WATERLOO | The bankruptcy trustee for defunct Cedar Falls-based commodities trader Peregrine Financial Group is working on a second payout to former investors who lost more than $215 million in a fraud scheme that brought the company down in July 2012.
Ira Bodenstein, the trustee appointed to handle PFG’s Chapter 7 bankruptcy, will go to court Wednesday with a plan to pay as much as $41 million to many of PFG’s 24,000 customers.
It would be the second payout to PFG customers who lost money in a 20-year fraud that led to the conviction and imprisonment of PFG’s former chief executive officer, Russ Wasendorf Sr.
According to documents filed Dec. 11, Bodenstein requested authority from the U.S. Bankruptcy Court for the Northern District of Illinois in Chicago to return about 7 percent, or $27.5 million, to Peregrine "4d Customers" who traded on domestic exchanges, according to court documents. In the first payout last year, the group, which comprised the bulk of the firm's clients, received back about 30 percent of the money they had in accounts when Peregrine failed.
Clients who traded on foreign markets would get back about 45 percent more of their money, or $13.5 million, in the second payout, according to documents.
They received back about 40 percent of their missing money in the first payout last year.
“The first thing that comes to mind is, he (Bodenstein) must have had a nightmare trying to weed through those claims,” said Ross Bond, 61, a retired PFG investor who moved in July from Bundaberg, Australia, to the U.S., settling in Houston.
Bond said Monday he had gotten back about 30 percent of his investment in PFG-brokered futures that were based in the U.S. and about the same percentage of his overseas interests.
“I’ve been getting about two offers a month to buy my interest, and the rate has picked up lately, so something must be happening,” he said.
He deferred a follow-up call to the court documents.
Documents state Bodenstein has about $68.7 million on hand that belongs to customers with various accounts. Bodenstein said he was seeking to hold back nearly $28 million in the second payout because some customer claims have to be settled. Court records indicate more than 14,000 claims totaling $700 million have been filed against PFG, according to a note from Geneva, Ill.-based Foremost Trading, an introducing broker that cleared trades through PFG.
“There's still some claims that are subject to resolution,” Bodenstein told the Reuters news service. "We believe that this is obviously a safe amount of money to disburse."
Last year, customers got about $123 million back in a first payout.