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For years, Russ Wasendorf Sr. enjoyed the perks of being a successful businessman: a corporate jet, a fancy swimming pool at his mansion, an extensive wine collection and top chefs who made him meals at the restaurant and office buildings he owned.
Then last summer he admitted that his lavish lifestyle was a lie, built with money he stole from customers at Peregrine Financial Group, the Cedar Falls-based brokerage he founded. Prosecutors said he took $215 million over 20 years in the biggest fraud in Iowa history.
Wasendorf is now being held in isolation at a county jail in a tiny cell where he sleeps on a concrete pad without a pillow, his pastor said. And on Thursday, the 64-year-old learned he will most likely spend the rest of his life in federal prison.
A judge sentenced Wasendorf to 50 years in prison. Wasendorf, who must serve at least 42½ years of the sentence, appeared in fragile health, having lost weight and suffering from health problems that made him look nothing like the image of a confident financial whiz he once projected.
Acting U.S. Attorney Sean Berry said the sentence was the longest ever given to a white-collar criminal in the northern district of Iowa and was fitting because Wasendorf's fraud was unparalleled in Iowa.
"This is a just sentence for a con man," he said at a news conference.
U.S. District Judge Linda Reade gave Wasendorf the maximum prison sentence available for the fraud and embezzlement charges to which he pleaded guilty in September. She cited the "staggering losses" his theft caused to 13,000 commodities investors who lost money and hundreds of employees who lost jobs.
Wasendorf used their money to build a business empire that included a publishing company that churned out his books and magazines, the jet that flew him to meetings, the nicest restaurant in Cedar Falls, a development company in Romania, and a charity known for donations to universities and hospitals.
But since last July, Wasendorf has been held in a cell on the fifth floor of the Linn County Jail in Cedar Rapids, where some of his fellow inmates scream all night long, said pastor Linda Livingston, who counsels him several times a week. She said he has not had access to writing or eating utensils and is kept away from other inmates.
"He has made an adjustment to an impossible circumstance with a grace that has surprised me," she said. "It's a stark existence."
Wasendorf's brokerage, nicknamed PFGBest, collapsed after investigators found Wasendorf unconscious after having attempted suicide in his vehicle outside its headquarters in Cedar Falls. He left a suicide note in which he confessed to a fraud in which he stole customer funds, and forged bank statements to fool his colleagues, auditors and regulators.
He attempted suicide after learning that regulators were insisting on electronic access to Peregrine's bank accounts, which meant they would soon find that more than $215 million in customer funds was missing. Prosecutors said Wasendorf's theft started after he founded Peregrine in the early 1990s, when he needed money to prop up the business after an investor pulled out.
Instead of having the courage to admit his company was a failure then, Reade said Wasendorf continued to steal clients' money and spent it on a lavish lifestyle to make himself look like "a big shot" in the community. She repeated a famous line from Wasendorf's suicide note: his ego was simply "too big to fail."
Reade said she hoped the sentence "sends a message that white-collar criminals may serve long prison sentences for stealing money from other people." She ordered Wasendorf to pay $215 million in restitution, but said it was "highly unlikely" the victims would ever be fully compensated.
Assistant U.S. Attorney Peter Deegan read statements from victims, who wrote about losing life savings or money they set aside to care for a relative. Some never meant to do business with PFG, which bought their accounts while it fraudulently expanded, he said.
Wasendorf apologized to his victims before he was sentenced.
"I just want to say I'm very, very sorry for the financial and emotional damage I have caused to investors and employees of Peregrine Financial Group," Wasendorf said.
Wasendorf told Reade any sentence she imposed would be less severe than the punishment of being estranged from his son, Russ Wasendorf, Jr., who was Peregrine's president and has been described as stunned by the fraud. Prosecutors said they don't anticipate bringing charges against anyone else.
"I've lost the love of my son, and I'll never see my grandchildren again," Wasendorf said, breaking up.
Wasendorf has said he managed to get away with the theft because he became adept at making "convincing forgeries" of bank statements using computer equipment.
Wasendorf's attorney, public defender Jane Kelly, urged Reade to impose a more lenient sentence than the 50-year term recommended by guidelines and requested by prosecutors. She noted he was cooperating with investigators to help customers maximize their refunds and had made significant contributions to charity.
But Reade said Wasendorf cooperated only after he was caught, and all of his good acts built up his reputation with others' money.
"It is easy to be generous with other people's money," she said.