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Thu January 31, 2013
Disgraced Financier Faces Lengthy Prison Sentence
Originally published on Thu January 31, 2013 9:24 am
Russell Wasendorf, Sr., the former head of Peregrine Financial Group, Inc., who confessed to stealing millions of dollars from customers just as he tried to dramatically commit suicide, will learn his fate today.
The sensational matter came to light last July in Cedar Falls, Iowa, when Wasendorf tried to kill himself by asphyxiating himself in his car with the exhaust from his tailpipe. When law enforcement arrived at the PFG offices, they found him and a suicide note, in which he confessed his thievery: "I have committed fraud. For this I feel constant and intense guilt. I am very remorseful that my greatest transgressions have been to my fellow man. 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 was resuscitated and later jailed, and last September he formally pleaded guilty to several federal felonies, including defrauding thousands of customers, running a fake business and lying to regulators. Court documents say he stole at least $100 million dollars, but Reuters reports prosecutors believe the amount is closer to $215 million.
The case is reminiscent of the huge Ponzi scheme perpetrated by Bernard Madoff, a much vaster crime in which victims lost billions of dollars. Madoff has been sentenced to 150 years in prison in North Carolina.
Wasendorf went to extraordinary lengths to deceive people, starting in the 1990s when he used copy machines to create fake monthly statements. In his original note, he explains why he started the lie: "...I had no access to additional capital and I was forced into a difficult decision: Should I go out of business or cheat? I guess my ego was too big to admit failure. So I cheated, I falsified the very core of the financial documents of PFG, the Bank Statements."
Prosecutors are asking U.S. District Judge Judge Linda Reade to sentence Wasendorf to 50 years in prison. Bloomberg News says the long sentence reflects how much money he stole for so many years and how cleverly he pulled off his scheme with investors and regulators.
But he'll also need to make restitution to victims and on that list is the state of Iowa; Reuters says Iowa regulators say he and his ex-wife, Connie, owe more than $14 million dollars in back taxes and penalties. Judge Reade will have to decide which victims will get how much of what's left of Wasendorf's assets. The Associated Press focuses on the balance between victims whose accounts Wasendorf raided and those who made much riskier investments with a promise of return, but didn't have their accounts bilked; their money is clearly traceable in bank accounts and they want to get it back.
And while Wasendorf says he acted alone, his son, Russell Wasendorf, Jr., has left Iowa with his family for Florida to start afresh. The younger Wasendorf was the chief operating officer and president of his father's company; he has not been charged with wrongdoing, the Wall Street Journal reports. He's written of the "trail of devastation and debris" left in the wake of his father's "horrific and unimaginable bad choices".