Peregrine Founder Won't Have to Name Names in Plea Deal

CNBC content available by kind permission of CNBC

By: Scott Cohn Senior Correspondent, CNBC

Peregrine a futures brokerage based in Cedar Falls, Iowa, also operated as PFG Best. The firm collapsed in July after Wasendorf, who had attempted suicide, admitted he had falsified the firm's financial statements for nearly 20 years. Wasendorf claimed to have acted alone, but the head of the firm's primary regulator, the National Futures Association, told CNBC at the time that did not seem possible.

"The sheer volume of forged documents that were produced as part of this scheme is staggering, and had to occur on a daily basis," NFA President Daniel Roth said on July 25. "I think there is a legitimate cause for question as to whether more than one person was involved."

Now, the question may never be answered.

Wasendorf, 64, is scheduled to plead guilty Monday to a four-count criminal complaint charging him with embezzlement, fraud and two counts of false statement to regulators. He is not charged with conspiracy.

Under a plea agreement signed by Wasendorf on September 6 but not made public until this week, an earlier indictment accusing him of 31 counts of false statements to regulators will be dropped. Unlike many criminal plea agreements, Wasendorf is under no obligation to cooperate with prosecutors.

A spokesman for the U.S. Attorney's office did not respond to an e-mail from CNBC asking why Wasendorf was being allowed to plead guilty to reduced charges without being required to cooperate in the investigation.

Wasendorf's court-appointed attorney, Jane Kelly, also did not respond to a request for comment. Wasendorf is being represented by a public defender because his assets are frozen.

While Wasendorf is not under any obligation under his plea agreement to cooperate with criminal authorities, court papers show he has met with them twice and "attempted to answer all of the questions put to him." The meetings, on July 27 and August 27, each lasted six hours and included assistant U.S. attorneys, FBI agents, representatives of the Commodity Futures Trading Commission, the bankruptcy trustee and others.

The federal judge overseeing Wasendorf's criminal case, Chief Magistrate Judge Jon Stuart Scoles, cited those meetings in ruling Thursday that Wasendorf should be freed on bail following his guilty plea pending his sentencing, despite prosecutors' arguments that he is a flight risk — or could attempt suicide again.

"I do not believe there is a serious risk Defendant will flee, and therefore his detention is not authorized," Scoles wrote in a 17-page opinion.

Based on his plea agreement, Wasendorf faces up to 50 years in prison. However, under federal sentencing guidelines, he could receive considerably less.

Prosecutors estimate more than 27,000 investors lost money in the fraud.

Peregrine Founder Won't Have to Name Names in Plea Deal

Stocks to Hit Record High Next Year—Eventually: Pro

‘Do Not Chase This Market’: Deutsche Bank’s Bianco

Source - CNBC.com