CEDAR RAPIDS, Iowa — For years, Russ Wasendorf Sr. enjoyed the perks of being a successful businessman: a corporate jet, a fancy swimming pool at his mansion, an extensive wine collection, and top chefs who made him meals at the restaurant and office buildings he owned.
Then last summer he admitted that his lavish lifestyle was a lie, built with money he stole from customers at Peregrine Financial Group, the Cedar Falls-based brokerage he founded. Prosecutors said he took $215 million over 20 years in the biggest fraud in Iowa history.
Wasendorf is now being held in isolation at a county jail in a tiny cell where he sleeps on a concrete pad without a pillow, his pastor said. And on Thursday, the 64-year-old learned he will most likely spend the rest of his life in federal prison.
A judge sentenced Wasendorf to 50 years in prison. Wasendorf, who must serve at least 42½ years of the sentence, appeared in fragile health, having lost weight and suffered from health problems that made him look nothing like the image of a confident financial whiz he once projected.
Acting US Attorney Sean Berry said the sentence was the longest ever given to a white-collar criminal in the northern district of Iowa and was fitting because Wasendorf’s fraud was unparalleled in Iowa.
US District Judge Linda Reade gave Wasendorf the maximum prison sentence available for the fraud and embezzlement charges to which he pleaded guilty in September. She cited the ‘‘staggering losses’’ his theft caused to 13,000 commodities investors who lost money and hundreds of employees who lost jobs.
Wasendorf used their money to build a business empire that included a publishing company that churned out his books and magazines, the jet that flew him to meetings, the nicest restaurant in Cedar Falls, a development company in Romania, and a charity known for donations to universities and hospitals.
But since last July, Wasendorf has been held in a cell on the fifth floor of the Linn County Jail in Cedar Rapids, where some of his fellow inmates scream all night long, said his pastor, Linda Livingston, who counsels him several times a week.
Wasendorf’s brokerage collapsed after investigators found Wasendorf unconscious after having attempted suicide in his vehicle outside its headquarters in Cedar Falls. He left a suicide note in which he confessed to a fraud in which he stole customer funds, and forged bank statements to fool his colleagues, auditors, and regulators.
He attempted suicide after learning that regulators were insisting on electronic access to Peregrine’s bank accounts, which meant they would soon find that more than $215 million in customer funds was missing. Prosecutors said Wasendorf’s theft started after he founded Peregrine in the early 1990s, when he needed money to prop up the business after an investor pulled out.
Instead of having the courage to admit his company was a failure then, Reade said Wasendorf continued to steal clients’ money and spent it on a lavish lifestyle to make himself look like ‘‘a big shot.’’ She repeated a famous line from Wasendorf’s suicide note: his ego was simply ‘‘too big to fail.’’
Assistant US Attorney Peter Deegan read statements from victims, who wrote about losing life savings or money they set aside to care for a relative. Some never meant to do business with PFG, which bought their accounts while it fraudulently expanded, he said.