IOWA CITY, Iowa (AP) — Disgraced businessman Russ Wasendorf Sr. should be given the maximum 50-year prison sentence for a $215 million fraud scheme that victimized thousands of customers at his Iowa-based brokerage, federal prosecutors argued Tuesday.
The U.S. Attorney's Office said in a filing that federal guidelines call for Wasendorf to be sentenced to life in prison, which means the founder and CEO of Peregrine Financial Group should get the maximum sentence his charges carry.
Assistant U.S. Attorney Peter Deegan asked U.S. District Judge Linda Reade to make the sentences on 4 separate counts run one after another for a full 50-year term "to achieve the total punishment called for under the guidelines." Wasendorf, 64, would likely spend the rest of his life behind bars if Reade agrees.
Wasendorf's attorney was expected to file her arguments later Tuesday, ahead of a Jan. 31 sentencing hearing in federal court in Cedar Rapids.
Wasendorf pleaded guilty in September to charges of mail fraud, embezzling customer funds and making false statements to two regulatory agencies. He admitted he used customer money that was supposed to be for investments to prop up his business empire and pay for personal expenses, and hid the theft from colleagues and regulators by making phony bank statements over a 20-year period.
PFGBest collapsed in July, after Wasendorf was found unconscious in his car in the company's parking lot with a tube hooked up to the exhaust pipe. Investigators say he attempted suicide after learning his company would be forced to give regulators electronic access to its bank accounts, a move he'd resisted for years. He would no longer be able to hide his fraud, and regulators would learn more than $200 million in customer funds the company claimed was missing.
Wasendorf left a tell-all suicide note in which he said he started stealing funds to run his business in the 1990s because "my ego was too big to admit failure."
The bankruptcy left investors who had 24,000 accounts unable to access to their money. Customers who opened accounts to invest in commodities have received 30 percent of their money back and are expected to eventually get back between 50 and 60 percent, said John Roe, co-founder of the Commodity Customer Coalition, which is helping customers. Thousands of others who opened accounts to trade foreign currency have not received any funds, and it's not clear yet how they will fare, he said.
Deegan argued that Wasendorf's recommended sentence should be enhanced because customers lost more than $215 million — over the $200 million threshold that triggers a stiffer penalty. He said the judge should also find that Wasendorf used "sophisticated means" to hide the misuse of customer funds from regulators and colleagues, another factor that enhances sentences.
Deegan said the government would respond in court to any defense request for a sentence of less than 50 years.