UPDATE: Prosecutors Ask For 50-Year Prison Sentence For Peregrine’s Russell Wasendorf, Saying He Stole More Than $215 Million And Presided Over Fraud For 2 Decades

Russell Wasendorf Sr.

The fraud at Peregrine Financial Group Inc. began at least sometime between 1993 and 1994 with an unlawful $250,000 transaction involving customer funds and grew to consume more than $215 million, federal prosecutors said while asking a federal judge to put Russell Wasendorf Sr. behind bars for 50 years.

Wasendorf, 64, tried to kill himself with carbon monoxide in July 2012, after the monumental fraud was exposed. But he recovered, and pleaded guilty in September to mail fraud, embezzlement and making false statements to regulators. The company was placed in bankruptcy, with Wasendorf’s fraud destroying jobs in Iowa and making the U.S. heartland town of Cedar Falls the scene of an outrageous financial crime that devastated clients.

Prosecutors in the Northern District of Iowa now say an early backer of Wasendorf identified as “J.C.” wanted to pull out his capital contribution in 1993 or 1994, but Wasendorf already was in over his head. To buy out J.C. and keep the Peregrine scheme afloat, Wasendorf “stole the required capital — at least $250,000 — from PFG’s customer segregated funds,” according to prosecutors.

“Moreover,” prosecutors said,  “in order for the fraud to be effective and sustainable for years, defendant routinely created and used false certifications and forged documents to deceive his customers, his accounting department, his fellow corporate officers, an outside auditor, and multiple regulatory agencies whose core function was to detect and prevent exactly the type of criminal activity defendant perpetrated.”

To evade detection by his employees, Wasendorf used “blunt authority to establish rules and procedures at PFG so that he was the only one to examine actual” statements from U.S. Bank.

Chief U.S. District Judge Linda R. Reade is scheduled to sentence Wasendorf Jan. 31.

PFG conducted business online as PFGBest at PFGBest.com. At one time, the website featured a photo of PFG’s glistening headquarters building in rural Cedar Falls. The site now redirects to the site of the PFG bankruptcy trustee.