Peregrine Financial CEO Indicted On 31 Charges

Tyler Durden's picture




 

It only took 20 years, a trail of counterfeit documents, superficial and failed audits, dubious tax returns and one unsuccessful suicide attempt, but in the end they got him: the CEO of failed commodity brokerage Peregrine aka PFG, Russell Wasendorf has been indicted on 31 charges of lying to government regulators regarding the failed brokerage's operations. He faces a maximum sentence of 155 years' imprisonment on the charges and fines of about $7.75 million, according to a statement from the U.S. Attorney's Office for the Northern District of Iowa. There is also that whole $215 million in commingled and subsequently stolen client money but that's another matter. In other words, just like Bernie Madoff, Wasendorf is going away for a long, long time for doing precisely what everyone else does: the first one for engaging in a ponzi even as now everyone acknowledges the entire system is one big ponzi - does that make it better and legitimate: apparently so; the second one for commingling client cash for personal benefit. As a reminder, this is what JPM did with $350 billion in excess deposit cash as part of its London whale trading fiasco, and broadly what every bank in the post Glass-Steagall world does with the roughly $8 trillion in total US bank deposits.

More from the WSJ:

Mr. Wasendorf was arrested July 13 on charges of lying to regulators following a suicide attempt on July 9 that included a confession that authorities say detailed a nearly 20-year fraud against Peregrine's customers. Regulators have estimated that about $215 million in customer money is missing.

 

Peregrine, which did business as PFGBest, filed for bankruptcy July 10.

 

No date has yet been set for Mr. Wasendorf to be arraigned on the charges, according to a statement from the U.S. Attorney's Office.

 

A grand jury in Cedar Rapids, Iowa, on Peregrine took just one day to hear testimony and hand up the indictment against Mr. Wasendorf.

Is it good that Wasendorf is going away, most likely for the rest of his life? Of course- the man is a sociopathic criminal. But the problem is that the incentives, the controls, and the "processes" that PFG engaged in to cheat thousands of clients out of their life savings are pervasive throughout the US financial system. It is this, and not an individual appeals court case which incidentally has no impact on a completely standalone bankruptcy process and whose outcome can be appealed under any other jurisdiction, that US investors, or what's left of them, should be worried about. Because it is the fundamental flaws in the US financial system which virtually assure that all capital currently residing with US banks as financial intermediaries will, sooner or later, in the parlance of MF Global, vaporize.

Sadly, and just like in the stock market, the cognitive bias that "it can't happen to me" and that "I can always get out first" is dominant here as well. And will be, until both of these delusions are found to be 100% just that.

Finally we have one more thing to add: free Corzine! (who may or may not be found at the contact details for his home office).

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Mon, 08/13/2012 - 21:03 | 2702623 malikai
malikai's picture

Corzine?

Mon, 08/13/2012 - 21:06 | 2702630 mofreedom
mofreedom's picture

He's doin Ron Paul!

 

Mon, 08/13/2012 - 21:31 | 2702704 TruthInSunshine
TruthInSunshine's picture

From:      The Offices of The Hon. Jon S. Corzine

To:         My fellow Americans & Patriots, ever vigilant

 

Dear Fellow Citizens,

 

While I am relieved to see that very preliminary measures regarding massive, systemic misappropriation of client funds by PFG are underway, we all need to by mindful of the sober fact that much work needs to be done to improve the odds that as full a measure of justice, economic and otherwise, is provided to all clients & victims of PFG.

This preliminary measure should also serve to warn all persons and institutions that may be arrogant enough to believe that they can emulate the actions and behavior of the PFG's of the world and escape justice. They can not & will not be allowed to do so.

As I've stated previously, our systems of economics and justice, which inherently rely on a robust pillar of trust in institutions, can not survive unless those who perpetrate fraud on this scale, obviously fueled by a seemingly unquenchable avarice and greed, are appropriately punished for their reprehensible deeds.

Finally, I would like to specifically acknowledge the outstanding dedication, attention to detail and willingness to pursue all leads and turn over any stone, that Mr. Eric H. Holder, Jr. our esteemed United States Attorney General, along with the support of hard working regulators working within various agencies charged with the vital duty of protecting the interests of market participants and U.S. taxpayers, have shown yet again.  Their campaign to root out and prosecute what can only be desribed as a massive, viral epidemic of Wall Street & financial fraud, that has gone on virtually unchecked for far too long, is a modern testament to the ever vigilant system of justice that serves to protect all of us who always have and who always will "play by the rules."

