! Sign In

Sign Up For Our Newsletter!

Glenn Beck Radio

Listen to Glenn Beck 24/7 Listen Now
Restoring Love