Russell Wasendorf Didn't Mean "I have embezzled millions of dollars from Customer accounts at Peregrine Financial" In A Literal Sense

Remember Russell Wasendorf? CEO of collapsed brokerage firm Peregrine Financial Group? Dirty blonde hair, about yea high? Opened his (attempted) suicide note with the words "I have committed fraud" and then went on to detail said fraud, writing: "Through a scheme of using false bank statements I have been able to embezzle millions of dollars from customer accounts at Peregrine Financial Group, Inc. The forgeries started nearly twenty years ago and have gone undetected until now. I was able to conceal my crime of forgery by being the sole individual with access to the US Bank accounts held by PFG. No one else in the company ever saw an actual US Bank statement.The Bank statements were always delivered directly to me when they arrived in the mail. I made counterfeit statements within a few hours of receiving the actual statements and gave the forgeries to the accounting department.” Using a combination of Photo Shop, Excel, scanners, and both laser and ink jet printers I was able to make very convincing forgeries of nearing every document that came from the Bank. I could create forgeries very quickly so no one suspected that my forgeries were not the real thing that had just arrived in the mail." ...apparently he was just kidding about all that and/or intended it to be read in more of an If I Did It style. The chief executive of Peregrine Financial Group Inc. on Friday pleaded not guilty to all 31 charges he faced of misleading federal market authorities as part of a long-running alleged fraud. Russell Wasendorf Sr., the head of the collapsed U.S. futures and currency brokerage, was formally charged this past week with 31 counts of misleading regulators, offenses that carry a maximum sentence of 155 years. It is one of the heaviest penalties sought in the wake of the last financial crisis. No further questions. Peregrine's Wasendorf Pleads Not Guilty [WSJ]
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Remember Russell Wasendorf? CEO of collapsed brokerage firm Peregrine Financial Group? Dirty blonde hair, about yea high? Opened his (attempted) suicide note with the words "I have committed fraud" and then went on to detail said fraud, writing:

"Through a scheme of using false bank statements I have been able to embezzle millions of dollars from customer accounts at Peregrine Financial Group, Inc. The forgeries started nearly twenty years ago and have gone undetected until now. I was able to conceal my crime of forgery by being the sole individual with access to the US Bank accounts held by PFG. No one else in the company ever saw an actual US Bank statement. The Bank statements were always delivered directly to me when they arrived in the mail. I made counterfeit statements within a few hours of receiving the actual statements and gave the forgeries to the accounting department.” Using a combination of Photo Shop, Excel, scanners, and both laser and ink jet printers I was able to make very convincing forgeries of nearing every document that came from the Bank. I could create forgeries very quickly so no one suspected that my forgeries were not the real thing that had just arrived in the mail."

...apparently he intended it to be read in more of an If I Did It style or was just straight up messing with us.

The chief executive of Peregrine Financial Group Inc. on Friday pleaded not guilty to all 31 charges he faced of misleading federal market authorities as part of a long-running alleged fraud. Russell Wasendorf Sr., the head of the collapsed U.S. futures and currency brokerage, was formally charged this past week with 31 counts of misleading regulators, offenses that carry a maximum sentence of 155 years. It is one of the heaviest penalties sought in the wake of the last financial crisis.

Can't anyone take a simple "I have committed fraud" joke anymore? Come on! No further questions.

Peregrine's Wasendorf Pleads Not Guilty [WSJ]

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Credit Where Credit Is Due: Peregrine Financial Once Won The "Iowa Character Award"

