July 25, 2012 / 8:33 PM / 5 years ago

Peregrine CEO may have had help in fraud, regulator tells CNBC

CHICAGO, July 25 (Reuters) - Russell Wasendorf Sr., the CEO of failed futures brokerage Peregrine Financial Group, likely had help pulling off a massive, 20-year fraud, the head of the firm’s frontline regulator said in an interview on CNBC on Wednesday.

Daniel Roth, president of the National Futures Association, said the sheer volume of documents that needed to be doctored to pull off the fraud indicated that one person did not do it alone, as Wasendorf has claimed.

There is “a legitimate cause for question” about whether Wasendorf acted alone, Roth told CNBC.

Peregrine filed for bankruptcy on July 10, a day after Wasendorf attempted suicide and left a signed note describing how he bilked customers of more than $100 million over a period of nearly 20 years, forging bank statements and intercepting mail between his bank and the firm’s auditors at the National Futures Association.

Wasendorf said in a signed confession left at the scene of his botched suicide that he concealed the crime “by being the sole individual” at Peregrine with access to statements from accounts at U.S. Bank, where segregated customer funds were held, and telling bank employees he was the only Peregrine employee they should contact.

Wasendorf, who is in jail after being arrested on July 13 for lying to regulators, said in the confession that he spent “most” of the embezzled funds on keeping his money-losing brokerage in business, a “portion” on a new office building in Cedar Falls, Iowa, and some also on paying fines and fees imposed by regulators.

However, the receiver in the bankruptcy case charged with tracking down and selling Wasendorf’s assets at the best possible price, believes that at least some of the money is tied up in property that can be sold to raise money for bilked customers.

Customers of the failed firm have had their accounts frozen for more than two weeks and have not received any of their money back. (Reporting By Tom Polansek; editing by Andre Grenon)

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