Iowa brokerage CEO arrested and charged

CEDAR RAPIDS, Iowa — The chief executive of an Iowa-based brokerage firm admitted in a tell-all suicide note that he carried out an elaborate fraud scheme in which he embezzled at least $100 million from customers over two decades, federal investigators said Friday.

FBI agents arrested Peregrine Financial Group Inc. Russell Wasendorf Sr. at a local hospital Friday and he appeared in federal court later in the day on charges of lying to federal regulators. Court documents detail a wide-ranging fraud scheme in which Wasendorf apparently fooled colleagues, customers, and regulators by creating fraudulent financial records.

Those documents detailed a note found in Wasendorf’s car Monday, when authorities found him unresponsive in the vehicle outside the company’s headquarters in Cedar Falls. ‘‘Through a scheme of using false bank statements I have been able to embezzle millions of dollars from customer accounts,’’ Wasendorf wrote, adding that the fraud had gone undetected ‘‘until now.’’


Assistant US Attorney Peter Deegan said during the court hearing Friday that Wasendorf could face a wide range of additional criminal charges and decades in prison for what the prosecutor called a $200 million scheme in which Wasendorf embezzled customer funds for 20 years.

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Wasendorf, who investigators said tried to commit suicide by hooking up a tube to his car’s tailpipe, had been hospitalized since Monday. Deegan and the FBI declined to comment on his arrest, but Chicago-based lawyer Thomas Breen said FBI agents ‘‘removed him from his hospital bed’’ at University of Iowa Hospitals and Clinics in Iowa City. Breen said he was on the phone with Wasendorf, 64, at the time.

The judge scheduled a hearing for Wednesday to determine whether Wasendorf should be held in jail pending his trial. Deegan said Wasendorf was a flight risk.

Peregrine Financial Group, which marketed itself as PFGBest, filed for bankruptcy Tuesday. It was 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 said that when authorities found Wasendorf in his vehicle Monday, they also found a suicide note addressed to his wife and a signed statement in which he detailed his fraud.


On Friday, officials from the Financial Industry Regulatory Authority, were on site at Peregrine’s Cedar Falls offices to examine the firm.

The criminal complaint alleges that Wasendorf made false statements to the Commodity Futures Trading Commission about the value of customer funds held by his company from 2010 until recently.