You know those letters that go out from banks and brokerage firms a couple days after a financial disaster has hit the news? They usually begin with “Dear Valued Customer,” and they assure freaked-out investors that that sort of thing would never happen here. Like this one, published November 1, 2011, the day after MF Global filed for bankruptcy. “Dear PFGBEST customers,” it began. Those rogues at MF Global might have lost track of a billion dollars or so of their customers’ money, but PFG clients could count on “the absolute dedication of PFGBEST to protect you and your PFGBEST accounts.” The soothing dispatch was signed by Russell Wasendorf, Jr., president and chief operating officer and son of the CEO Russell Wasendorf, Sr. It pledged that PFG was “compliance-focused,” and said the principled firm was in communication with regulators “to assist in any way” after the purloining of MF Global’s clients. Well, you can’t argue that the senior Wasendorf didn’t assist his regulators. The CEO of PFG Best, aka Peregrine Financial Group, even sat on an advisory committee of the National Futures Association. On that “compliance-focused” part, though, the your-money-is safe-with-us vow didn’t turn out to be so reliable. Eight months after the “Dear customer” letter, PFG filed for liquidation under Chapter 7 of the U.S. Bankruptcy Code on July 10 -- a day after the NFA said the Cedar Falls, Iowa futures brokerage firm was short about $200 million in its customer accounts. That would be the same NFA whose board had on three occasions – in 2004, 2007 and 2009 -- voted to put Wasendorf, Sr. on its Futures Commission Merchant advisory committee that weighed in on new rules. NFA spokesman Larry Dyekman declined to comment. Russ Senior today is in the Linn County jail in Cedar Rapids, Iowa, having been charged with making false statements to regulators about the value of his customers’ accounts. His bail hearing is on Friday. Junior hasn’t been accused of wrongdoing and his lawyer told The Wall Street Journal that the younger Wasendorf is cooperating with regulators to track down assets. Neither man’s lawyers returned phone calls. The elder Wasendorf tried to commit suicide on July 9 and left a note saying he’d been stealing from customers for 20 years. “I had no access to additional capital and I was forced into a difficult decision,” he wrote. “Should I go out of business or cheat?” Well, we know the answer to that one. During the years he was dipping into customers’ funds, Wasendorf was honored with awards for his charity, his patriotism, and his devotion to green initiatives. The firm received accolades, too. Last year, it was among 13 winners of the “Iowa Character Award.” Spokeswoman Amy Smit of “Character Counts in Iowa” said in an email that PFG won for its “extensive community involvement,” including research for pediatric diseases and support to tornado victims. Futures magazine called it “one of the nation’s Top 50 Brokers” for 13 years in a row. Ginger Szala, group editorial director at Summit Business Media, which publishes Futures, said in an email that the list is based on “customer equity reports” that the magazine gets from the Commodity Futures Trading Commission. The CFTC gets those from the firms. “We rely on the regulator to confirm the amount as accurate, and of course, that now is under question,” she said. Oh yeah, that. We could take a little comfort if it had all come as a surprise – the cagey guy who’d never given the regulators a clue. No such luck. While he was picking up his trophies over the years, Wasendorf was running companies that waved red flags. He owned a securities firm, Peregrine Financials & Securities Inc., that first registered with Finra in 1998. That firm wound up terminating its registration in June of 2004, just two months after Finra fined it $251,000 for “unfair and excessive” commissions and for failing to keep proper records of emails. A year before that, in February of 2003, Finra said Peregrine had filed inaccurate reports and had failed to maintain the minimum required net capital. Peregrine also lost arbitrations with customers in 2001 (for breach of contract) and 2004 (for misrepresentation and “fraudulent activity.”) His separate futures trading company, PFG, had its own set of problems. In 2009, an administrative law judge said it had failed to investigate numerous questionable activities in the account of a 73-year-old retiree, adding that PFG had shown “a reckless disregard” for its duties. Ten years before, the Commodity Futures Trading Commission said the firm had failed on several occasions to report that it had fallen below minimum financial requirements, and that it had been showing receivables as current assets in its reports to the regulator. There is more, but you get the idea. Wasendorf thought regulators were kind of dumb, and while he may be a big-time liar, you can’t argue with him on that one. It was “relatively simple” to trick regulators, he said in his suicide letter. At a hearing of the House Committee on Agriculture Wednesday, amid talk about how to prevent future MF Global and Peregrine-style fiascos, witnesses from the financial industry made the familiar business lobby pitches that regulations can kill competition, stifle innovation, and lead to firms leaving the futures business altogether. The carrying on could almost have been scripted by Wasendorf himself. When the CFTC was proposing increased margin rules for foreign exchange traders in 2010, Wasendorf said in a press release that the changes would send thousands of U.S. jobs overseas. “Congress made it clear that the industry was to be policed, not abolished,” he said at the time. Even if this guy gets stuck doing a couple years in prison, there’s got to be a financial lobbying job in his future. Susan Antilla is a columnist for Bloomberg View.

Dick Bové: Wells Fargo Is Managed Great If You Don't Take Into Account The Horrible Customer Service I've Received On Several Occasions, For Which Heads Should Roll

Picture this. You're world-renonwn bank analyst Dick Bové, famous for, among other things, issuing a report in summer 2008 about which banks were "next" to fail, not rolling over and taking it when Citigroup tried to screw you good, and standing by Ken Lewis when literally no one else (including his board) would. When you walk into rooms, people notice. More often than not, they ask you to pose for pictures, kiss their babies, sign their tits. Some have fainted in your presence. You're the fifth Beatle, Justin Bieber, and George Clooney, all wrapped into one devastating little package.  It should go without saying that an appearance by you at your local branch bank, to cash six-figure checks, as you often do, would be call for a red carpet and the crème de la crème of customer service, right? Apparently wrong. The following is an accounting of Dick Bové's experiences as Wells Fargo customer. (Originally he banked with Wachovia, who he had only good things to say about. Sadly, the same cannot be said for the degenerates he's encountered at WFC.) * "Dick Kovacevich, Wells retired CEO, felt strongly that customers should be greeted when they entered the branch and that the visit should be a positive experience. I can honestly state that no one ever greeted me when I entered my local branch. In fact, on one occassion, when I needed to speak with a platform person, I never got the opportunity. The bank officer made me wait a bit; came out of his office and entered the public bathroom; and left the bank." * "On a second occasion, I entered the branch with a low six figure check. I needed some information concerning more than one issue related to the deposit. After searching out an employee, I was told that he could not handle the transactions...It is interesting to note that no one at the branch suggested any investment to me but simply deposited the check. No one ever called me to indicate that there was over six figures sitting in a no interest checking account." * "What my Wells Fargo experience suggests is that a successful bank is one that keeps seeking new customers and selling them more products and not getting bogged down by offering service...My interaction with Wells has been an enlightening experience." Does Dick Bové "rate banks based on one person's anecdotal experience"? No, at this time he does not. If he did though, a bank--if you can call it that-- named Wells Fargo would be up shit's creek right about now. Because in the scenario in which DB did assign ratings based on his own interactions with management, WFC would have a giant red "U" across its chest, for "unacceptable" and caution tape around its buildings which would in turn be condemned and schedule for demolition at 9AM.

