Update: Former Peregrine Financial CEO Sentenced to 50 Years in Prison

In a spectacular fall from the top rungs of the financial world, Russell Wasendorf Sr., former CEO and founder of Peregrine Financial Group, has been sentenced to 50 years in prison for embezzling more than $200 million from his clients. Not long after the story broke in July 2012, he pled guilty and avoided what would have most certainly been a lengthy investigation and trial.

According to reports, few clients have recovered funds they invested with Peregrine. In addition to his 50-year prison sentence, the judge ordered Wasendorf to pay restitution of $215 million. Since he is preparing to spend the rest of his life in prison, it seems unlikely investors will salvage much more than a small fraction of what they invested.

Wasendorf was sentenced a short six months after the almost overnight collapse of Peregrine. The collapse occurred after it was revealed that Wasendorf had been fabricating documents to make regulators and others believe certain client funds existed; in reality, he had already spent their money, reportedly to fund his extravagant lifestyle and provide operating funds for Peregrine itself.

Perhaps more stunning is the way he concealed his fraud through a crude system of scanners, ink jet printers, Photoshop and Excel. For a supposedly sophisticated financial firm, it apparently wasn’t hard for him to create fake records for nearly two decades with a few supplies anyone could buy at a local box store. Here’s an excerpt from Wasendorf’s statement, provided as part of the legal proceedings:

“I have committed fraud. For this I feel constant and intense guilt. I am very remorseful that my greatest transgressions have been to my fellow man. Through a scheme of using false bank statements I have been able to embezzle millions of dollars from customer accounts at Peregrine Financial Group, Inc. The forgeries started nearly twenty years ago and have gone undetected until now. I was able to conceal my crime of forgery by being the sole individual with access to the US Bank accounts held by PFG. No one else in the company ever saw an actual US Bank statement. The bank statements were always delivered directly to me when they arrived in the mail. I made counterfeit statements within a few hours of receiving the actual statements and gave the forgeries to the accounting department.”

Later in his statement, Wasendorf describes in more detail how he thwarted the efforts of auditors to verify the funds he was supposed to be holding for clients. At some point, he established a post office box that only he controlled, so when auditors mailed the bank confirmations, the confirmation letters came directly to him. When he received the confirmation letters, he forged the signature of a bank officer and mailed them back to the auditors. He also described how, with the advent of online banking, it became easy to fabricate bank statements.

Wasendorf’s statement provides a small glimpse into the mind of someone capable of such a scheme. It also serves a cautionary tale to auditors and regulators to understand the lengths some people will go to keep others from discovering the truth.


Jeffrey works with a wide variety of clients and organizations providing fraud prevention, fraud investigation, fraud risk assessments and assurance services. He has investigated allegations of improprieties in a variety of companies and organizations, including privately held companies, financial institutions, cooperatives, governmental entities and not-for-profit organizations. Jeffrey also works with clients to develop organizational procedures that can help prevent future fraudulent activity. He provides support to attorneys on litigation issues that involve accounting, auditing and other financial issues and has provided testimony in trial, deposition and grand jury settings.

Jeff Roberts – who has written posts on BKD Forensics.

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