Peregrine Financial Group Inc. founder Russ Wasendorf Sr., whose once-highflying company came apart with high drama last year amid federal charges, has been sentenced to 50 years in prison for stealing $215 million from investors and concealing the theft for 20 years.
U.S. District Judge Linda Reade told Wasendorf at a hearing in Cedar Rapids, Iowa, that he knowingly caused "staggering losses" to investors, employees and creditors that grew larger over 20 years.
Reade said Wasendorf, 64, lacked the courage to stop his fraud sooner and admit that his company was a failure from its inception in the early 1990s.
She also said the collapse of Peregrine Financial Group had rippled across the financial industry, affecting regulatory agencies and the nation as whole.
"By imposing a substantial sentence, the court sends a message that white-collar criminals may serve long prison sentences for stealing money from other people," Reade said.
Wasendorf appeared frail at the sentencing on Thursday. His attorney said he'd lost a substantial amount of weight while being held in jail.
Before the sentencing, Wasendorf issued a broad apology for the damage he caused and said he would accept any sentence imposed.
Wasendorf pleaded guilty in September to misusing at least $100 million to cover business losses at his Cedar Falls brokerage, which did business as PFGBest, and a variety of personal expenses. This week, he agreed with prosecutors that he caused $215 million in losses. Reade ordered Wasendorf to pay that amount in restitution, but said it was "highly unlikely" the victims would ever be compensated in full.
He admitted that he hid the theft from colleagues and regulators by making phony financial statements for nearly two decades.
Wasendorf was found unconscious outside the company's headquarters in July after attempting suicide in his vehicle by connecting a tube to his exhaust pipe. He left a startling suicide note confessing to the fraud, saying he started stealing because his "ego was too big to fail," that he did not feel bad about duping regulators he believed were overzealous and that he had learned to make "convincing forgeries" of bank and financial statements using printers and scanners.
Regulators discovered that PFGBest could not account for more than $200 million in customer funds it was supposed to be holding, and the firm filed for bankruptcy protection. Some 24,000 customers were unable to access their accounts and still have not been fully reimbursed. Customers who opened accounts to trade commodities have received between 30% and 40% of their money back, while customers who traded foreign currency have received nothing because that activity has less legal protection.
Wasendorf used their money to build up a business empire that included a publishing company, a corporate jet, the nicest restaurant in Cedar Falls and a family charity known for making donations to universities and hospitals.
Customer money also helped build what was perhaps the biggest symbol of Wasendorf's home-grown success with a firm he started in a basement 30 years ago: PFG's $20-million headquarters, a three-story glass building that opened in 2009 and included a gym, a day-care center, a Montessori school and a restaurant. The building now is largely empty and up for sale.
Peregrine Financial founder is sentenced to 50 years in prison
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Peregrine Financial founder is sentenced to 50 years in prison
