CEDAR RAPIDS, Iowa (AP) — The founder of an Iowa brokerage has signed a plea agreement with federal prosecutors in which he admits to carrying out a $200 million fraud and embezzlement scheme that bankrupted his company and could result in him spending the rest of his life in prison, prosecutors said Tuesday.
Prosecutors said Russ Wasendorf Sr. will plead guilty to mail fraud, embezzling customer funds and two counts of making false statements to regulators. U.S Magistrate Judge Jon Scoles confirmed the agreement but hasn't ruled on the matter.
Prosecutors said the agreement calls for Wasendorf, 64, to be sentenced to up to 50 years in prison.
Details of the agreement were made public during a hearing in federal court in Cedar Rapids called to determine whether Wasendorf should be freed from jail pending his plea hearing and sentencing.
Scoles said he would rule by Friday on whether to release Wasendorf pending sentencing, which hasn't been scheduled. The judge also plans to schedule a hearing soon to allow a formal guilty plea.
Prosecutors have asked the judge to not release Wasendorf, who listened intently as FBI agent William Langdon laid out the case against him.
Langdon recounted how Wasendorf was found July 9 outside the company's headquarters in Cedar Falls after a failed suicide attempt in his vehicle. He said Wasendorf had connected a hose to his exhaust pipe, took prescription drugs and drank alcohol.
Langdon read out loud a note that Wasendorf left behind in which the businessman said he started forging bank records 20 years ago to prop up his struggling firm. Wasendorf wrote that he used computer software, scanners and printers to make convincing forgeries of bank statements to fool regulators about how much money the company had.
Langdon said the statements in the suicide note were corroborated during a search of his office, where investigators found several fake "cut-and-paste" bank records Wasendorf had created. Wasendorf has also met with regulators and investigators on multiple occasions since his arrest to explain the fraud, which he "knew would one day catch up with him," Langdon said.
FBI agents arrested Wasendorf days after the suicide attempt while he was hospitalized at University of Iowa Hospitals and Clinics, and by then court records show he had already been cooperating with investigators.
After his arrest, Wasendorf waived his right to an immediate detention hearing, but he requested one last week.
Defense attorney Jane Kelly said the plea agreement leaves open how much prison time will be recommended for Wasendorf under federal sentencing guidelines. She indicated it would likely be far less than the maximum 50 years.
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