Quest for Wasendorf's embezzled funds yields little
By Tom Polansek and Ann Saphir
CHICAGO/SAN FRANCISCO (Reuters) - Russell Wasendorf Sr., who is serving a 50-year prison sentence for embezzling $215 million from clients of his failed futures brokerage, appears to have told the truth about one thing: he spent nearly all the money.
Almost a year after Wasendorf's Peregrine Financial Group imploded in the wake of his fraud, the receiver in charge of selling the disgraced CEO's assets has netted just $3.6 million for bilked customers, according to court documents filed in the bankruptcy of his firm.
The total is disappointing for former Peregrine customers just a week after U.S. regulators said that clients of MF Global, another bankrupt futures brokerage, would recover all of their missing money.
To drum up money for customers, Peregrine's receiver liquidated nearly all of Wasendorf's property - his two homes and a flashy corporate headquarters, his wine and his cars, his boat and plane, his restaurant and his life insurance policy. Even that sum will be docked in coming months to pay some of the estate's expenses.
"He lived very big and very showy, and unfortunately there is very little left," Wasendorf's receiver, Michael Eidelman, said in a telephone interview on Wednesday.
"You wouldn't have thought it would be possible to spend $200 million, but there was a succession of absolutely horrible deals."
The bad deals included a "Taj Mahal" of a corporate headquarters built for $21 million at the end of a dirt road in Iowa, a now insolvent Romanian real estate venture, and a sprawling home with cramped rooms and a pool that costs $10,000 a month just for upkeep.
All told, Eidelman made about $5.8 million selling Wasendorf's properties, a fraction of what they cost to acquire, the court filing showed. Peregrine's headquarters sold for just $2.4 million. Some of the proceeds then had to be paid to the bank that financed the properties, reducing the total take. Continued...