It's Friday the 13th, and this Peregrine Financial Group CEO seems to be having terrible luck. Russell Wasendorf Sr. was arrested today for making false statements to regulators from 2010 to July 2012, according to the agency. The statements concerned his Iowa-based company, Peregrine Financial, that filed for bankruptcy protection on Tuesday. The CFTC and the National Futures Association have accused Wasendorf of misappropriating over $200 million in customer funds. These allegations were brought to light after Wasendorf tried to kill himself on Monday in the parking lot of Peregrine headquarters. He is set to appear in federal court later today.
Wasendorf had been hospitalized at University of Iowa Hospitals and Clinics after attempting suicide outside the company's headquarters in Cedar Falls on Monday by hooking up a tube to his car's tailpipe.
His company filed for bankruptcy Tuesday, the same day the industry's top regulator filed civil fraud charges alleging the firm misused customer money and falsely claimed a bank account contained more than $220 million when it actually had about $5 million. The money in that account belonged to customers, and was supposed to be kept separate from Peregrine's own money.
An affidavit by FBI agent William Langdon, made public with the criminal complaint, says authorities found Wasendorf unresponsive Monday in his vehicle, along with a suicide note addressed to his wife and a signed statement in which he detailed his fraud.
"Through a scheme of using false bank statements I have been able to embezzle millions of dollars from customer accounts at Peregrine Financial Group, Inc. The forgeries started nearly twenty years ago and have gone undetected until now. I was able to conceal my crime of forgery by being the sole individual with access to the US Bank accounts held by PFG," he wrote in the note, according to court documents.
Wasendorf said that he faced "a difficult decision" when his access to capital was limited earlier in his career.
"Should I go out of business or cheat? I guess my ego was too big to admit failure," he wrote. "So I cheated, I falsified the very core of the financial documents of PFG, the bank statements."
It's difficult to feel any sympathy for the man, he did know exactly what he was getting into and how wrong it was. I do feel badly for his family. They'll no doubt carry the shame that Wasendorf should have felt.