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Peregrine Financial's Failure and the Failure of Regulation

Message Steve Klingaman

Russell Wasendorf Sr., 64, founder and chairman of Peregrine Financial Group, slumps forward in his car in the parking lot of his firm, a tube running from the exhaust pipe to his slightly cracked window, a suicide note on the seat beside him.    He is discovered there, close to death, and later falls into a coma in the hospital where he remains on life support.    So fails another firm engaged in the criminal financial malfeasance, in this case stealing farmers' hard-earned funds invested as a hedge against commodity price volatility.    Investigators find that the company's bank account is $220 million dollars short of what the books say it is, with a paltry $5 million available to panicked creditors.    When will we learn that Ponzi schemes grow in the shade of self-regulated industries?

Wasendorf is--or was--one of those rock-star CEOs to his own minions.   His inner circle was known within the Cedar Falls, Iowa-based company as "Wasendorfians" according to Associated Press.    Blind loyalty and deference to the charismatic founder of the company set up a culture that allowed the kind of machinations that build fraud machines, which is what this firm was.    The handwriting on the wall was there for all to see. A relationship with convicted Minneapolis mega-Ponzi-schemer Trevor Cook, a $700,000 fine from the National Futures Association, and an over-the-top opulent campus should have been signals that something was amiss, but it took a federal lawsuit over Peregrine's dealing with Cook to bring down this particular house of cards. ...

  Read the entire article at Open Salon:

http://open.salon.com/blog/steve_klingaman

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