PFG's Chairman Was Forging Bank Documents For Years Even As The CFTC Gave An "All Clear"

Tyler Durden's picture

If there is an event that should cost Gary Gensler his job as head regulator at the CFTC, it is this. According to a just released Reuters report, the head of MFG(lobal) part 2, PFG, whose story we broke yesterday, Russell Wasendorf Sr. "intercepted and forged bank documents for more than two years to cover up hundreds of millions of dollars in missing money, a person close to the situation." Once Wasendorf realized he was caught, and knew the implications of his actions would be exposed for the whole world to see, he tried to commit suicide, and failed. "Wasendorf, 64, is reported to be in a coma after a suicide attempt Monday morning, according to a complaint filed by the Commodity Futures Trading Commission on Tuesday that accuses Wasendorf and Peregrine of fraud." And while crime happens all the time, what is truly stunning is that as we reported previously, the CFTC gave the firm a clean bill of health in its January inspection of Peregrine Financial Group. That's 6 months ago. The CFTC, as a reminder, was it regulator. The entity whose sole charge is to make sure that firms at least have real, not rehypothecated, cash in their segregated client bank accounts. PFG never did for the past two years. And somehow the CFTC missed this. MF Global was a warning shot, and the CFTC missed it entirely. And not only that but 2 months later ir pronounced PFG clean. For this Gensler has to be fired immediately, and with prejudice.

More from Reuters:

The source offered new details on how Wasendorf allegedly carried out the deceit, which involved the forging of confidential documents that the NFA uses to verify a broker's cash balance with its depository institution.


Wasendorf intercepted these documents after they were mailed by the NFA, the broker's first-line regulator, to U.S. Bank, where PFGBest had said it had well over $200 million on deposit, the person said. The NFA has said the account actually held just $5 million this week.


Wasendorf had set up a post office box in Cedar Falls, Iowa, according to a second person involved in the matter. It was to that post office box that NFA sent the documents, which were addressed to the bank.


The post office box was neither in Wasendorf's name nor registered to the bank, the second person said.


Wasendorf then forged signatures and fabricated bank balances on the documents and simply mailed them back to the Chicago-based NFA, the person said.


Calls to spokespeople for PFGBest and NFA were not returned. A woman who answered the phone at the home of Wasendorf declined to comment.

If anyone deserves some credit here, it is the NFA:

The scheme apparently began to unravel after the NFA began to press Wasendorf, who was an early advocate of electronic trading, to allow the regulator to confirm balances electronically and directly with the bank, rather than in a hard copy via mail, the person said.


NFA "started getting suspicious. He was resisting this new way of confirming the balance," the source said.


Wasendorf only recently signed the authorization, a decision that would quickly have led regulators to uncover the discrepancy, the person said. PFGBest's total segregated funds requirement was around $400 million, meaning more than half is missing.

Finally the spin: PFG is not MFG, it is Madoff.

While news that a second broker in less than a year appears to have misappropriated customer funds drew immediate comparisons to the MF Global failure in October, the source said the prolonged nature of the apparent deceit drew a more fitting parallel to the Ponzi scheme run by Bernard Madoff, though the size of the funds missing from PFGBest is tiny by comparison.

Well thank god for that: the farmers whose money is now forever gone can sleep much better knowing their cash was not Corzined, it was merely Made-off.

Of course, the real problem is that since there was only $5 million in the "client fund", there never likely was more than $5 million in real cash terms to begin with.

And this is what the CFTC signed off on.

Cur Congressional banana hearings, witch trials, and more fingerpointing which will result in more of the same: a former Goldmanite in charge of the CFTC, and virtually no hope that anything in these broken capital markets will ever be fixed until the big reset finally sweeps all this toxic garbage away.

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tlnzz's picture

"he tried to commit suicide, and failed."

Apparently, this guy can’t do anything right.

Silver Alert's picture

If the crooks never get punished why did he try to kill himself?  Could it be to keep embarrassing details of "arrangements" from being exposed?  Maybe he was suicided instead like that BOE official who had multiple stab wounds to the chest and defensive wounds on his arms. 

Miss Expectations's picture

Since we don't know, I'd venture that he merely succumbed to a fatal exposure of trichloroethane contained in correction fluids, including Liquid Paper.  Just how do you fake bank statements?  I would LOVE to see the paperwork that he was submitting...sounds like a job for Willliam Banzai.  I'm sure it's more complicated that crossing out $5,000,000.00 and typing in $208,300,198.16.  AND he wasn't doing this alone in his basement, either.

TheFourthStooge-ing's picture

Miss Expectations said:

I'm sure it's more complicated that crossing out $5,000,000.00 and typing in $208,300,198.16.  AND he wasn't doing this alone in his basement, either.

He had help from Linda Green.

Shizzmoney's picture

You gotta be fucking kidding me!

