Peregrine Financial Group Inc. Chief Executive Officer Russell Wasendorf Sr. said in a signed statement linked to his suicide attempt that he committed fraud for two decades at his Cedar Falls, Iowa-based company, according to a federal complaint.
Wasendorf, 64, was charged by U.S. prosecutors with making false statements to federal regulators and is to appear in court later today.
Peregrine filed for bankruptcy a day after the National Futures Association said it identified a shortfall of about $200 million in customer funds on deposit. Wasendorf told the Federal Bureau of Investigation that the estimated amount of loss from his fraud exceeded $100 million.
Its bankruptcy petition lists more than $500 million in assets and more than $100 million in liabilities. The broker estimates it has more than 10,000 creditors, according to the filing.
“Wasendorf made false statements to the United States
Commodity Futures Trading Commission regarding the value of customer segregated funds held by Wasendorf's company, Peregrine Financial Group, Inc.,” from 2010 to July 2012, Cedar Rapids U.S. Attorney Stephanie Rose said today in press statement announcing the charges.
He is scheduled to make an initial court appearance in Cedar Rapids at 4 p.m. local time, according to Rose.
'Intense Guilt'
The commodities regulator accused Wasendorf and his firm of misappropriating at least $200 million in customer funds which the agency said remain unaccounted for.
Wasendorf attempted to commit suicide outside the firm's Cedar Falls office building on July 9, according to a Black Hawk County, Iowa, sheriff's report.
“I have committed fraud. For this I feel constant and intense guilt,” Wasendorf said in a signed statement detailing his fraud that was found together with a suicide note with him in his car, according to an affidavit by FBI agent William F. Langdon filed on July 11.
“Through a scheme of using false bank statements I have been able to embezzle millions of dollars from customer accounts at Peregrine Financial Group Inc.” Wasendorf wrote, according to the signed statement. “The forgeries started nearly 20 years ago and have gone undetected until now.” He even learned to deceive regulators by forging online bank statements, he said in his statement.
False Statements
In the signed statement -- a copy of which Wasendorf also left for his son at the company office before trying to kill himself -- Wasendorf said he had embezzled millions of dollars from customer accounts through a scheme of using false bank statements. He verified that he wrote the statement, according to the complaint.
Starting with the Firstar Bank, which became U.S. bank, and the Harris Bank, he began forging the company's bank statements, “the very core of PFG,” the futures brokerage, he said. He also made forgeries of official letters and correspondence from the bank, along with trade confirmation statements. He used Photo Shop, Excel, scanners, laser and ink jet printers to produce “convincing forgeries” of almost every bank document.
After closing the Harris Bank account, he “only had to falsify” one set of statements, he said.
The key to his 20-year fraud was maintaining sole access to the company's accounts at
U.S. Bank, he said. The statements were always delivered to him directly when they arrived by mail; within a few hours he had made counterfeit statements and gave the forgeries to his accounting department.
“No one else ever saw an actual
U.S. Bank statement,” he said.
--Bloomberg news--
