Trustee Seeks to Question Peregrine’s Imprisoned Founder

The official tasked with repaying customers of Peregrine Financial Group Inc. wants to have a talk with defunct brokerage’s founder, who’s behind bars after pleading guilty to fraud.

Bankruptcy trustee Ira Bodenstein on Thursday filed papers asking the Chicago bankruptcy court to let him question Russell Wasendorf Sr. about Peregrine’s financial affairs, which the trustee says will help him in a months-long effort to repay Peregrine’s customers and other creditors. At the center of that effort is an investigation into various transactions related to the fraud that brought down the brokerage.

“Given his significant role in the massive fraud that was perpetrated on PFG’s customers and creditors, Wasendorf is believed to have personal knowledge about many issues that are relevant to the trustee’s ongoing investigation of various matters relating to the debtor’s financial affairs and potential claims against third-parties,” Mr. Bodenstein said in the court filing.

Mr. Bodenstein said that due to the “costs and logistics associated with deposing an incarcerated individual,” he may seek to coordinate with regulators and customers who are separately suing Mr. Wasendorf and have also sought to question him.

Arrested in July 2012, Mr. Wasendorf later pleaded guilty to charges of mail fraud, embezzlement and lying to regulators. Found to have stolen more than $215 million in customer funds between the early 1990s and July 2012, he was sentenced to 50 years in prison. He’s serving his sentence at the Terre Haute Federal Correctional Complex in Indiana.

Peregrine’s bankruptcy filing followed the arrest of its founder. Over the past year and a half, Mr. Bodenstein has moved to distribute more than $160 million to Peregrine’s futures customers in the U.S. and abroad.

Write to Jacqueline Palank at [email protected]. Follow her on Twitter at @PalankJ.