“For the love of money is the roots of all sorts of evil.”
1 Timothy 6:10
“Great broker! Would recommend them. They’ve started TV Advertising which I think is always a sign of confidence from a broker looking for new wealth to manage.”
Online user review for PFGBest April 16, 2012
(Less than three months before that company filed for bankruptcy)
On this repost Saturday it seems fitting to revisit a post that’s only a year and a half old but follows nicely my recent posts on the movies The Wolf of Wall Street, It’s a Wonderful Life, and Wall Street. Because while Wall Street has had its share of scoundrels, just because a broker is in a quintessential small town like the one in It’s a Wonderful Life doesn’t mean he can’t be a scoundrel too. Remember even Bedford Falls in It’s a Wonderful Life had Henry F. Potter—”The richest and meanest man in the county!” (Mr. Potter even made it to #6 on AFI list of villains—that’s 18 slots ahead of Gordan Gekko.)
Well, back in Cedar Falls, Iowa just last year they had a fellow who some newspapers dubbed “The Midwest Madoff.” But I actually think that title originally went to Tim Durham who defrauded 5,000 investors for more than $200 million. Last year he was sentenced in Indianapolis to 50 years in prison. Up in Minnesota’s Twin Cities, Tom Petters orchestrated what CNN/Money called “a $3.65 billion Ponzi scheme — one of the largest in U.S. history second only to Bernie Madoff.” Back in 2010 he was also sentenced to a 50 year prison sentence.
That’s why I prefer the Main Street Madoff title for this fellow in Iowa. (Technically his offices weren’t on Main Street, but he did own a restaurant on Main Street. It was a good one, too. )
It’s not every day that Cedar Falls, Iowa makes the front page of The Wall Street Journal—but sadly, July 11, 2012 was one of those days. When Russ Wasendorf Sr., the founder and chairman of PFGBest, a locally based international futures trading business, attempted suicide on that day and the FBI began a fraud investigation into $215 million in customer money allegedly missing, it had a way of attracting national news.
Back in February of 2012, I did a video shoot inside the company’s building and all looked right in the world. In fact, the 50,000 square foot state of the art building of the business—now shut down and under scrutiny—is one of the nicest in Iowa. European in design, eco-friendly, and three stories of glass fill the offices with natural light.
During the shoot I briefly met Wasendorf and the word that I ‘d use to describe his outward appearance would be “successful.” He supported local charities and in 2009 pledged $2 million to the University of Northern Iowa. He also opened a terrific Italian restaurant on Main Street and brought his chef here from Chicago.
And though I’d only seen Wasendorf a handful of times since he moved here, the Sunday afternoon before his suicide attempt I saw him walking out of his restaurant just as I was driving by. I even had the thought, “That dude’s got it made.” About 8 hours later he drove to his company’s headquarters and drank a bottle of vodka and at some point hooked up a hose from the tail pipe of the car to its interior. Later that morning he was found unconscious and a suicide note was found.
“I have committed fraud. For this I feel constant and intense guilt. I am very remorseful that my greatest transgressions have been to my fellow man. Through a scheme of using false bank statements I have been able to embezzle millions of dollars from customer accounts at Peregrine Financial Group, Inc.”
Part of Wasendorf’s suicide note
The fact that he got married in Las Vegas nine days before his attempted suicide added more bizarreness to the situation. An annulment was filed for, the restaurant closed, contents of the offices auctioned off, and even Wasendorf son who worked for him—but was not a part of the embezzlement— said of his father, “As far as I am concerned, he died that day.”
Earlier this year Wasendorf was sentenced to 50 years in prison for defrauding thousands of innocent investors out of a $215,000,000 over a 20 year period. Bloomberg News quoted the acting U.S. Attorney’s statement, “The lengthy prison sentence imposed today is just punishment for a con man who built a business on smoke and mirrors.”
All of this fraud has got me thinking about a poem written over 100 years ago by a poet raised in Gardiner, Maine, educated at Harvard, and well versed in the works of Shakespeare, small town life and “the American dream gone awry.”
By Edwin Arlington Robinson
(Poem written in 1887)
Whenever Richard Cory went down to town,
We people on the payment looked at him:
He was a gentleman from sole to crown,
Clean favored, and imperially slim.
And he was always quietly arrayed,
And he was always human when he talked;
But still he fluttered pulses when he said,
“Good-morning,” and he glittered when he walked.
So on we worked, and waited for the light,
And went without the meat, and cursed the bread;
And Richard Cory, one calm summer night,
Went home and put a bullet through his head.
Update 7/13/12: Peregrine CEO Arrested