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Jan 28 (Reuters) - Some of the more than $100 million Peregrine Financial's former chief executive stole from his brokerage's clients went to pay for his divorce settlement, the trustee of the now-bankrupt brokerage said in a lawsuit late Friday against the former wife.
The lawsuit demands the return of more than $2.9 million in divorce payments and the disallowance of the former wife's bankruptcy court claims for an additional $2.4 million, money she says is still owed her from the divorce.
Russell Wasendorf Sr, the former CEO, has pleaded guilty to embezzlement and is in an Iowa jail awaiting sentencing this Thursday. Wasendorf's attempted suicide last July sent his firm into bankruptcy.
Prosecutors say he stole about $215 million from his clients over the nearly 20-year life of his firm, and are seeking to keep him behind bars for the rest of his life.
Authorities say he spent some of the money on personal items like a private plane and a luxury Chicago apartment, and Wasendorf has confessed he used it to pay for regulatory fines and to keep his money-losing company afloat.
The lawsuit by Peregrine Financial trustee Ira Bodenstein alleges yet another use for the stolen funds: to cut free from his 24-year marriage to Connie Wasendorf. The divorce was finalized on December 30, 2010.
"On December 31, 2010, Wasendorf fraudulently authorized a transfer from the Customer Seg Account to Defendant in the amount of $2,469,692, and such transfer was received by Defendant on the same day," the lawsuit said, referring to a U.S. Bank account that was supposed to be reserved for customer money.
Wasendorf also used company funds to pay his former wife about $20,000 a month for more than a year, trustee Ira Bodenstein said, even though she did little work for the money. Those payments - also part of the divorce settlement -- totaled $360,000, he said.
Connie Wasendorf has refused to return the $2.5 million lump sum payment from December 2010, the trustee said in the lawsuit.