PFGBest founder and chief executive Russell Wasendorf Sr was arrested on Friday after allegedly stealing more than US$100 million from clients of his now-bankrupt brokerage, using little more than a rented post office box, Photoshop and inkjet printers to dupe regulators for decades.
In the dramatic conclusion to a week-long drama that has shaken trader confidence in the trillion-dollar US futures markets, FBI agents arrested Wasendorf, 64, at the Iowa City hospital he was taken to after he tried to commit suicide on Monday, and they released parts of the detailed confession he had left.
In that signed statement, released as part of the criminal complaint, Wasendorf said he began forging bank documents after the business he built from his basement risked failing without additional capital.
“I was forced into a difficult decision: Should I go out of business or cheat?” he wrote.
He chose to cheat, and described the deceit that extended for nearly the entire life of his firm, known as PFGBest and formally named the Peregrine Financial Group.
“I guess my ego was too big to admit failure. So I cheated,” the note said.
It was discovered on Monday in his car outside PFGBest’s Iowa headquarters, where Wasendorf had tried to kill himself by funneling in tailpipe exhaust.
FBI agents arrested Wasendorf for making false statements to regulators, the agency said.
The arrest and disclosure will end much of the mystery that has enveloped the futures industry this week, but not the pain the disclosures about Wasendorf and his company brought to the small Iowa town where PFGBest is based and to a financial industry still smarting from the failure of rival brokerage MF Global.
“I have committed fraud,” Wasendorf wrote in the note, the contents of which he later told authorities was true. “I feel constant and intense guilt.”
Yet he also writes in almost boastful detail about the “blunt authority” that allowed him to control the flow of documents into the company; how he used a simple post office box to trick “unquestioning” regulators; and his skill in turning out forged bank statements within hours that “no one suspected.”
He was set to appear in federal court in Cedar Rapids, Iowa, later on Friday.
A spokeswoman for PFGBest could not be reached for comment. The name of Wasendorf’s lawyer was not immediately known.
PFGBest president Russell Wasendorf Jr, son of the accused CEO, was in the dark about his father’s alleged crimes, said his lawyer, Nicholas Iavarone, who represented PFGBest for 23 years.
“Working on something as traumatic as this and as personally devastating, it’s just been a very hard week,” Iavarone said in an interview, adding Wasendorf Jr has been assisting authorities in the investigation.
Wasendorf’s note said “no one else in the company” ever saw the real bank statements before he doctored them.