Hearing Postponed In Peregrine CEO's Fraud Case
LINDA WERTHEIMER, HOST:
Russell Wasendorf had hoped he'd be released on bail today, but the bail hearing has been postponed. So the former head of Peregrine Financial Group remains in jail, and the business empire he built continues to crumble.
Iowa Public Radio's Pat Blank reports Wasendorf's once fairy tale lifestyle came to an abrupt end earlier this month. He was arrested following an unsuccessful suicide attempt.
PAT BLANK, BYLINE: Wasendorf's story is one that rarely happens, a Chicago entrepreneur who got lucky with the stock market, moved his business and family back to his home state of Iowa and turned everything he touched to gold. Waterloo Courier Business columnist Jim Offner has watched the company's rapid expansion over the past three years.
JIM OFFNER: They had their hand in construction. They had their hand in wind energy. They had their hand in local charities. They made grants to the university. So they were well entrenched and we certainly thought well endowed.
BLANK: Offner says when Wasendorf attempted suicide outside company headquarters July 9th, no one believed it.
OFFNER: I really don't know what to make of what happened, other than to say I was extremely surprised as a lot of people were.
BLANK: The surprises had just begun. As Wasendorf prepared to take his life, he confessed in a document that he'd embezzled more than $200 million from clients of his brokerage firm, Peregrine Financial Group, and deceived regulators for more than 20 years. As the news got out, one of those regulators, the Commodity Futures Trading Commission, promptly froze PFG's assets and the firm filed for bankruptcy the next day.
The confession Wasendorf had hoped would be found after his death is now part of a mounting federal case against him. Former Assistant U.S. Attorney Bob Teig says collecting evidence will involve numerous resources.
BOB TEIG: The big thing is to determine whether anybody else has been involved, and that can take quite a bit of effort. But that's an important thing that has to be done. You don't just stop and say, all right, we got somebody. You want to make sure you find out how far things went.
BLANK: Wasendorf, who was arrested July 13th, has been in custody since and instead of his personal lawyer, will be represented by a public defender. Chief public defender in Black Hawk County, Iowa, Aaron Hawbaker, says even when someone has admitted in writing to a crime, there's always an avenue for the client.
AARON HAWBAKER: I'd want to make sure that Miranda was followed, and I'd want to make sure the confession was voluntary. If there aren't any constitutional issues, then I would look at the mental status of my client, see if there are any mental health issues that we need to think about, substance abuse issues.
BLANK: Along with the brokerage customers he allegedly swindled, Wasendorf's arrest has left nearly 300 people jobless, from the pilot of his private jet to the dishwashers at his four-star Italian restaurant. Business columnist Jim Offner describes it as a cautionary tale.
OFFNER: It's not a happily ever after story, but I've found in the business world, people who go in expecting to live happily ever after often do reach a conclusion they were not expecting.
BLANK: Wasendorf is expected to be in court soon for a bail hearing. Former federal prosecutor Bob Teig says courts operate under the assumption that defendants are entitled to bail. But in this case, given the amount of money involved and his suicide attempt, the chance of Wasendorf regaining freedom is slim.
For NPR News, I'm Pat Blank in Cedar Falls, Iowa.
(SOUNDBITE OF MUSIC)
WERTHEIMER: This is NPR News. Transcript provided by NPR, Copyright NPR.