Peregine Financial Group CEO Russell Wasendorf Sr. pleaded not guilty on Friday to all charges filed against him for making false statements to federal regulators.
According to legal viewers, they had been expecting the move after Wasendorf Sr. confessed to misusing customer funds. The move sets the stage for a plea bargain.
Wasendorf Sr., who owns the entire company, was charged on 31 counts of falsifying financial reports to Commodity Futures Trading Commission (CFTC) of customer funds at his futures brokerage. The amounts of funds were overstated by tens of millions of dollars.
Peregrine sought for Chapter 7 liquidation on last month with more than $200 million of missing customer funds. According to court documents, Peregrine has $500 million in assets and more than $100 million in debts.
The National Futures Association said that on July 9 the brokerage reported that its customer-segregated funds were $400 million as of June 29. About $225 million of which was deposited at U.S. Bank.
The regulator suspected that Wasendorf Sr. forged the bank statements after it found out that Peregrine had only $5 million deposited in the bank. According to ATF, the NFA has frozen all of the customers’ money.
The ATF’s Chapter 7 filing came after Wasendorf Sr. attempted to take his own life and left a suicide note confessing that for the past 20 years he had been stealing from customers.
The collapse of the futures brokerage has caused another blow to confidence in the industry. MF Global Holdings Ltd’s filed for bankruptcy not more than a year ago and it left customers with a shortfall of $1.6 billion.
Since Wasendorf was indicted, he made his first appearance on Friday at the U.S. District Court in the Northern District of Iowa in Cedar Rapids. He was wearing a prison jumpsuit and his hands and feet were shackled.
- A lot of people think that it is impossible to meet the requirements for Chapter 7 liquidation under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Although there are changes in the process, it is still possible to file for Chapter 7 bankruptcy. A Bankruptcy Attorney San Antonio Texas law expert can help.