Peregrine CEO due in court over alleged fraud

PFGBest Chairman and CEO Russ Wasendorf (Credit: Brandon Pollock/Waterloo-Cedar Falls Courier)
Brandon Pollock/Waterloo-Cedar Falls Courier

(CBS/AP) IOWA CITY, Iowa - The former CEO of collapsed Iowa brokerage Peregrine Financial Group is expected to appear in court for a hearing to determine whether he will be jailed pending trial.

Russ Wasendorf Sr. is expected to appear in U.S. District Court in Cedar Rapids on Wednesday afternoon.

Federal prosecutor Peter Deegan said last week that Wasendorf should be jailed while investigators look into what he called a $200 million fraud. He says Wasendorf, who tried to commit suicide last week, presents a flight risk.

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Wasendorf said last week that he would be represented by Chicago attorney Thomas Breen. But Breen declined the case after learning Wasendorf's assets have been frozen and he has no money to pay for private counsel.

Federal public defender Jane Kelly was appointed Tuesday to represent Wasendorf.

FBI agents arrested Wasendorf on July 13. Deegan has said the 64-year-old executive could face "a wide range of criminal charges" for what investigators say was a $200 million scheme in which Wasendorf embezzled customer funds for 20 years.

Wasendorf had been hospitalized after attempting suicide last week outside the company's headquarters in Cedar Falls, Iowa, by hooking up a tube to his car's tailpipe.

Peregrine filed for bankruptcy July 10, the same day the industry's top regulator filed civil fraud charges alleging the firm misused customer money and falsely claimed a bank account contained more than $220 million when it actually had about $5 million.

The money in that account belonged to customers and was supposed to be kept separate from Peregrine's own money.