Peregrine President to Testify Before Grand Jury

An Iowa grand jury is expected to hear testimony from Peregrine Financial Group's president next week as it begins considering alleged wrongdoing at the failed futures brokerage.

Russell Wasendorf Jr., Peregrine's president and the son of the brokerage's accused chief executive, has been subpoenaed by the grand jury and will likely testify next week, his lawyer told Reuters.

Russell Wasendorf Sr., Peregrine's founder and CEO, was arrested on July 13 on charges of lying to federal regulators in connection with an alleged massive financial fraud at the company. Prosecutors have said they expect to expand charges against him.

Peregrine, commonly known as PFGBest, filed for bankruptcy protection on July 10, one day after Wasendorf Sr. attempted suicide and left a note describing how he had bilked customers of more than $100 million over nearly 20 years.

Wasendorf Sr. said he had forged and intercepted financial statements that were mailed between U.S. Bank, where some Peregrine customer money was held, and the firm's auditors at the National Futures Association.

Wasendorf Jr., through his lawyer, has denied that he knew about wrongdoing at the company.

Other top Peregrine executives, including the chief financial officer, also are expected to testify before the grand jury in Iowa, where the brokerage had its headquarters, lawyers have said.

The U.S. Attorney's Office for the Northern District of Iowa, which is prosecuting Wasendorf Sr., did not immediately return calls for comment.

Separately, the trustee in Peregrine's bankruptcy this week won approval from a federal judge to subpoena financial information from 10 major banks that did business with Peregrine.

The trustee, whose job is to oversee the liquidation of the brokerage and return money to customers and creditors, wants to obtain records directly from financial institutions to identify any inconsistencies in Peregrine's records and examine transfers of money out of its accounts.