The chief executive of collapsed brokerage Peregrine Financial Group Inc. admitted defrauding his clients of more than $100 million over nearly 20 years.
The chief executive of Peregrine Financial Group Inc. was arrested on charges including lying to regulators, according to the U.S. Attorney’s Office. Mr. Wasendorf appeared tired and serious at his hearing Friday in federal court in Cedar Rapids, Iowa. He wore a blue polo shirt and jeans and said in a low voice that he understood the charges against him. Wasendorf was hospitalized after police discovered him in his car outside Peregrine headquarters in the small town of Cedar Falls, Iowa, with a hose from the tailpipe to the interior.
In his written statement, Wasendorf said he was the only person at Peregrine who knew about the fraud. He accomplished this through careful obfuscation and authority to keep it secret from his co-workers. He implied it was out of financial desperation. “I had no access to additional capital and I was forced to make a difficult decision: Should I retire from the business or cheat? I think my ego was too big to admit failure.”
Wasendorf founded PFGBest 22 years ago and runs it with his son, Russell Wasendorf. Wasendorf’s statements about his actions indicate that fraud went further back than originally thought. It was initially thought to have occurred only in the last two years.
Critics say the scope and duration of the fraud reflects serious flaws in the industry. The MF Global Holdings scandal was also mentioned in this context. The committee had held a series of hearings over the past eight months because of it.
