CHICAGO (CN) – Police said the CEO of Peregrine Financial Group tried to kill himself the day before federal regulators sued his futures brokerage, claiming it could not account for more than $200 million of missing customer funds.
The Commodity Futures Trading Commission on Tuesday sued Peregrine Financial Group and its CEO Russell Wasendorf Sr., in Federal Court.
Peregrine Financial Group, a Chicago-based futures brokerage, declared bankruptcy Tuesday, the day after Wasendorf’s attempted suicide, according to the complaint.
Police found Wasendorf in Cedar Falls, Iowa in his Chevrolet Cavalier, with a hose running from the tailpipe into the car, CNN reported. He was in critical condition Wednesday.
His son, Russell Wasendorf Jr., Peregrine’s COO, signed the bankruptcy papers because his father was incapacitated, according to CNN.
The CFTC complaint accuses Wasendorf Sr. and his company of misappropriating money and falsifying bank records.
“From at least February 2010 through the present, PFG and Russell R. Wasendorf Sr., PFG’s chief executive officer and sole owner, have failed to maintain adequate customer funds in segregated accounts,” the CFTC says in its complaint. “That shortfall exceeds and has exceeded $200 million. PFG and Wasendorf have used customer funds for purposes other than those intended by its customers, and consequently, have misappropriated these funds. The whereabouts of the funds is currently unknown.
“Additionally during at least this same period, PFG and Wasendorf have filed false reports with the CFTC regarding the amount of customer segregated funds held by PFG.”
The National Futures Association, a regulatory organization, audited PFG in July.
“In connection with the audit, PFG represented to NFA that it held in excess of $220 million in the 1845 customer seg[regated] account when in fact, that account held approximately only $5.1 million,” the CFTC said in its complaint.
After Wasendorf’s attempted suicide, “the staff of the NFA received information that Wasendorf may have falsified certain bank records,” the complaint states.
The National Futures Association on Tuesday sought an emergency order freezing Peregrine’s assets saying it did not have enough money to carry out its trades, according to the CNN report.
“Since August 15, 2011, Wasendorf filed and or caused to be filed at least three 1-FR statements on behalf of PRG which falsely reported the amount of funds in customer segregated accounts,” the CFTC says in its complaint.
It seeks a restraining order to prevent Peregrine from destroying evidence, withdrawing assets or refusing CFTC agents access to records. It also seeks a detailed accounting of PFG’s assets and liabilities.
The CFTC wants Wasendorf Sr. barred from trading or owning commodity futures, he and Peregrine make full restitution of customers’ funds, and treble damages for violations of the Commodity Exchange Act.
Citing the bankruptcy filing, CNN reported that Peregrine had 10,000 to 25,000 customers.