Peregrine Financial’s ex-CEO’s ex-wife sued over divorce money

CEDAR FALLS, Mon Jan 28, 2013 — Some of the more than $100 million Peregrine Financial’s former chief executive stole from his brokerage’s clients went to pay for his divorce settlement, the trustee of the now-bankrupt brokerage said in a lawsuit late Friday against the former wife.

The lawsuit demands the return of more than $2.9 million in divorce payments and the disallowance of the former wife’s bankruptcy court claims for an additional $2.4 million, money she says is still owed her from the divorce.

Russell Wasendorf Sr., the former CEO, has pleaded guilty to embezzlement and is in an Iowa jail awaiting sentencing this Thursday. Wasendorf’s attempted suicide last July sent his firm into bankruptcy.

Prosecutors say he stole about $215 million from his clients over the nearly 20-year life of his firm, and are seeking to keep him behind bars for the rest of his life.

Authorities say he spent some of the money on personal items like a private plane and a luxury Chicago apartment, and Wasendorf has confessed he used it to pay for regulatory fines and to keep his money-losing company afloat.

The lawsuit by Peregrine Financial trustee Ira Bodenstein alleges yet another use for the stolen funds: to cut free from his 24-year marriage to Connie Wasendorf. The divorce was finalized on Dec. 30, 2010.

“On Dec. 31, 2010, Wasendorf fraudulently authorized a transfer from the Customer Seg Account to Defendant in the amount of $2,469,692, and such transfer was received by Defendant on the same day,” the lawsuit said, referring to a U.S. Bank account that was supposed to be reserved for customer money.

Wasendorf also used company funds to pay his former wife about $20,000 a month for more than a year, trustee Ira Bodenstein said, even though she did little work for the money. Those payments — also part of the divorce settlement — totaled $360,000, he said.

Connie Wasendorf has refused to return the $2.5 million lump sum payment from December 2010, the trustee said in the lawsuit.

Peregrine CEO had $6.9 million in life insurance, airplane debt

CHICAGO, Mon Aug 6, 2012 – Russell Wasendorf Sr., chief executive of failed brokerage Peregrine Financial Group, had $6.9 million in life insurance and a debt on his private jet when he attempted suicide last month.

A receiver for Wasendorf, who in July confessed to stealing more than $100 million from the futures broker’s customers over nearly 20 years, detailed the value of the plane and insurance policies in a court filing on Monday and said he was preparing to unload them as assets.

Peregrine, commonly known as PFGBest, filed for bankruptcy protection on July 10, one day after Wasendorf attempted suicide by funneling tailpipe exhaust into his car. He left a note describing how he had bilked customers and fooled regulators by intercepting and forging financial statements mailed between a bank where Peregrine customer money was held and the firm’s auditors at the National Futures Association.

The receiver, whose court-appointed job is to track down and sell Wasendorf’s assets at the highest price, said the CEO held two life insurance policies with an “aggregate death benefit” of $6.9 million.

One policy, issued in 2004, had a face amount of $4.5 million, the receiver Michael Eidelman said. He is seeking to surrender it for its cash value of about $1.3 million.

Wasendorf obtained a second policy with a face amount of almost $2.2 million 14 months before he attempted suicide, but it would not have paid a benefit if he had succeeded in killing himself. The policy has no cash value and should be allowed to lapse, Eidelman said.

Eidelman did not explain the difference between the $6.9 million aggregate death benefit of the policies and the $6.7 million combination of their face amounts.