CFTC SEEKS ORDER FREEZING ASSETS AND RESTITUTION OF CUSTOMER FUNDS IN COMPLAINT AGAINST PEREGRINE FINANCIAL GROUP, INC.

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION
CFTC Files Complaint Against Peregrine Financial Group, Inc. and Russell R. Wasendorf, Sr. Alleging Fraud, Misappropriation of Customer Funds, Violation of Customer Fund Segregation Laws, and Making False Statements
Commission Seeks an Order Freezing Assets and Restitution of Customer Funds.
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) announced today that it filed a complaint in the United States District Court for the Northern District of Illinois against Peregrine Financial Group Inc. (PFG), a registered futures commission merchant, and its owner, Russell R. Wasendorf, Sr.(Wasendorf).  The Complaint alleges that PFG and Wasendorf committed fraud by misappropriating customer funds, violated customer fund segregation laws, and made false statements in financial statements filed with the Commission.

The National Futures Association (NFA) is PFG’s Designated Self-Regulatory Organization and is responsible for monitoring and auditing PFG for compliance with the minimum financial and related reporting requirements. According to the Complaint, in July 2012 during an NFA audit, PFG falsely represented that it held in excess of $220 million of customer funds when in fact it held approximately $5.1 million.
The Commission’s action alleges that from at least February 2010 through the present, PFG and Wasendorf failed to maintain adequate customer funds in segregated accounts as required by the Commodity Exchange Act and CFTC Regulations.  The Complaint further alleges that defendants made false statements in filings required by the Commission regarding funds held in segregation for customers trading on U.S. Exchanges.
According to the Complaint, Wasendorf attempted to commit suicide yesterday, July 9, 2012.  In the aftermath of that incident, the staff of the NFA received information that Wasendorf may have falsified certain bank records.

In the litigation, the CFTC seeks a restraining order to freeze assets, appoint a receiver and preserve records.  Further, the litigation seeks restitution, disgorgement, and civil monetary penalties among other appropriate relief.

The following CFTC Division of Enforcement staff members are responsible for this case: William Janulis, Jon Kramer, Thaddeus Glotfelty, Melissa Glasbrenner, Rosemary Hollinger, Scott Williamson, Richard Wagner.

CFTC ANNOUNCED FEDERAL COURT FREEZES ASSETS OF ALLEGED COMMODITY SCHEME FRAUDSTERS

September 9, 2011 The following is an excerpt from the CFTC website: “Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that a federal court in Charlotte, N.C., entered an emergency order freezing assets held by defendants Toby D. Hunter of Waxhaw, N.C., and his companies, Prestige Capital Advisors, LLC (Prestige) and D2W Capital Management, LLC (D2W) of Charlotte, N.C. The court’s order, entered by Judge Max O. Cogburn, Jr., also prohibits the destruction of books and records and grants the CFTC immediate access to such documents. The judge ordered Hunter to appear in court on October 3, 2011, for a preliminary injunction hearing. The order arises out of a CFTC civil complaint filed on September 6, 2011, in the U.S. District Court for the Western District of North Carolina, Charlotte Division. The CFTC’s complaint alleges that, since April 2008, Hunter, Prestige, and D2W fraudulently solicited and accepted funds from the general public to trade pooled investments in commodity futures, options on commodity futures and managed forex accounts. As a result of defendants’ allegedly fraudulent solicitation, at least six individuals invested $4.65 million with the Prestige Multi-Strategy Fund, LP, a pool established by Hunter and Prestige. In addition, the defendants solicited and received $2.36 million in connection with forex trading accounts managed by D2W. Defendants also allegedly misrepresented the profitability of their trading programs by posting false purported returns on a website called BarclayHedge. The complaint further alleges that defendants misappropriated some of the Prestige investors’ funds and issued false account statements to investors in both schemes in order to perpetuate defendants’ fraud. In its continuing litigation, the CFTC seeks a return of ill-gotten gains, restitution to defrauded customers, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of the federal commodities laws. The CFTC appreciates the assistance of the National Futures Association and the United Kingdom’s Financial Services Authority.”