For this Gensler has to be fired immediately, and with prejudice.

Instead, he'll either a) get a raise or b) get a comfy new job with some investment firm

Let's see if Santelli talks about this.

Normalcy Bias's picture

If you will just sign this, Mr. CFTC. Right here.
Yes, yes. What the hell is it?
Well, under the provisions of this bill, we would snatch two hundred thousand acres of Indian land, which we have deemed unsuitable for their use at this time. They're such children.
Two hundred thousand acres? Two hundred thousand acres? What'll it cost, man, what'll it cost?
[brings out a carton of paddleballs] A box of these.
Are you crazy? They'll never go for it. And then again they might. Those little red devils... they love toys!

Real Estate Geek's picture

"The region is home to no one, save the Red Indian, and these heathen savages may be either exterminated or relocated to less valuable land, such as the so-called oil-fields of Oklahoma, where noisome substances bubble out of the Earth."


tony wilson's picture

if i was running the hospital i would say.

ok doc keep him alive give him the min amount of medication for life but take away the pain killers.

let him feel the tortures of the damned.

let him plead for mercy.

make him reject his money grasping thieving  zionist racist belief system in the hope of relief.

when he does carry on regardless.

only through the  pain torture and perpetual agony of the banksta's within a gitmo style torture facility will the human race get any payback

Cursive's picture

@tony wilson

I want him alive so he can turn state's evidence on his bankster buddies.

Mentaliusanything's picture

Alive,you want him alive to spill da beans.

We are Talking the Chicago Mob here .. "Legitimate Numbers"Mob

That one is not long for this World.

He will have "vistors"

cougar_w's picture

I think you might enjoy this one:

And so, to become cat food. I don't suppose it gets any lower than that.

No there is one more that's worse: To be unmade entirely. Leaves a wonderful large stain, however it doesn't hurt quite as badly.

TerraHertz's picture

That was a very enjoyable read. Thank you.

In return:


Hey, your website pipes-frontage looks a lot like mine.

Bugsquasher's picture

Can't we just find him a lamp post instead?

MsCreant's picture

Save some money and resources, now you're talking...

Killtruck's picture

Speak of efficiency, you could reuse the noose!

knukles's picture

In the good olde days of the Roman Empire, when somebody screwed up thereby affording the peasantry a glimpse of the depth and breadth of the theft and depravity, violating the unwritten rule of the powers that be (similar to the first two rules of Fight Club, BTW) they were publicly crucified along the Apian Way to great spectacle, fanfare and public celebration.

Miss Expectations's picture

But, it was the slaves who were crucified that time.

Miffed Microbiologist's picture

If my history serves me correctly, after the crucification the body was released to the public to abuse as they wish (head used as a football etc) and then what ever was left was hooked and thrown into the Tiber river. Them was the good 'ol days! Now the worst that could happen to a bankster is club fed. Pitchforks are to good for these people.


ghengis86's picture

Leave nothing in any bank account, brokerage, fund, etc. save for your monthly bills. Buy PMs, guns, ammo, rice, beans, supplies, alcohol, porn, whatever. JUST DON'T GIVE THESE FUCKS ANY MORE MONEY TO STEAL FROM YOU!!!

When bankers hanging from lamp posts is a regularly occurring event, then you can reevaluate returning you cash to a financial institution. Even the it may take a few more years.

cougar_w's picture

That's fine.

However whatever we don't lend them the Fed will.

Just say'n.

ghengis86's picture

The Fed already does lend to them.  To the tune of $16 trillion so far. 

Just say'n

JackT's picture

I'm sure Morgan has just misplaced the funds and Wasendorf accidentially slipped and suicided himself. All this fuss over nothing.

Whiner's picture

Correction to disclaimer at bottom: There is a substantial risk of THEFT in trading options that an investor (or regulator) may not discover until published in th media.

NotApplicable's picture

Wait, he's 64? Just how old is that picture?

Cursive's picture

Just a damn minute.  The NFA was sending balance confirmations for U.S. Bank to an unverified post office box?  I wouldn't give the NFA any credit here.  Where did they get the post office box from?  Who literally typed this address into the NFA database?  That was the problem.  Sure, electronic confirmation would be great, but the NFA was doing a poor job from the start and electronic confirms can be intercepted/spoofed as well.

AnonymousMonetarist's picture

So the smurf-regualted NFA is the hero because they didn't even know what the proper submission address for US BANK was.... for years?



sangell's picture

Gensler should commit suicide not Wasendorf. We also need a Federal 'SuperMax prison for these high dollar thieves. Solitary cells, 23 hours per day with web cams installed so the world can watch them do time.

SheepDog-One's picture

Nah! Gensler has only capped off a star level resume to be Fed Chairman!

yrad's picture

When are people going to jail? Iceland did it!!!

