Peregrine boss Wasendorf gets 50 years jail for fraud

Thu Jan 31, 2013 5:21pm EST
 
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By P.J. Huffstutter

CEDAR RAPIDS, Iowa (Reuters) - A judge on Thursday sentenced the founder of Peregrine Financial Group to 50 years in prison for looting hundreds of millions of dollars from the brokerage, saying his customers would probably never recover the money they lost.

Russell Wasendorf Sr., who had tried to kill himself just before the fraud was uncovered last year, received the maximum sentence allowed by law and was ordered to pay $215.5 million in restitution for his nearly 20-year scheme.

A local hero in Iowa known for his charitable work and lavish lifestyle, Wasendorf triggered the collapse of the brokerage through his fraud. The scam shook investors' confidence in the U.S. futures industry, already rattled by the failure of larger rival MF Global less than a year earlier.

"I'm very sorry for the financial and emotional damage I've caused to investors and employees of Peregrine Financial Group," Wasendorf said in a feeble voice at a sentencing hearing in Cedar Rapids, Iowa.

"I feel I fully deserve whatever sentence I am given," he said. "My guilt is such I will accept that sentence."

Chief Judge Linda Reade of the U.S. District Court of the Northern District of Iowa said former Peregrine customers will probably never get all their money back.

Wasendorf, 64, admitted last July that he had bilked tens of thousands of clients over a period of two decades. He used little more than a rented post office box, Photoshop and inkjet printers to fake bank statements and lie to federal regulators, employees and his closest family members.

As regulators closed in on the fraud, Wasendorf made a botched suicide attempt outside his $24-million headquarters in Cedar Falls, Iowa, which investigators say was financed with money siphoned from customers.   Continued...

 
Peregrine Financial Group owner and CEO Russell R. Wasendorf, Sr is sentenced at the US District Courthouse in Cedar Rapids, Iowa, January 31, 2013. A U.S. judge on Thursday sentenced Wasendorf to 50 years in prison for looting hundreds of millions of dollars from the brokerage, saying his customers would probably never recover the money they lost. REUTERS/Connie Gross for The Gazette-KCRG TV9