IOWA CITY, Iowa (AP) — Russ Wasendorf Sr. duped customers, regulators and his colleagues as he pulled off a 20-year, $100 million fraud at his Iowa-based brokerage. The state's tax collectors say he and his ex-wife also duped them, and that the former couple owes Iowa more than $14.1 million in unpaid taxes, interest and penalties.
The Iowa Department of Revenue filed an assessment in November against Russ and Connie Wasendorf, alleging they underreported their taxable income between 2001 and 2009 by about $75 million and dodged $6.6 million in taxes as a result, according to court records released this week.
Wasendorf is in jail awaiting sentencing after pleading guilty to misusing more than $100 million in funds that customers invested with his now-bankrupt brokerage, Peregrine Financial Group. He was arrested last year after attempting suicide in his car outside the company's headquarters in Cedar Falls and left a note confessing to a scheme in which he misused customer funds to support his financial empire and created phony documents to cover his tracks.
The details of Wasendorf's tax liability were made public in a filing in federal court in Chicago by a receiver that is in the process of liquidating Wasendorf's far-flung personal and business assets to reimburse his victims. The assessment alleges that the Wasendorfs underreported their income by about $8.3 million per year.
U.S. District Judge Rebecca Pallmeyer granted the receiver's request Friday to suspend any efforts by the department to enforce the assessment rather than litigate the issue now. The revenue department had agreed to the court order, which puts the process on hold until further notice by Pallmeyer. The order "preserves all rights the department and State of Iowa may have with respect to assessing and collecting any amounts lawfully due."