Reuters: Bankruptcy News: Peregrine Financial trustee's $123 mln payout moves forward

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Peregrine Financial trustee's $123 mln payout moves forward Sep 12th 2012, 18:21 By Ann Saphir CHICAGO, Sept 12 | Wed Sep 12, 2012 2:21pm EDT CHICAGO, Sept 12 (Reuters) - Former customers of Peregrine Financial Group moved a step closer Wednesday to getting some of their money back from the failed futures brokerage after a bankruptcy court judge allowed the trustee to begin laying the groundwork for the return of $123 million to customers. Judge Carol Doyle stopped short of approving the trustee's plan to return the funds, which amount to 30 percent to 40 percent of futures customers' claims. Responding to concerns raised by the Commodity Futures Trading Commission over the integrity of Peregrine's books and records, Doyle asked the trustee, Ira Bodenstein, to appear in court next Friday to explain his procedures for verifying the amounts due to each customer. But she did allow him to go ahead with a plan to solicit bids from other futures brokerages to take over the Peregrine accounts, and to start making technical preparations for the payouts once they are approved. A lawyer for the trustee, Geoff Goodman, told Reuters during a courtroom break that the trustee still hopes to make the first distributions by the planned Sept. 28 target date, or soon after. Peregrine Financial filed for bankruptcy on July 10, a day after CEO Russell Wasendorf Sr. attempted suicide and confessed to stealing money from customers over nearly 20 years. Wasendorf, who is 64, was arrested on July 13. On Tuesday, he agreed to plead guilty to wire fraud, lying to regulators and embezzling customer funds, crimes that could put him in jail for as many as 50 years. Peregrine's 24,000 customers have had no access to their money since Wasendorf's attempt on his own life. The trustee's plan, filed in court last week, would set in motion the return of money to the firm's 17,000 futures customers. The CFTC had raised concerns over the integrity of the company's books, telling the court that it had found fictitious records and warning that without proper vetting of records some people could get money they are not entitled to. CFTC lawyer Anne Stukes and another trustee lawyer, Robert Fishman, on Tuesday both told Judge Doyle they are hopeful that the two sides will agree on what tests need to be done to verify customer accounts by next week's hearing. "There are some fraudulent records in the company's possession," Fishman told the court, saying that the trustee had already run a number of tests that the CFTC had recommended and was in the process of running still more. The regulator is suing Wasendorf over what the regulator alleges was his misappropriation of more than $200 million in customer funds. Link this Share this Digg this Email Reprints

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