PFG implosion affects employees and others

2012-07-12T12:15:00Z 2012-12-03T15:12:31Z PFG implosion affects employees and othersBy JON ERICSON jonathan.ericson@wcfcourier.com and JEFF REINITZ, jeff.reinitz@wcfcourier.com Waterloo Cedar Falls Courier

CEDAR FALLS --- Employees of Peregrine Financial Group and other companies related to Russell Wasendorf Sr. have been trying to sort out the next step.

PFG founder and CEO Russ Wasendorf Sr. allegedly attempted suicide Monday morning, setting off investigations, enforcement against the company and bankruptcy.

Many employees were initially told they may or may not be paid for their work, but were encouraged to come back Tuesday out of professional integrity to field questions and deal with urgent matters. On Tuesday nearly all of the Cedar Falls workforce did, but that was the last day for many of them. In the company's Chicago offices, some employees were told they were no longer employed and one opened a lawsuit claiming he was fired without proper notice under federal law.

The employee, Ronald Kotulak, seeks class action status to bring in other employees, including those in Cedar Falls.

On Wednesday, the Northeast Iowa Food Bank picked up loads of food from both the Peregrine complex cafeteria in rural Cedar Falls and MyVerona, a Wasendorf-owned restaurant.

Cedar Falls employees were already filling out unemployment claims as the company was filing for bankruptcy.

Wade Arnold, Chief Executive Officer of Banno, formerly T8 Webware, saw both opportunity and an obligation in the mess of PFGBest this week. His company has a need for highly skilled employees and has recently expanded into Des Moines. Arnold put out a message on Twitter telling PFG employees about opportunities at Banno. In addition, he asked his staff to network and let people know about employment possibilities.

As of Wednesday afternoon, Banno had received six resumes from PFG employees and Arnold was impressed with what they had to offer.

"PFGBest have, at least as far as companies in our economy, people with skillsets that we need. We were more or less competitors with them before for talent," Arnold said.

Aside from filling roles at Banno, Arnold also thought about the need to retain bright people in Iowa. He served on the board for the Technology Association of Iowa and is plugged into the needs across the state.

"Nobody likes to be unemployed. If we can help them out, or help them find other companies, it keeps the talent here," Arnold said.

Signs of impending troubles were starting to come out in recent months.

Phil Flynn had been a broker at PFG, but left at the end of May, in part over concern about a $700,000 fine paid by the company on charges of lax oversight of brokers who were making made deceptive sales pitches and sought big commissions at the expense of customers.

Employees at Peregrine Financial Group's offices were told to expect lean times earlier this year.

About six weeks ago, before Wasendorf allegedly attempted to take his own life and the company filed for bankruptcy, workers in the Chicago office were told to their salaries were going to be cut by 10 percent in June to make ends meet, sources said. They were also told to expect to take a second hit in July.

But then, just a few weeks ago, officials with Peregrine sent out a memo telling employees that the company's outlook was better. They didn't have to worry about the second pay cut.

"There was a breath of fresh air, light at the end of the tunnel, that kind of thing," said one Chicago employee, who asked not to be identified.

Then on Monday, things took a turn for the worse.

The Chicago employee said he was at work when a friend told him Wasendorf Sr. had attempted suicide and the company was placed on "liquidation only."

He passed on the rumor to others in the office.

"They didn't believe me at first. They thought I was joking around," he said.

Then came the big meeting. Employees at Peregrine's many branches gathered around speaker phones as Wasendorf's son, Russell Wasendorf Jr., filed them in on the developments.

"He could barely talk. It sounded like he was in another world," the Chicago employee said. The son only talked for a few minutes, choking up as he spoke.

People in the Chicago facility returned to the office Tuesday and Wednesday, although it wasn't clear if they would be paid for their time.

The fallout from PFG's problems extend to related companies. When MyVerona closed its doors Monday it left 70 employees without jobs.

Trader's Press was in Wasendorf's umbrella. Wasendorf acquired it in 2009. The company's focus is on publishing financial and trading materials, but also branched out recently by publishing "Bridges of Madison County" author Robert Waller's most recent non-fiction book.

Waller did not want to comment on the status of Trader's Press.

Another author, Charles Rotblut of Chicago, is a vice president at the American Association of Individual Investors. His book, "Better Good than Lucky: How Savvy Investors Create Fortune with the Risk-Reward Ratio," was published by Trader's Press.

"The commissions are a concern and I presume I won't be seeing anything. My more pressing concern has been trying to get physical copies of my book," Rotblut said.

He hasn't been able to contact anyone at the company to obtain those copies and at this point believes he will have to wait on a bankruptcy trustee to sort out the situation.

Copyright 2015 Waterloo Cedar Falls Courier. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(1) Comments

  1. Tom Klemesrud
    Report Abuse
    Tom Klemesrud - July 12, 2012 4:26 pm
    On the optimistic side, that money may not even be lost. Has anybody thought to ask US Senator Grassley if they could search his Grove? Perhaps he has one of those "financial black holes" that wormholes to PO Box 438 in the Cayman Islands?
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