 

Sincerely & With Respect,

 

The Hon. Jon S. Corzine

 

*Former United States Senator (D-NJ), Former Governor of New Jersey, Former CEO of Goldman Sachs, Former CEO of MF Global (a former Primary Dealer), and prominent Obama Bundler

Mon, 08/13/2012 - 21:57 | 2702807 ghengis86
ghengis86's picture

This never gets old; my blood pressure med manufacturer thanks you as well. Nice work

Mon, 08/13/2012 - 23:42 | 2702970 Precious
Precious's picture

We the Sheeple of the United States ...

Tue, 08/14/2012 - 05:56 | 2703139 GetZeeGold
GetZeeGold's picture

 

 

The sheeps have had their day.

 

We're in charge now.........we're the Muppets from America! We use to be kids...but we're all grownup now.

http://www.youtube.com/watch?v=79zC8RIcy0w

Tue, 08/14/2012 - 00:39 | 2703034 Daily Bail
Daily Bail's picture

That is fucking brilliant work, Truth In Sunshine.

Thanks for the laugh.  This is less funny:

 

Watch Jon Corzine And Barack Obama Campaign Ad

 

Tue, 08/14/2012 - 00:46 | 2703044 SockPuppetMan
SockPuppetMan's picture

Thanks to leaders like Corzine, I'm glad to see that the Five Year Plan is working so well in Amerika...

Tue, 08/14/2012 - 05:54 | 2703141 GetZeeGold
GetZeeGold's picture

 

 

Watch Jon Corzine And Barack Obama Campaign Ad

 

Barry.....baffle them with bullshit and I'll steal their money - Jon Corzine

 

Don't need a get out of jail free card when you know you're never going to jail in the first place......screw you and good night - Jon Corzine

Mon, 08/13/2012 - 22:25 | 2702859 mofreedom
mofreedom's picture

He should be free just due to the fact he's being prosecuted!  When the scales off justice are off, we must degend the one and/or few that get it in the ass when others go free!  Didn't Dr. Paul pen/approve racial vommit that the NSM ignored?  I know he did!  The media covers up for those that wish to destroy this country and start over.  Beware the useful idiot, you idiots!  Amen, amen, I say to you, Love God, for he lets you breathe!

Mon, 08/13/2012 - 22:27 | 2702868 James_Cole
James_Cole's picture

Is this Tyler secretly Berkowitz? Great opening line. 

Mon, 08/13/2012 - 21:25 | 2702692 RacerX
RacerX's picture

yeah that was the VERY first thing I thought of with this.

WHERE IS CORZINE?!

Mon, 08/13/2012 - 21:31 | 2702710 nmewn
nmewn's picture

Corzine is the financial Where's Waldo? until October.

I mean, the law and regulators must first, at all costs, have their priorities straight, right?

Mon, 08/13/2012 - 22:23 | 2702852 LongSoupLine
LongSoupLine's picture

hmmm, I guess Wassendorf wasn't a White House financial advisor.  Otherwise he'd be scott free right now in the Hamptons with the other "advisors"

Tue, 08/14/2012 - 05:35 | 2703161 azusgm
azusgm's picture

Wasendorf wrote out a suicide note/confession. Corzine doesn't know anything except that he never directed that customer funds be misused.

Mon, 08/13/2012 - 21:09 | 2702640 LetThemEatRand
LetThemEatRand's picture

"Is it good that Wasendorf is going away, most likely for the rest of his life? Of course- the man is a sociopathic criminal."

How about making the fucker work at McDonald's the rest of his life while he pays off the victims one paycheck at a time?  I understand locking up killers or other violent offenders forever, but this guy stole money that was given to him under false pretenses.  A just sentence is living in poverty while paying it back.

Mon, 08/13/2012 - 21:11 | 2702650 i_call_you_my_base
i_call_you_my_base's picture

General population at Rikers sounds like more fun.

