Cedar Falls broker accused in a $200 million fraud scheme admitted in a suicide note that he stole millions from his customers for more than 20 years, according to court documents.
Russell Wasendorf Sr., 64, chief executive officer of Peregrine Financial Group Inc. was charged with making false statements in the scheme and made his initial appearance Friday in U.S. District Court.
Wasendorf appeared in his street clothes during the hearing but was shackled in hand and ankle cuffs. He told the judge he was taking an antidepressant but was able to understand the proceedings.
“I was able to conceal my crime of forgery by being the sole individual with access to the US Bank accounts held by PFG,” Wasendorf wrote in a suicide note and signed statement to his wife and son that was included in the criminal complaint against him.
On Monday, Black Hawk County Sheriff’s deputies were called to a suicide attempt report at Peregrine and found Wasendorf unresponsive in his car, which had a tube hooked to its tailpipe, according the criminal complaint.
The apparent suicide note and signed statement recovered were addressed to Wasendorf’s wife and son, Russell Wasendorf Jr., president and chief operating officer of Peregrine, and detailed Wasendorf’s actions.
According to the complaint, from 2010 through July of 2012 Wasendorf made false statements to the United States Commodity Futures Trading Commission regarding the value of customer segregated funds held by Peregrine.Wasendorf said in the signed statement he was in financial trouble and had choose between going out of business or cheating.
“I guess my ego was too big to admit failure,” he said in the statement. “So I cheated, I falsified the very core of the financial documents of PFG, the bank statements.”
Wasendorf explained how he made forgeries of bank statements. He also made forgeries of official letters and correspondence from the bank, as well as transaction confirmation statements, he wrote.
Wasendorf provided details in the statement about how he made the forgeries using Photo Shop, scanners and printers. He said he changed procedures and rules if anyone questioned his authority and had the bank statements delivered directly to him without anyone else seeing the documents. He also said he set up a post office box so he could intercept forms mailed by auditors to the banks to verify information regarding customer funds.
He also made sure the bank only dealt with him at the company, and learned how to falsify online banking statements when that system became available, according to his statement.
Wasendorf’s son obtained a bank statement from the company’s accounting department to verify for law enforcement what his father said in the statement. The ending statement balance in December 2011 was more than $221 million but the bank statement obtained from US Bank indicated the actual balance was more than $6.3 million.
Other falsified bank statements confiscated by law enforcement for the period ending in March 2011 report a balance of more than $218 million in the account but an actual balance of about $7.1 million, according to the affidavit.
Wasendorf’s charitable organization, Peregrine Charities, pledged or already donated thousands to organizations across the region.
The Waterloo-Cedar Falls Courier reported earlier this week that Wasendorf had pledged $2 million to the University of Northern Iowa’s athletic programs. UNI officials said payments on the pledge were current, but the total commitment had not yet been paid.
Wasendorf’s Peregrine Charities donated more than $500,000 to the University of Iowa Foundation in recent years, according to the company’s website and federal tax filings.
In 2007, the company established the Peregrine Charities Discovery Fund for Children’s Medicine, which supports research of rare pediatric diseases by UI scientists. The $100,000 added to the fund in 2011 brought the company’s total contribution to $500,000, Peregrine Charities reported on its website. The group also gave the UI Foundation $42,200 in 2011 for a Fluorescence-Activated Cell Sorting Machine, “which will advance cell-based therapies for children with many congenital and acquired diseases,” the website states.
The company’s Form 990 tax reports show combined gifts of $424,000 to the UI Foundation in 2008, 2009 and 2010, the most recent years for which the reports are available on www.guidestar.org.
St. Luke’s Foundation received $44,850 from the company in 2011 for a CinemaVision goggle system, which allows patients receiving Magnetic Resonance Imaging (MRI) to watch shows or movies during the procedures, according to Peregrine Charities’ website.
Although Wasendorf graduated from Marion High School in 1966, he had made no major gifts to the school district north of Cedar Rapids, Superintendent Sarah Pinion said.
“In the last seven years, no pledge or substantial donation came from him,” Pinion said. “If there was anything before that, we don’t have knowledge of it.”
Assistant U.S. Attorney Peter Deegan on Friday asked the court to detain Wassendorf due to the nature of the crime. Deegan said Wasendorf was a flight risk because he could face decades in prison if convicted.
U.S. Magistrate Jon Scoles set a detention and preliminary hearing for 2:30 p.m. Wednesday.
Erin Jordan of The Gazette contributed to this story.