Peregrine Financial Group Charged with Fraud

July 23, 2012 by Thomas F. Burke, P.C.

Peregrine Financial Group, Inc. ("PFG") has been shut down by enforcement actions filed against it by the Commodity Futures Trading Commission ("CFTC") and the National Futures Association ("NFA") on July 9, 2012. The regulators discovered that the firm's founder, Russell Wasendorf, Sr., had been falsifying bank statements about the amount of funds held by PFG. It is estimated that more than $200,000,000 in customer funds are missing. Wasendorf Sr. claims that he has spent the vast majority of that money. PFG filed for bankruptcy protection on July 10, 2012.

The scheme came to a head when the NFA required PFG to confirm its capital electronically rather than to submit bank statements. Wasendorf Sr. unsuccessfully attempted to commit suicide the next day by hooking a hose up to the tailpipe of his car. A suicide note found by the FBI in Wasendorf Sr.'s car stated that he had been lying to regulators for twenty years and he admitted to stealing $100,000,000 dollars.

Wasendorf Sr. was arrested on July 13, 2012. Wasendorf Sr. is charged criminally with making false statements to Commodity Futures Trading Commission regulators about how much client money the firm had on deposit. He, along with his son, Russell Wasendorf Jr., and two other executives at PFG have been named in a class action case.

This is the second major case with missing customer segregated funds in the last year, following the collapse of MF Global. In January of this year, the CFTC conducted an audit of futures commission merchants and found no irregularities with PFG.