Mon, 08/13/2012 - 21:22 | 2702685 TheFourthStooge-ing
TheFourthStooge-ing's picture

Naw. Force him to work in fast food for minimum wage, dealing with the public every single day. Make him live in a single-wide in a run down trailer park, riding the bus to and from work.

His next suicide attempt would be a guaranteed success.

Mon, 08/13/2012 - 21:16 | 2702641 buzzsaw99
buzzsaw99's picture

another unconnected minnow goes to jail. :YAWN:

it is the fundamental flaws in the US financial system which virtually assure that all capital currently residing with US banks as financial intermediaries will, sooner or later, in the parlance of MF Global, vaporize...

word. they don't call them "brokers" for nothing.

Mon, 08/13/2012 - 21:24 | 2702689 TheFourthStooge-ing
TheFourthStooge-ing's picture

Too bad for him that he's not a friend of Lloyd or Jamie. He'd get a fifty dollar fine and no admission of wrongdoing.

Mon, 08/13/2012 - 21:33 | 2702726 taniquetil
taniquetil's picture

"I simply do not know where the money is"

 

-Jon Corzine

Tue, 08/14/2012 - 08:36 | 2703320 rayduh4life
rayduh4life's picture

Yeah and we'd have to give him the fifty.

Mon, 08/13/2012 - 23:18 | 2702943 Al Gorerhythm
Al Gorerhythm's picture

You can't blame the regulators if they were lied to. They couldn't capture criminal activity if the books were corrupt lies, could they? The regulators can't be expcted to be experts in picking up inconsistencies when doing audits, if the books balance out, right?.

(Coughbullshitcough!)

Mon, 08/13/2012 - 21:09 | 2702642 TrainWreck1
TrainWreck1's picture

So they sacrifice a little fish while the whales go scot-free.

 

Mon, 08/13/2012 - 21:41 | 2702752 boogerbently
boogerbently's picture

Where's Corzine?

I bet there is a hundred paparazzi that can tell you where Kim K.. Lohan, Snooki....are at any given moment.

Where's Corzine, Blankfein, Dimon ????

Directions to their house ???

Mon, 08/13/2012 - 21:11 | 2702647 SolarQuench
SolarQuench's picture

I want to see some blood... just a little compensation... if you would not mind ...

Mon, 08/13/2012 - 21:21 | 2702661 sixsigma cygnus...
sixsigma cygnusatratus's picture

Wasendorf should have used that line Corzine used:  "You're and errand boy sent by grocery clerks to collect a bill..."

Tue, 08/14/2012 - 01:49 | 2703083 AlaricBalth
AlaricBalth's picture

Great line from a great movie: Apocalypse Now.
http://www.hark.com/clips/gcvgsfsxhc-errand-boy

Colonel Kurtz would take a punk like Corzine and put his head on a stick.

Mon, 08/13/2012 - 21:14 | 2702662 SolarQuench
SolarQuench's picture

im now pissed off with all this bullshit

Mon, 08/13/2012 - 21:16 | 2702671 SolarQuench
SolarQuench's picture

I make a prediction? As they did in those olden days? Pain....

Mon, 08/13/2012 - 21:18 | 2702676 Seasmoke
Seasmoke's picture

so i guess, he doesnt know where many of the skeletons are buried ???

Mon, 08/13/2012 - 21:19 | 2702679 otto skorzeny
otto skorzeny's picture

was this guy a Tribesman or what? if so why was he banished to the hinterlands of Iowa?

Mon, 08/13/2012 - 21:21 | 2702683 buzzsaw99
buzzsaw99's picture

not that far from the cme.

Tue, 08/14/2012 - 05:48 | 2703167 Bringin It
Bringin It's picture

The volcano demands another virgin??

Bernie was no longer enough and another Hindu just won't do.

 

Mon, 08/13/2012 - 21:24 | 2702690 wang (not verified)
wang's picture

You have received a new message from MADOFF, BERNARD LAWERENCE, (291938666). Please visit http://www.corrlinks.com and login to retrieve your message.

Usted ha recibido un nuevo mensaje de MADOFF, BERNARD LAWERENCE,, (291938666). Por favor, visite http://www.corrlinks.com para iniciar su sesión y tener acceso al mensaje.

