Russell Wasendorf Sr., founder of Peregrine Financial Group (PFG) and former CEO, will find out his fate at the end of month as a result of his September guilty plea.
According to a court filing this week, his sentencing is set for Jan.31 in U.S. District Court in Cedar Rapids, Iowa. At age 64, he could essentially face a life sentence as he could receive a 24 to 50-year prison sentence from defrauding clients of more than $200 million, reported FIN Alternatives.
In July, Wasendorf was arrested as his company started to fall apart and prior to his suicide attempt. He wrote a confession and admitted “fraud” and having “cheated.” This came with his acknowledgement that he took “more than $100 million” of client funds to help the firm. He admitted to defrauding customers for almost 20 years.
Wasendorf pleaded guilty in September to mail fraud, embezzlement and giving false statements to regulators.
After Wasendorf’s July actions, PFG soon unraveled and filed for bankruptcy on July 10, 2012. Today, thousands of previous customers still don’t have their money.
At ValueWalk, we wrote about the firm’s collapse in September. In the firm’s bankruptcy filing, it disclosed that it had $525.3 million in liabilities and $270.2 million in total assets.
The actual amount of Peregrines assets came in lower than analyst estimates of $500 million to $1 billion, while its liabilities were greater than the July estimate of $250 million to $500 million.
Back in September, the current financial status for PFG meant that 24,000 former clients would face hardships in their attempts to accessing their funds entrusted to the company, which had been used to back their trading.
According to the company’s trustee, Ira Bodenstein, Wasendorf had proposed to return $123 million initial funds (30 percent to 40 percent) to certain customers by the end of September. The percentage of the money he was willing to return represented less than the 72 percent received by the customers of MF Global Holdings Ltd (PINK: MFGLQ) when that company went bankrupt.
Analysts had believed customer payouts would be limited due to the company’s financial situation.
Since Wasendorf’s arrest, he’s remained in custody.
Fast forward to the present and lawyer and accountant bills are mounting because of their work with a court-appointed bankruptcy trustee as they determine what remains at PFG. These fees could further limit the amount potentially available for clients.
According to Reuters, PricewaterhouseCoopers has already submitted a $1.6 million bill for 4,239 hours of work that were logged from July 22 through Oct. 31, according to a bankruptcy court filing on Monday.
Documents noted that the accounting firm is still giving financial advisory services for the case.
Last Friday, the law firm that represents Bodenstein Shaw Fishman Glantz & Towbin, sent over a $671,417 bill for 1,508 hours of work between July 10 and Oct. 31.