Looks like we have another MF Global on our hands. Peregrine Financial Group, a one-man operation run by Russell Wasendorf, ripped off its clients to the tune of hundreds of millions of dollars, as reported by Reuters. While smaller than the MF Global or the Bernie Madoff scams, on all other levels it’s pretty similar.
Russell Wasendorf Sr., the sole owner and chairman of stricken futures broker Peregrine Financial Group, Inc., intercepted and forged bank documents for more than two years to cover up hundreds of millions of dollars in missing money, a person close to the situation told Reuters.
The National Futures Association on Monday froze the funds of the Iowa-based brokerage, which does business as PFGBest, after discovering an estimated $220 million shortfall in PFGBest’s customer accounts. The NFA had said in an affidavit that Wasendorf “may have falsified bank records.”
Wasendorf, 64, is reported to be in a coma after a suicide attempt Monday morning, according to a complaint filed by the Commodity Futures Trading Commission on Tuesday that accuses Wasendorf and Peregrine of fraud.
Wasendorf would intercept the documents as they traveled between the National Futures Association and US Bank. The NFA for some reason agreed to mail these documents to a post office box in Cedar Falls, Iowa, rather than to the bank itself. Wasendorf would then make it look like the accounts at the broker were flush, but it turned out they held only $5 million. More than half of the customer money had vanished. Years into the scheme, the NFA finally caught on, requesting that they confirm balances directly with the bank. Wasendorf eventually authorized this, and days later tried to kill himself.
Naked Capitalism has more. This happens with far too much regularity these days. Ordinary investors have a better chance of “beating the market” by going to an actual casino rather than putting their faith in this band of jackals. At least at the casino you know going in that the odds are stacked against you.