Peregrine Financial Group Files for Bankruptcy
Peregrine Financial Group of Cedar Falls, Iowa filed for bankruptcy protection yesterday. The National Futures Association had received information that the company’s founder had, for many years, falsified bank confirmations indicating over $225 million in the bank account when in fact, the account may have contained only $5 million or less.
The founder, Russell Wasendorf, SR. attempted suicide on July 9 and is currently in a coma. It appears that he had created a PO Box for all confirmations of the bank account to be sent to and then simply created false bank statements and mailed them onto the futures regulators.
After being pressured to start allowing the regulators to obtain the information electronically, the shortfall was much easier to be determined.
The actual amount of the shortfall of customer funds may take several months to determine and in the meantime, these customer funds are frozen and most positions are in the process of being liquidated.
After the MF Global debacle and this episode, it is extremely important for farmers to know who their commodity broker is and their actual financial strength. However, as in this case, if somebody wants to fool a regulator, it can happen for many years before they are caught and it can be very expensive to the account holder.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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