Phil Falcone Will Borrow Hundreds Of Millions Of Dollars From Any Gated Investor Fund He Pleases

Phil Falcone, as some of you may know, has made some mistakes in the last couple years. Pouring his investors' money into a wireless start-up that may or may not ever get off the ground. Offering those who wanted out illiquid LightSquared equity instead of cash. Not getting his wife a driver for party-time.  If you're wondering why we haven't mentioned the time he borrowed $113 million from a gated fund in order to pay personal taxes, which he had not set aside enough money to cover, it's because Phil doesn't count it as a mistake, regardless of what you, or the SEC, or anyone else says. Hedge-fund manager Philip Falcone and his firm, Harbinger Capital Partners LLC, formally signaled their intent to seek the dismissal of fraud charges filed against them earlier this year by securities regulators, according to people familiar with the case. In June, the Securities and Exchange Commission filed civil charges accusing Mr. Falcone of putting his own interests, including maintaining a "lavish lifestyle," ahead of those of Harbinger's investors. The agency accused Mr. Falcone, Harbinger and Harbinger's former operating chief, Peter Jenson, of misleading investors and an outside law firm when Mr. Falcone took out a $113.2 million loan in 2009 from a Harbinger fund to pay his personal taxes, even as other investors in the fund were prevented from pulling their money. Lawyers for Mr. Falcone and Harbinger sent a letter to Judge Paul Crotty of U.S. District Court in Manhattan Friday, the deadline for responding to the SEC's complaint, saying they intended to seek dismissal, the people said. The letter also summarized arguments for the dismissal. Mr. Jenson also filed a letter Friday through his lawyers saying he intended to seek dismissal of the complaint. Representatives of Mr. Falcone and Harbinger have said before they planned to fight the allegations. In negotiations with securities regulators leading up to the charges, they had argued that Mr. Falcone and Harbinger were simply following sound advice from their legal counsel. Which, for those who missed it, was: “[L]ending money to principals is not part of the fund’s investment program” and "a loan . . . will never be a good idea" and "[We are] unequivocally against the loan idea for a number of reasons." Falcone To Seek Case's Dismissal [WSJ] Earlier: Phil Falcone’s Alleged Piggish Behavior Made Him Some Enemies

Not Everyone Convinced Former Trader Meant "It Wasn't A Question Of If I Was Going To Kill You, Just Of When" In A Figurative Sense

A year or so a go, commodities trader Vincent McCrudden was arrested for some things he put on a company website and some emails he sent out. The former involved an "execution" list containing the names of a handful of financial regulators, which he asked readers to aid him in crossing off ("I need your help," he wrote. "There are just too many for me alone"). The latter included an email to a CFTC staffer that noted: “You fucking corrupt piece of shit! I have let so many of you fucking corrupt mother fuckers off the hook for doing this to my life. You my friend are not getting away with this. I am going to do this my way now and you, you corrupt mother fucking piece of shit are the first on my list! laugh mother fucker…I am going to make you a test case!” To that end, the chief operating officer of the NFA was told, “It wasn’t ever a question of ‘if’ I was going to kill you, it was just of when." Were these emails particularly colorful? Yes. Should anyone who received them (or had their name placed on The List) been actually worried about losing his/her life? McCrudden could see how maybe things might have been interpretted that way, but no. As he told a judge, “I wrote provocative language on my website that could have been perceived as threatening. I would never intentionally hurt or cause bodily harm to another human being." And yet, this is still happening: Vincent P. McCrudden, a former New York commodities trader, was sentenced to two years and four months in prison for threatening to kill federal financial regulators. McCrudden, 51, who pleaded guilty last year, was sentenced today by U.S. District Judge Denis R. Hurley in federal court in Central Islip, New York...McCrudden said he was being persecuted for fighting back against unfair regulatory actions that destroyed his career. In addition to trading commodities, he ran his own hedge funds...McCrudden’s legal and regulatory entanglements began in 2000, when he was criminally charged with masking shortfalls in statements to his hedge-fund investors. The government said he included in his results money he expected to get from a lawsuit after Sumitomo Corp. (8053) was accused of manipulating the copper market. Ex-Trader McCrudden Gets 28 Months in Prison for Threats [Bloomberg]