(Reuters) - Peregrine Financial Group Chief Executive Russell Wasendorf Sr., who confessed to bilking more than $100 million from customers of his futures brokerage, will remain in jail after prosecutors objected to a plan to release him, according to a court order.
Wasendorf, 64, was previously expected to be released from an Iowa jail, pending sentencing for lying to regulators, mail fraud and embezzling customer money, after he pleads guilty to the crimes later on Monday.
In approving the release last week, Magistrate Judge Jon Scoles said Wasendorf's chances to flee were limited because he had surrendered his passport and assets to authorities.
However, prosecutors on Monday objected to the plan and Chief Judge Linda Reade ruled that Wasendorf "shall remain detained pending further order of the court." It was unclear how soon a new order could come. Wasendorf is still due to appear in court in Iowa on Monday.
The public defender representing Wasendorf has declined to comment.
Prosecutors said Wasendorf should stay behind bars because there was a "serious risk" he might try to flee instead of facing the consequences of his crimes.
They cited the large amount of money Wasendorf stole and the strong evidence against him. Wasendorf claimed in a detailed suicide note that he stole more than $100 million from customers over nearly 20 years.
"Defendant's crime is nothing short of breathtaking," prosecutors said in a court filing.
HIDDEN ASSETS?
Prosecutors said last week that Wasendorf had agreed to plead guilty to mail fraud, lying to federal regulators and embezzlement, and could be sentenced to up to 50 years in prison.
Wasendorf attempted suicide on July 9 near the headquarters of his Cedar Falls, Iowa, brokerage. He was arrested on July 13 and charged with 31 counts of lying to federal regulators.
The search continues for the money he stole. Former clients are still unable to access funds frozen since the firm's bankruptcy on July 10.
Prosecutors, in the court filing on Monday, said Wasendorf stole about $200 million and that there was a serious concern he could access assets that may be hidden from authorities.
"If even the smallest portion of such a vast amount of money were hidden away, it could be all (the) incentive and means that defendant might need to flee a probable life sentence," prosecutors said.
The Commodity Futures Trading Commission has filed a lawsuit against Wasendorf and his firm, saying the CEO misappropriated more than $200 million in customer funds over several years.
LIFE ABROAD
Wasendorf has cooperated with authorities working to piece together his crime and track down his assets, but prosecutors said his cooperation was "primarily designed to bolster his argument for release."
Wasendorf was set to move in with a local pastor in Iowa who has counseled him in prison.
Wasendorf has told authorities he is no longer suicidal. However, "none of what defendant says can be taken at face value" following his previous suicide attempt and two-decade fraud, prosecutors said in Monday's filing.
Wasendorf partially owns a construction company in Romania, raising some concerns he could attempt to flea overseas. He also had at least one bank account in Germany, according to prosecutors.
"Given the current state of defendant's domestic relationships and the likelihood he may die in prison, a lifetime abroad may be a relatively appealing option," they said in the court filing.
(Editing by Gerald E. McCormick, Maureen Bavdek and Andre Grenon)
Source: http://news.yahoo.com/peregrine-ceo-remain-jail-government-balks-release-175716296--finance.html
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