Russ Wasendorf Sr. gets 50-year sentence in brokerage fraud
BY RYAN J. FOLEY Associated Press
Friday, February 01, 2013
2/01/13 at 4:58 AM
CEDAR RAPIDS, Iowa - A judge sentenced Peregrine Financial Group Inc. founder Russ Wasendorf Sr. to 50 years in prison on Thursday for stealing $215 million from investors over 20 years in what a prosecutor called the biggest fraud in Iowa history.
U.S. District Judge Linda Reade told Wasendorf, 64, that the stiff sentence was warranted because of the "staggering losses" his greed caused to more than 13,000 investors, employees and creditors over 20 years.
Instead of having the courage to admit his company was a failure since its inception in the early 1990s, she said Wasendorf lavishly spent clients' money to make himself look like "a big shot," Reade said. Last summer's collapse of the company, nicknamed PFGBest, rippled across the financial industry, affecting regulatory agencies and the nation as a whole.
Wasendorf, who has been kept in an isolation unit since last summer, seemed frail in his orange prison jumpsuit. His attorney said he'd lost a substantial amount of weight behind bars and was suffering from serious health problems, including a tumor on his pancreas that doctors are testing for cancer.
Before he was sentenced, Wasendorf issued a broad apology for the damage he caused and said he would accept any punishment.
"I just want to say I'm very, very sorry for the financial and emotional damage I have caused to investors and employees of Peregrine Financial Group," Wasendorf said.
Wasendorf pleaded guilty in September to misusing at least $100 million to cover business losses at PFGBest and a range of personal expenses. This week, he agreed with prosecutors that he caused $215 million in losses.
Wasendorf hid the theft from colleagues and regulators by making phony financial statements for nearly two decades that made the company appear healthy.
At a news conference after the hearing, acting U.S. Attorney Sean Berry praised the sentence, saying it was the longest ever given to a white-collar criminal in the northern district of Iowa. He said the punishment was fitting because Wasendorf carried out the largest fraud in Iowa history.
Wasendorf's attorney, public defender Jane Kelly, had urged Reade to impose a more lenient sentence than the 50-year prison term recommended by advisory guidelines. She argued that Wasendorf had cooperated with regulators and investigators to help customers maximize their refunds. She also said Reade should consider that he wasn't motivated by greed because he had made significant contributions to charity for medical research and other causes.
But Reade rejected those arguments. She said he cooperated only after he was arrested and left a suicide note detailing his theft. She blasted Wasendorf for blaming overzealous regulators for prompting him to start stealing. And she said all of his good acts in the community built up Wasendorf's reputation - and allowed him to victimize more people.
Original Print Headline: Brokerage founder gets 50 years
Associated Images:
Assistant United States Attorney Peter Deegan discusses the sentencing of Peregrine Financial Group owner Russell R. Wasendorf Sr. for mail fraud and embezzlement in Cedar Rapids, Iowa, on Thursday. CLIFF JETTE/The Gazette/AP
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