CEO of failed Iowa brokerage appears at court hearing

CEDAR RAPIDS, Iowa -- Disgraced business leader Russell Wasendorf Sr. faces the prospect of additional federal charges and potentially decades in prison for allegedly pilfering roughly $200 million from customer accounts at Pergerine Financial Group.

The 64-year-old Cedar Falls resident appeared in handcuffs, jeans and a T-shirt today in federal court in Cedar Rapids. He answered the judge's questions intelligently and succinctly just four days after allegedly trying to commit suicide via asphyxiation.

"I'm taking anti-depressants your honor," Wasendorf replied after being queried about his medication. The owner of Peregrine, which markets itself under the PFGBest brand, indicated they didn't hinder his judgment.

Wasendorf's bail will be discussed Wednesday when he appears in court again for detention and preliminary hearings.

A large media contingent was present for the 10-minute hearing, but members of the Wasendorf family did not appear to be present.

Wasendorf was represented by Assistant U.S. Public Defender Jill Johnson. He told U.S. Magistrate Jon Scoles that he had retained Chicago attorney Thomas Breen, who was not present.

Assistant U.S. Attorney Peter Deegan requested that Wasendorf be held for a detention hearing, pending further proceedings. At that time, bail will be discussed.

"Additional investigation in this case indicates that this is a $200 million fraud," Deegan told the court.

Scoles told Wasendorf that he was entitled to a preliminary hearing because no formal indictment has been filed against him — just a complaint. The hearing will determine if probable cause exists to believe that he committed the offenses he's charged with.

Wasendorf engaged in a whispered discussion with Johnson after the judge left. In general, he was a well-behaved defendant who seem resigned to the role he must now play in a legal process that could end with him in prison for the rest of his life.

There has been a groundswell of public disgust with abuses within the financial service industry in recent years, thanks to the Bernard Madoff and MF Global scandals and excessive risk taking in the banking sector. American workers are now dealing with a lethargic labor market amid one of the longest periods of economic lethargy since The Great Depression.

From 2010 through July 2012, Wasendorf is accused of making false statements to the U.S. Commodity Futures Trading Commission about the value of customer segregated funds that his company held, according to the complaint.

"As with any criminal case, a charge is merely an accusation and a defendant is presumed innocent until and unless proven guilty," the U.S. Attorney's Office for the Northern District of Iowa said Friday.

On Monday morning, sheriff's deputies say Wasendorf tried to asphyxiate himself by running a hose from his vehicle's tailpipe into its passenger compartment as his vehicle was parked behind the company's $18 million headquarters north of Cedar Falls, Iowa, a town of almost 40,000 about 90 miles northeast of Des Moines, Iowa. Deputies found a suicide note detailing some of Wasendorf's alleged financial improprieties, the sheriff said.

Wasendorf, who moved the headquarters of his fast-growing brokerage business to Cedar Falls from Chicago in 1990, has been recovering at University of Iowa Hospitals, according to several media reports.