Mon, 08/13/2012 - 21:54 | 2702695 Dr. Engali
Dr. Engali's picture

Well that should restore trust in the markets. Prosecute some obscure slug. At least Madoff won't be alone. Now if they really want to restore trust they will prosecute Martha Stewart.

Mon, 08/13/2012 - 21:29 | 2702709 Arnold Ziffel
Arnold Ziffel's picture
Three ex-Chase bank workers admit $4.8 million tax fraud

 

NEW YORK (Reuters) - Three former employees at JPMorgan Chase & Co (JPM) branches in New York pleaded guilty on Monday to using the identities of Puerto Rican customers to file fraudulent tax returns, U.S. authorities said.

The three were charged in January by Manhattan federal prosecutors with orchestrating two separate tax fraud schemes between 2006 and 2007 that cheated the Internal Revenue Service and New York State out of $4.8 million.

 

http://finance.yahoo.com/news/three-ex-chase-bank-workers-004149961.html

 

It's never enough.

Mon, 08/13/2012 - 21:30 | 2702714 Ted Baker
Ted Baker's picture

Soon we will get JPM further losses on its CIO unit - Can't wait

Mon, 08/13/2012 - 21:35 | 2702737 gwar5
gwar5's picture

He'll be the token industry scapegoat and will get a single cell for not ratting anybody else out.

Mon, 08/13/2012 - 23:07 | 2702929 slewie the pi-rat
slewie the pi-rat's picture

the feds throw a $1.8 billion trial in drought-stricken iowa;
charlie manson to preside:  no! he's not insane!

they must think this guy is another marthaStewart, gwar

this guy had a problem and solved it with fraudulent banking!  what's not to like?

prez0 can take full credit for being on the take, er,...ball here!  great campaign angle:  if we elected mittens he would pardon this guy!

he is very remorseful.  obviouly.  and the poor man has suffered for years already!  therefore the goobermint has accepted his offer of forfeiture of 1/2 of his severence pay of $15 million, the plea of nolo,  and we release our dear friend with:  time served!

Mon, 08/13/2012 - 21:36 | 2702739 lolmao500
lolmao500's picture

Corzine is quite safe...

http://www.reuters.com/article/2012/08/10/us-sentinel-appeals-decision-i...

Sentinel ruling may hurt MF Global clients

Futures brokers are required to keep customers' funds in dedicated accounts to protect them from being used for anything other than client business.

However, Thursday's ruling suggests that brokerages can use customer funds to pay off other creditors, Sentinel trustee Fred Grede told Reuters.

Worse, Grede said, is that the ruling suggests that a brokerage that allows customer money to be mixed with its own is not necessarily committing fraud.

That may raise the bar for proving that MF Global Holdings Ltd, under then-CEO Jon Corzine, misused customer funds as it scrambled to meet margin calls to back bets on European debt in the brokerage's final days. A $1.6 billion customer shortfall remains.

 

"I'm sure Mr. Corzine's attorneys will get ahold of this ruling and use it for all it's worth," Grede said.

Mon, 08/13/2012 - 23:16 | 2702940 Real Estate Geek
Real Estate Geek's picture

That Sentinel ruling is right up there with Kelo v. New London.

What a travesty.

Mon, 08/13/2012 - 21:52 | 2702791 MIDTOWN
MIDTOWN's picture

Corzine will be convicted one day prior to his pardon by Obama.

Mon, 08/13/2012 - 21:58 | 2702808 Bay of Pigs
Bay of Pigs's picture

Where are the regulators? Mary Shapiro? Gary Gensler? And how about lil Timmah Jeethner running the NY FED in 2007/8 when everything blew up?  

Professor William Black-We've Decriminalized Fraud

http://www.youtube.com/watch?v=HPP6xLlVP7I

Tue, 08/14/2012 - 08:00 | 2703259 disabledvet
disabledvet's picture

In New York. But NOT in Iowa. I think it is now safe to say "outside of Iowa there is no Government right now." Now take your money from the Government and vote for you know who!

Tue, 08/14/2012 - 14:22 | 2704496 NotApplicable
NotApplicable's picture

Well, Iowa is NOT in the club. It's just a corn-hole that funnels wealth to Chicago.

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