IOWA CITY (AP) — If he ever writes a book about his stunning 20-year fraud scheme, disgraced businessman Russ Wasendorf Sr. must give the profits to the government that he fooled for so long.
Federal prosecutors Thursday made public their full 17-page plea agreement with the founder of Cedar Falls-based Peregrine Financial Group, two days after a hearing in which the deal was described in general terms. The agreement says Wasendorf must assign any profit to the government that he makes “in connection with any publication or dissemination of information relating to” his crime.
Wasendorf also cannot help associates or family members profit from the story, and any proceeds generated from publicity must go toward paying back the roughly 24,000 customers expected to lose money in the scheme.
Wasendorf, 64, has agreed to plead guilty to mail fraud, embezzling customer funds and making false statements to two regulatory agencies. In the agreement, Wasendorf acknowledged that he embezzled and misspent more than $100 million in investors’ funds on himself, to keep Peregrine afloat and on other business interests, such as an upscale restaurant he opened.
Wasendorf faces up to 50 years in prison and a fine that could be twice the amount his customers lost, which hasn’t been calculated yet. He agreed to help investigators track down his personal assets so they can be sold to repay customers.
The agreement dryly lays out the fraud and embezzlement scheme to which Wasendorf took sole responsibility in a note found with him in July following a failed suicide attempt in his car in his company’s parking lot. The agreement says Wasendorf — who moved his company to Cedar Falls from Chicago in 2009 — secretly withdrew customer funds and then used a computer to make false bank statements to conceal the theft from auditors, regulators, customers and his colleagues.
Wasendorf gave fraudulent bank statements to his own accounting department showing fictitious deposits and balances, which were then entered into the company’s accounting system. The false numbers were used to generate monthly reports to regulators showing the company was holding more than $200 million in customer funds than it actually had.
Wasendorf also fooled auditors with the National Futures Association, the industry’s self-regulator, by changing the bank’s address in the fake statements to a post office box he controlled. The auditors would mail forms to the address asking the bank to verify the account balances; Wasendorf would send back false documents purportedly from the bank backing up his numbers.