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Peregrine Financial trustee seeks subpoenas for accountant
March 20, 2013 / 4:12 PM / 5 years ago

Peregrine Financial trustee seeks subpoenas for accountant

CHICAGO, March 20 (Reuters) - The trustee overseeing the collapse of Peregrine Financial Group is seeking documents from the futures broker’s former accountant in an attempt to track down millions of dollars missing from customers’ accounts, court records show.

Trustee Ira Bodenstein, whose job is to return money to Peregrine’s former customers and creditors, has asked a federal bankruptcy judge in Chicago for the authority to serve subpoenas on the former accountant, Victor DiMaggio.

Bodenstein wants to obtain documents about Peregrine’s finances from DiMaggio and have the power to compel the accountant to sit for an interview, according to court records.

The brokerage, commonly known as PFGBest, failed last July after founder Russell Wasendorf Sr. confessed to stealing more than $100 million from thousands of customers over nearly 20 years.

As regulators closed in on his fraud, Wasendorf made a botched suicide attempt outside his $24 million headquarters in Cedar Falls, Iowa, which investigators say was financed with money siphoned from customers. Prosecutors later said he stole close to $215 million.

Wasendorf, 65, pleaded guilty in September to embezzlement and other crimes and last month began serving a 50-year sentence at a high-security federal prison in Indiana.

Bodenstein’s pursuit of subpoenas for DiMaggio shows the search for customers’ missing money is ongoing.

Bodenstein, in a court filing on Tuesday, said he is “gathering information and investigating the involvement of various parties in Wasendorf’s fraudulent conduct.”

DiMaggio did not immediately respond to a message left at his office in Chicago. Neither Bodenstein nor his lawyer could immediately be reached for comment.

At Wasendorf’s sentencing in Iowa in January, U.S. prosecutors said the government did not anticipate filing further criminal charges in Peregrine’s downfall. A U.S. judge said customers would probably never recover all the money they lost.

By contrast, former customers of MF Global, a futures brokerage that collapsed less than a year before Peregrine failed, are set to receive back nearly all the money they had lost.

MF Global clients’ money was frozen when the broker dipped into customer accounts in violation of industry rules, leaving a $1.6 billion hole.

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