(Bloomberg News) Peregrine Financial Group Inc. founder Russell Wasendorf Sr. pleaded guilty to stealing more than $100 million from the bankrupt commodities firm's customers.
Wasendorf, 64, yesterday admitted to embezzlement, mail fraud and two counts of lying to federal regulators in an appearance before U.S. Magistrate Judge Jon Scoles in Cedar Rapids, Iowa.
Wasendorf, dressed in a prison-issue orange jumpsuit, was handcuffed and wearing leg shackles during the hearing. He was taken into custody after U.S. District Judge Linda Reade earlier yesterday stayed Scoles's ruling that Wasendorf could be released from custody until sentencing.
In response to the judge's direct questions, Wasendorf replied "guilty" to each of the four counts. He made no other comment.
The plea agreement calls for a prison sentence of as long as 50 years. Scoles said he would recommend to Reade to accept the plea. Reade will also set a sentencing date.
Assistant U.S. Attorney Peter Deegan told Scoles that Wasendorf could serve a life sentence under federal sentencing guidelines.
Jill Johnston, Wasendorf's lawyer, said her client could serve 25 to 30 years if he receives reductions under the guidelines.
Customer Funds
Wasendorf's crimes came to light on July 9 when the founder of Peregrine, who was also the company's chairman and chief executive officer, tried to kill himself by piping auto exhaust into the passenger compartment of his car parked outside the firm's Cedar Falls, Iowa, headquarters.
In a written statement found with him then, Wasendorf said he'd been stealing from the company for almost 20 years.
The National Futures Association, an industry self- regulator, announced the same day that about $200 million in customer funds the firm reported was on deposit at its bank were unaccounted for.