IOWA CITY, Iowa (AP) — A disgraced Iowa businessman should be released from jail while he awaits sentencing for a "reprehensible" 20-year fraud scheme that bilked customers out of millions of dollars, a judge ruled Thursday.
U.S. Magistrate Judge Jon Scoles ordered Peregrine Financial Group founder Russ Wasendorf Sr. released from the Linn County jail in Cedar Rapids after he pleads guilty Monday to mail fraud, embezzling customer funds, and lying to regulators. The ruling came after prosecutors released their 17-page plea agreement with the founder of the Cedar Falls-based brokerage, as well as suicide notes he left for his new wife and son.
Wasendorf will be confined to the suburban Cedar Rapids home of Linda Livingston, a friend and Lutheran pastor who has been counseling him. He will be under GPS electronic monitoring and allowed to leave only under special circumstances.
Assistant U.S. Attorney Peter Deegan had sought Wasendorf's continued detention, arguing he was suicidal and had the means to travel internationally. Deegan declined comment Thursday, but he said earlier in the week that he would likely appeal if Scoles ordered the 64-year-old Wasendorf released.
Scoles said he doesn't believe Wasendorf is likely to flee because he surrendered his passport and no longer has access to cash, cars or his corporate jet. And while he may be suicidal, that is not a reason to detain Wasendorf under the law, Scoles said.
It's unknown how long Wasendorf will be free because sentencing hasn't been set.
In the plea agreement prosecutors made public Thursday, Wasendorf acknowledged he embezzled and misspent more than $100 million in investors' funds to keep Peregrine afloat and on other personal and business interests, such as a restaurant and publishing company he owned. He sent phony documents to two regulatory agencies, the National Futures Association and the U.S. Commodity Futures Trading Commission, to cover his tracks.
Wasendorf faces up to 50 years in prison and a fine up to twice the amount his customers lost. The agreement bars Wasendorf from profiting from selling books or movies about his fraud, requiring him to assign the rights of any proceeds to the government to pay back victims.
The agreement details the scheme that Wasendorf took responsibility for in a note found with him in July following a failed suicide attempt in his car in his company's parking lot. Wasendorf secretly withdrew customer funds and used computers to make false bank statements to conceal the theft from auditors, regulators and colleagues.