An update on this issue for the guys that had money with them.
An embezzler's empire parceled out at auction
CEDAR FALLS, IA. — The former trading floor of the defunct Peregrine Financial Group was crowded with bidders in hooded sweatshirts and work boots Wednesday as the remnants of jailed financier Russell Wasendorf’s empire were auctioned off to compensate his nearly 25,000 victims.
The frigid parking lot of Peregrine headquarters in Cedar Falls was filled to overflowing with cars and work trucks, which lined both sides of the road leading to it for a half mile. More than 400 bidders hustled inside the $24 million building, tramping mud on its high-end bamboo floors. An additional 500 bidders participated online, said Mark Weitz, president of the Great American Group liquidation firm handling the auction.
Buzz Anderson of nearby Waterloo wound up snagging a painting of a peregrine falcon, which had graced the headquarters lobby, for $600. Most bidders fared more poorly and many went home empty-handed. The general feeling was that the strong turnout increased competition, causing prices to surge on most items.
“A painting like this would probably be worth at least $2,000 new,” said Anderson, a local real estate professional who knows Wasendorf. “It’s kind of sad to see everything that’s happened. It was a shock to everybody and something this area will never forget. I just can’t imagine his thinking.”
Wasendorf’s empire collapsed with his failed suicide attempt July 9. He wrote three suicide notes outlining how he stole as much as $200 million from segregated customer accounts entrusted to his futures brokerage over 20 years. The 65-year-old has pleaded guilty of mail fraud, embezzlement of customer funds and two counts of lying to regulators. He faces a maximum sentence of 50 years in prison.
Read past Register coverage of the Peregrine Financial Group scandal at DesMoinesRegister.com/peregrine
Wasendorf, labeled the “Madoff of the Midwest” by the New York Post, had an affinity for the best of everything.
The auction atmosphere took on a feverish tone at times. Bidders pulled the high-end office chairs they hoped to purchase inside the trading floor and sat on them as they competed for everything from computers and office furniture to vehicles and sports memorabilia.
“Festive is not a word I would use,” said court-appointed receiver Michael Eidelman. “This is a necessary process to raise money so creditors and customers can get paid what they’re owed.”
Eidelman and bankruptcy trustee Ira Bodenstein are selling off items from the Wasendorf business empire to fill a $190 million hole in the $400 million owed to former account-holders at the futures brokerage.
The personal items on sale included Wasendorf’s 1957 baby blue Ford Thunderbird, purchased by an online buyer for $34,000, and the 4,000 bottles that constitute the wine collections of his home and restaurants. More than 1,100 lots were sold during the auction in all — many containing dozens of items, said Mark Weitz, president of the Great American Group liquidation firm running the sales.
Les Akers was frustrated by the high prices being offered for some items. A 2011 Jeep Wrangler Rubicon with 9,550 miles on it sold for $25,000 before the auctioneer’s commission and sales tax, about par with its Kelley Blue Book value.
“People are overpaying,” he said. “They’re paying more than wholesale for some items, especially once you add in the 10 percent commission for the auctioneer and the 7 percent sales tax.”
Tom Allendorf, 44, of Dubuque purchased 48 computer monitors for Mi-T-M Corp., a manufacturer that employs about 300 people. He estimated that he wound up paying about $25 each.
“We did OK, but there were no deals today,” said Allendorf, who serves as managing director of operations for the Peosta company.
More than 200 Wasendorf employees lost their jobs, and many are still awaiting their final paychecks. A message scrawled in marker on the glass wall of one office adjacent to the trading floor reads “life is like a box of chocolates — Chris.” The apparent reference to a famous line from the film “Forrest Gump” ends with “you never know what you’re going to get.”
Jeff Fitzpatrick, a member of the board of the nonprofit Fellowship Club in Cedar Rapids, marveled at the 50,000-square-foot headquarters and the sale items.
“Look at that thing,” he said, pointing at a Varimixer food services mixer in the kitchen. “It’s a monster.”
Bidders eyed 21 vehicles in the garage, which included pickup trucks, a front-end loader, quad off-road vehicles, a canoe and Wasendorf’s personal cars. Empty rocking chairs and cribs in the employee child-care center sat next to a basket of clothes, which read “washed 8/13/12.”
“They have some great stuff. It’s all like brand- new,” said Jennifer Pratt, 30, of Iowa City. “I really feel bad for the victims. I’m sure he didn’t start out trying to hurt this many people.”
Jennifer and Brandon Pratt hoped to snag some of the kitchen equipment for a new Pizza Ranch restaurant they’re opening in Cedar Rapids.
“Some of this stuff is just flawless,” he said. “I sure hope some good can come out of this situation.”
WTF! I have been broken up over this fiasco ever since it happend, I have been lighting a candle every night for the victims. NOT!!!!! What a loser this fella was, "Tried" to commit suicide three times and failed. Give me a break. Those who got hosed, accepted the risk when they decided to put their money with this outfit, just like they did at Mo Fo Global. I do not recall any one being remorseful as the banksters foreclosed on farmers in the 80's and sold their ground at fire sale prices to tree huggers in DSM.
These people received an education, and education gets expensive sometimes, WTF is wrong with people who put their money under the control of other people to invest for them. I would not trust any of these suckers who hold themselves out as brokers or investment advisors, you are just asking for it. Sooooooooo I have no remorse for these losers who suffered financial losses, if they are going to piss with the big dogs they had better figure out a way to get off the porch. Iowa is a state of Morons anyway they deserve to be preyed upon, because they are "True Muppets", in the Goldman Sachs sense of the word. Give me a break! John
We were lucky in my area, only knew of 1 guy who lost money on this issue Faust. Yes, people need to watch these guys, but for him to do this for 20 years says something about our safeguards that are in place to stop these things. It really is a dog eat dog world out there I would say.