Business

Sudden amnesia: Peregrine’s alleged embezzler pleads not guilty

That was just crazy talk.

Perhaps that will be Russell Wasendorf Sr.’s defense after the former CEO of failed Peregrine Financial Group pleaded not guilty yesterday to lying to regulators — even though authorities say he confessed three times to a long-running fraud, including a note he left after a botched suicide attempt.

In a shocking turn of events, the 64-year-old disgraced money man backtracked on statements he made last month, when authorities said he admitted to a 20-year scheme to embezzle from his clients.

“At this time, not guilty on all counts,” Wasendorf’s public defender, Jane Kelly, told Cedar Rapids magistrate judge Jon Scoles during his arraignment yesterday. A trial date was set for Oct. 15.

Wasendorf, who has been in jail since his alleged scam unraveled, entered the courtroom yesterday in leg irons and handcuffs and wearing an orange prison uniform, according to Bloomberg News.

Authorities said they found Wasendorf, once a pillar of his community in Cedar Falls, Iowa, unconscious in his car after he attempted suicide by running a hose to the tail pipe.

In a note he left for his new wife, Nancy Paladino, Wasendorf said he has been fooling regulators for decades through a complex system of forgery that made them believe he had more money than he actually had.

His hitting rock bottom led regulators to discover a shortfall of at least $200 million in a bank account that housed Peregrines’ brokerage customer funds.

Peregrine’s demise marked another shock to the commodity futures business in a matter of months. Some $1.6 billion in client money was improperly tapped in the chaotic days leading up to the collapse of MF Global on Oct. 31.

The Commodity Futures Exchange Commission sued Wasendorf in July and indicted him by a federal grand jury on Monday. The indictment charged him with knowingly lying to regulators 31 times between 2010 and 2012.

“I have committed fraud. For this, I feel constant and intense guilt,” Wasendorf said in the suicide note to Paladino, which was found with him in his car.

He left a similar, but less detailed note to his son, Russ Wasendorf Jr., who was also an executive at Peregrine.

Beyond the notes, Wasendorf also allegedly confessed to his crimes from his hospital bed, according to the CFTC complaint.

In the note to his wife, Wasendorf described an elaborate scheme that involved him intercepting audits from the National Futures Association using an ordinary postal box, which he told the regulator was the bank’s.

After receiving statements from the bank, the executive would alter them to show more money than he actually had. He would then mail the forged document to the NFA, using the fake post office box as the return address.

“I falsified the very core of the financial documents of PFG, the bank statements,” he said in his suicide note.

With Post wires