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CEO of US brokerage Peregrine indicted in $200-mn fraud

Futures brokerage founder Russell Wasendorf indicted on charges of lying to regulators.

business Updated: Aug 15, 2012 01:55 IST

Peregrine Financial Group founder and chief executive Russell Wasendorf Sr was on Tuesday indicted on charges of lying to regulators, a little over a month after he botched a suicide attempt and confessed to bilking customers of his brokerage for years.

Wasendorf, 64, "overstated the value of PFG’s customer segregated funds by at least tens of millions of dollars" to the Commodity Futures Exchange Commission, according to the indictment, filed in federal court in Cedar Rapids, Iowa.

The indictment carries a possible maximum sentence of 155 years in prison, a $7.8 million fine, and 93 years of supervised release following any imprisonment, the US Attorney’s office said.

The public defender representing Wasendorf Sr could not be reached for comment.

Peregrine filed for bankruptcy protection on July 10, one day after Wasendorf Sr attempted suicide and left a note describing how he had stolen from customers for nearly 20 years.

The collapse of what was once a mid-sized futures brokerage has dealt a blow to confidence in the futures industry, coming less than a year after MF Global Holdings’ bankruptcy, which left customers with a $1.6 billion shortfall and is still being investigated.

The CFTC has said Wasendorf Sr misappropriated more than $200 million in customer funds.

His former customers are baying for blood.

“He should rot in a prison cell, like Bernie Madoff,” said Ronald Riehm, a coin dealer from Johnston, Iowa, who has $51,000 tied up at the firm. “He lived for 18 and a half years a life of luxury on stolen money. I have no sympathy for him whatsoever.”

Wasendorf Sr is being held in a county jail and his next appearance for an arraignment has not yet been set, the US Attorney’s office said.

First Published: Aug 14, 2012 23:12 IST