Russell Wasendorf Sr. lashed out at “mean-spirited” regulators for driving him to commit a multimillion-dollar, 20-year fraud at his Iowa-based brokerage, the Wall Street Journal reported on Tuesday, citing previously unreleased portions of a signed confession.
Wasendorf, the 64-year-old founder of Peregrine Financial Group, said in the confession that he had spent most of the money – more than $100 million by his own estimates – on shoring up his firm’s capital, funding a new headquarters in Iowa and paying fines and fees, according to the Journal.
“Most of the misappropriated funds went to maintain the increasing levels of Regulatory Capital to keep in business and to pay business,” Wasendorf wrote in the signed statement.
The Journal did not say how it obtained the statement, portions of which had been released with a criminal complaint after Wasendorf’s arrest on Friday.
In the note, Wasendorf said that his scheme began around 1993, when a CFTC investigator in Kansas City sought to fine his firm for a violation involving customer funds, according to the Journal. The CFTC “harassed” him by conducting six on-site audits over five months, he wrote. He said a “technical violation” then raised his capital requirements.
“I have to say I don’t feel bad about deceiving the regulators,” the note said. “They made the decision to be my enemy.”
The disclosures offer new details about how Wasendorf used his clients funds, and what drove him to commit the fraud. Regulators estimate missing customer cash at more than $200 million.