This country is sooooo lost. We all know this is just the tip of the Titanic

Ms. Erable's picture

Coma? Fucker shoulda jumped.

NotApplicable's picture

It's Iowa. Corn only grows so tall.

Miffed Microbiologist's picture

Ha ha! I've got that " Jump you Fuckers" song now stuck in my head.


mick68's picture

I understand the cynicism, since we've watched fraudster after fraudster get caught, only to also watch nothing happen to them. And although we are not the elite, we can bitch loudly and en masse, which if nothing else, will increase the chance these dirtbags pay for their crimes.

So, howabout less cynicism and more activism? After all, these people are one way or another, paid by us.

Ms. Erable's picture

Activism? Surely you jest - unless your idea of activism involves trees, lampposts, lengths of rope, and/or tying subhuman (i.e., bankster) limbs to quarter horses prior to the starting gun, that is.

fuu's picture

Oooo drawing and quartering ftw!

Meesohaawnee's picture

if you want to know whats gonna happen to Gensler just redo Corzine. Find out  how much the check was to Obummers campaign fund. Then youll know the answer. Hell be on some tropical island with 5 gay cabanna boyz just like JC. The daily police blotter in Wall Street is just getting comical. Every day i ask myself what will be the scam discovered of the day. Good thing Obama got right on all that corruption like he promised. Whew. or else..

lotsoffun's picture

gensler worked for corzine.

"Gary Gensler joined Goldman Sachs in 1988 and spent 18 years there. He became a partner at the age of 30, youngest in Goldman Sachs history. He later became head of the company’s fixed income and currency trading operations in Tokyo by the mid-’90s, and eventually the company’s co-head of finance"

In early November, 2011, Gensler stepped aside from the CFTC's investigation of the giant derivatives broker MF Global because of his longstanding ties to Jon Corzine, the CEO of MF Global, for whom Gensler had worked while both were at Goldman Sachs.

nothing happens.  ever.  learn to love these guys.  they figured it out.  no guns need be involved.  you were robbed.  deal with it.



HMFIC's picture

Well I'm done waiting for 'authorities' to put ANY credibility back into the system.  Nothing will change regardless of which version of OBAMNY gets bought...I mean elected. 

Therefore I plan to cash out all other accounts (before they all get MFG/PFG'd) and investing in only deliverable precious metals.  That is physical gold, silver, and lead.



MsCreant's picture

Welcome to fight club.

cougar_w's picture

Wait. Don't you have to hit someone?

blueridgeviews's picture

I couldn't agree more Tyler. It sickens me to think the regulatprs are worthless. SEC with Madoff and now this.  What else is lurking behind closed/manipulated accounting books.

rufusbird's picture

When I read some of the comments after a post, I save the film recommendations and request them from the library. When they come in, like the two I picked up today, I bring them home with the full intention to watch them in what time I have left over for entertainment etc after my daily projects. I usually don't get to watch them because the developments in the US financial system are way more facinating than fiction and movies and I spend more time reading this stuff on ZH.

I feel kind of like Woody Harrel's character in the Movie 2012 when he goes to the edge of the volcano to get front row seat of The Great Cataclysm.

michael_engineer's picture

Here is the trend :


ZeroAvatar's picture

Agreed, next one to go:  'SFG'.  (?)

Downtoolong's picture

 PFG is not MFG, it is Madoff

Funny how the same dichotomy keeps absurdly getting tossed up in these incidents like some sort of justification for what transpired.

We just can’t be sure, they say, whether a) he was a crook or b) just incredibly f^%$!ing stupid. Maybe one day they’ll get around to considering the possibility it was both.

MsCreant's picture

No offense meant by this-- there is no stupid going on here, except maybe us...

cougar_w's picture

However I did once hear an interesting account, and I keep it in mind.

Someone with insider understanding of finances once remarked that these people pulling their frauds and larceny are like infants. They really have no idea what they are doing, no idea how it is wrong, toss terrible fits when anyone gets in their grill, and basically destroy everyone and everything they touch without the least understanding of how that is a problem.

It's a fairly close description for a sociopath, but I think the truth is more interesting.

They are spoiled.

Rich and spoiled. Nobody as ever held any of them to any account, for anything, even murders. Their money buys them both protection and friends, and if need be, protection from their friends. They never do without a single thing that they want or desire, even for 5 seconds. They think they are immortal, that the laws apply only to others, and they live on another planet.

They might not even be all that intelligent. Just rich. When you are stupid but rich you cannot make mistakes which money cannot later correct. So you never learn. So you remain ignorant and child-like.

I think the stupid rich people have done well in the run-up to the end of the world. Now I suppose not knowing how to save themselves they will just suffer and die. They will no more understand this than they understood anything else about the real world, never actually having experienced it.

MsCreant's picture

Good insight and my experience says you are correct. I just wanted to put in check the idea that it was mere incompetence that got us here.