Feds: PFGBest CEO should get 50-year prison term

IOWA CITY – Disgraced businessman Russ Wasendorf Sr. should receive the maximum 50-year prison sentence for a $215 million fraud that victimized more than 10,000 customers and bankrupted his Iowa-based brokerage, federal prosecutors argued Tuesday.

The U.S. Attorney’s Office said in a filing that federal guidelines call for Wasendorf to be sentenced to life in prison, which means the founder and CEO of Peregrine Financial Group should get the maximum sentence his charges carry.

U.S. District Judge Linda Reade should make the terms on separate counts run one after another for a full 50-year sentence “to achieve the total punishment called for under the guidelines,” prosecutors argued. Wasendorf, 64, would likely spend the rest of his life behind bars if Reade agrees at the Jan. 31 sentencing hearing in Cedar Rapids.

Wasendorf pleaded guilty in September to mail fraud, embezzling customer funds and making false statements to two regulatory agencies. He admitted he used customer money that was supposed to be held separately to prop up his company, known as PFGBest, and hid the theft from colleagues and regulators by making phony financial statements over a 20-year period.

Defense attorney Jane Kelly had no comment Tuesday, but she has argued the loss was less than $200 million and Wasendorf’s scheme was not sophisticated – two factors that could reduce the length of his recommended sentence.

Prosecutors disputed both claims, saying Wasendorf carried out “an exceedingly complex scheme” that inflated his business and personal wealth through the theft of customer funds.

Wasendorf tightly controlled the company’s bank accounts, and used computers and copiers to create phony bank statements, deposit slips, and checks to cover up the theft, prosecutors said. His system fooled colleagues, who submitted false financial statements to regulators.