Less than five years after the Bernie Madoff scandal, in the small town of Cedar Falls, Iowa, Russell Wasendorf Sr. worked as the CEO of Peregrine Financial Group, Inc. Known to many as PFGBEST, this futures commissions merchant firm, worked to match buyers and sellers of commodities. The company’s revenue structure was based on commissions for services and was thus driven on their customers need for security. Wasendorf had a significant role in his company, acting as the only employee with access to the firm’s customer accounts at U.S. Bank (Philips, 2012). He regularly viewed bank statements, monitoring customer accounts and balances. In the community, Wasendorf was seen as a local hero, bringing his large business back to the small town
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Beginning in the early 1990s, Wasendorf began to secretly withdraw money from segregated customer bank accounts. He initially began to skim money out of financial desperation and his inability to obtain capital for his company (Arens, Elder, Beasley, 2013). Because he insisted on having bank documentation sent directly to him, he was able to omit withdrawals from the bank statements. To compensate for these withdrawals and create a sense of financial growth, Wasendorf began to inflate balances on the forged bank statements. He would then push these forged documents to the CFO and staff accountants to use for reporting purposes. By the end of his scheme he had overstated the amount of customer funds by over $200 million. To fool regulators from the NFA and Commodity Futures Trading Commission, Wasendorf submitted false periodic reports with forged bank account verifications to insure that his company was successfully running (FBI, 2013). He became skilled at using Photoshop, inkjet printers, and scanners to create these false documents. In addition, he opened a post office box in which he led regulators to believe belonged to the bank. We would forge bank statements to reflect this PO box and because all notices were sent here, company accountants never knew of the troubling nature of account balances (FBI, 2013). Wasendorf was able to perpetrate this scheme for twenty years and without anyone finding
Beginning in the early 1990s, Wasendorf began to secretly withdraw money from segregated customer bank accounts. He initially began to skim money out of financial desperation and his inability to obtain capital for his company (Arens, Elder, Beasley, 2013). Because he insisted on having bank documentation sent directly to him, he was able to omit withdrawals from the bank statements. To compensate for these withdrawals and create a sense of financial growth, Wasendorf began to inflate balances on the forged bank statements. He would then push these forged documents to the CFO and staff accountants to use for reporting purposes. By the end of his scheme he had overstated the amount of customer funds by over $200 million. To fool regulators from the NFA and Commodity Futures Trading Commission, Wasendorf submitted false periodic reports with forged bank account verifications to insure that his company was successfully running (FBI, 2013). He became skilled at using Photoshop, inkjet printers, and scanners to create these false documents. In addition, he opened a post office box in which he led regulators to believe belonged to the bank. We would forge bank statements to reflect this PO box and because all notices were sent here, company accountants never knew of the troubling nature of account balances (FBI, 2013). Wasendorf was able to perpetrate this scheme for twenty years and without anyone finding