Published August 06, 2012
CHICAGO – The hunt for the assets of Peregrine Financial Group CEO Russell Wasendorf Sr. has yielded a backyard pool, 2,000 bottles of wine, pickup trucks and some high-end photography equipment.
But a receiver appointed for Wasendorf's assets in the firm's bankruptcy says that so far there is little to suggest that the CEO, who in July confessed to stealing more than $100 million from the futures broker's customers over nearly 20 years, blew the money on high-priced cars or other indulgences whose sale could quickly generate money for bilked clients. He did own a private jet but that appears to be heavily mortgaged.
Wasendorf's relatively modest stash of possessions stands in contrast to the flashy toys with which other financial swindlers of recent years have surrounded themselves, and suggests that recouping money for Peregrine's former clients will not be easy.
Wasendorf's Cedar Falls, Iowa home has a backyard pool with a retractable glass roof, a tree house, and grounds spacious enough to erect a tent for the firm's annual picnic, Michael Eidelman, the receiver, told Reuters as he headed back to Chicago from Iowa late on Friday.
But inside, the house was comfortable, not ostentatious, Eidelman said. There were couches, electronic equipment, family photos and, in the basement, a large amount of home-canning equipment.
"At this point we are not talking about Ferraris or Lamborghinis," said Eidelman, whose court-appointed job is tracking down and selling Wasendorf's assets at the highest price. "We do expect and we hope that we are going to find more assets as the investigation goes on."
PROBE AT EARLY STAGE
Peregrine's bankruptcy trustee has previously said he has found less than $25 million in cash and liquid assets. Eidelman did not say what, if any, cash he has located in Wasendorf's own accounts, and a court filing last week listing Wasendorf's known assets does not mention any. The investigation, the filing said, is in its infancy.
Wasendorf's lawyer did not respond to requests for comment.
Peregrine, one of the largest independent U.S. futures brokerages, filed for bankruptcy protection in Chicago on July 10, a day after Wasendorf attempted suicide just outside his company's Cedar Falls headquarters.
Wasendorf left a note confessing to years of fraud and said he spent "most" of the embezzled funds on keeping his money-losing brokerage in business.
The CEO, who is 64, was arrested on July 13 for lying to regulators, and is being held at Linn County Correctional Center in Iowa. A grand jury has subpoenaed his son Russell Wasendorf Jr., who is Peregrine's president, as part of its investigation. No hearing date is set.
Wasendorf did build a brand-new, state-of-the-art $20-million office building and owned a downtown Cedar Falls restaurant named myVerona.
There have been two or three expressions of interest in the office building, and a couple in the restaurant, Eidelman said.
Eidelman will not speculate on the value of Wasendorf's estate, but says he is working to make sure he sells assets at the highest possible price. This week he will meet with an auctioneer to discuss possible options.
Many of Wasendorf's assets were likely bought with embezzled funds, Eidelman has told the bankruptcy court.
Wasendorf also owns a condo, free and clear of debt, on the 55th floor of a 56-story building overlooking Lake Michigan in downtown Chicago, Eidelman said. But Wasendorf's private jet, parked in Waterloo, Iowa, appears to be saddled with a substantial mortgage.
Eidelman and a team of 15 are keeping busy looking at assets, talking to people about how much they are worth and how best to sell them, and chasing leads to find as-yet-unidentified property. Some of Wasendorf's wealth may be tied up in companies in the United States and abroad, he said. Among Wasendorf's investments are interests in a real-estate developer in Romania.
"We are three weeks into a case that could last a very long time," Eidelman said. "When somebody is hiding money, it's never blatant." (Editing by Martin Howell and Dale Hudson)