Iowa-based CEO admitted to $200M fraud in suicide note, prosecutor says CEDAR RAPIDS, Iowa - The chief executive of an Iowa-based brokerage firm admitted in a tell-all suicide note that he carried out an elaborate fraud scheme in which he embezzled at least $100 million from customers over two decades, federal investigators said Friday. FBI agents arrested Peregrine Financial Group Inc. Russell Wasendorf Sr. at a local hospital Friday and he appeared in federal court later in the day on charges of lying to federal regulators. Court documents detail a wide-ranging fraud scheme in which Wasendorf apparently fooled colleagues, customers and regulators by creating fraudulent financial records. Those documents detailed a note found in Wasendorf's car Monday, when authorities found him unresponsive in the vehicle outside the company's headquarters in Cedar Falls. "Through a scheme of using false bank statements I have been able to embezzle millions of dollars from customer accounts," Wasendorf wrote, adding that the fraud had gone undetected "until now." Assistant U.S. Attorney Peter Deegan said during the court hearing Friday that Wasendorf could face a wide range of additional criminal charges and decades in prison for what the prosecutor called a $200 million scheme in which Wasendorf embezzled customer funds for 20 years. Wasendorf, who investigators said tried to commit suicide by hooking up a tube to his car's tailpipe, had been hospitalized since Monday. Deegan and the FBI declined comment on his arrest, but Chicago-based lawyer Thomas Breen said FBI agents "removed him from his hospital bed" at University of Iowa Hospitals and Clinics in Iowa City. Breen said he was on the phone with Wasendorf at the time. The 64-year-old executive walked calmly and was wearing jeans and a polo shirt during his brief court appearance Friday. The judge scheduled a hearing for Wednesday to determine whether Wasendorf should be held in jail pending his trial. Deegan said Wasendorf was a flight risk. Peregrine Financial Group, which marketed itself as PFGBest, filed for bankruptcy Tuesday. It was the same day the industry's top regulator filed civil fraud charges alleging the firm misused customer money and falsely claimed a bank account contained more than $220 million when it actually had about $5 million. The money in that account belonged to customers and was supposed to be kept separate from Peregrine's own money. An affidavit by FBI agent William Langdon said that when authorities found Wasendorf in his vehicle Monday, they also found a suicide note addressed to his wife and a signed statement in which he detailed his fraud. The forgeries started nearly twenty years ago and have gone undetected until now. I was able to conceal my crime of forgery by being the sole individual with access to the US Bank accounts held by PFG," he wrote, according to Langdon. Wasendorf said he faced "a difficult decision" when his access to capital was limited earlier in his career. Should I go out of business or cheat? I guess my ego was too big to admit failure," he wrote. So I cheated, I falsified the very core of the financial documents of PFG, the bank statements. Wasendorf said he used computer software, scanners and printers to "make very convincing forgeries of nearly every document that came from the bank," including statements, letters and other correspondence, the affidavit says. "I could create forgeries very quickly so no one suspected that my forgeries were not the real thing that had just arrived in the mail," he wrote. He said he used "careful concealment and blunt authority" as the company's founder and sole shareholder to hide the fraud. He said he ordered bank statements be delivered directly to him unopened, that he was the only person with access to the firm's online bank account, and he told the bank that he was the only representative they should call, according to court documents. Wasendorf said he also fooled regulators checking how much money his company held by opening a Cedar Falls post office box in 2006 in the name of US Bank, an address he put on the counterfeit bank statements he created. Auditors mailed confirmation forms to the address, and he sent phony documents back showing the accounts contained "the amount I needed to show." "When online banking became prevalent, I learned how to falsify online bank statements and the regulators accepted them without question," he added. Wasendorf confirmed that he wrote the statement and that it was true during an interview with investigators Monday at the hospital in Iowa City, Langdon wrote. He estimated "the amount of loss due to his fraud exceeded $100 million," Langdon added. On Friday, officials from another industry regulator, the Financial Industry Regulatory Authority, were on site at Peregrine's Cedar Falls offices to examine the firm. The agency regulates broker-dealers that buy and sell stocks. The losses apparently are centered in the part of Peregrine that sold commodity options and futures. The criminal complaint alleges that Wasendorf made false statements to the U.S. Commodity Futures Trading Commission about the value of customer funds held by his company from 2010 until recently. Deegan said he would present the case to a grand jury and seek additional charges. Breen, the Chicago attorney, said he'd planned to represent Wasendorf but learned Friday that Wasendorf's assets were frozen, so he'll have to be represented by a public defender. Wasendorf's son, Russ Wasendorf, Jr., the company's president and chief operating officer, also received a copy of the statement from his father admitting to the fraud at his office Monday, the FBI affidavit said. He told authorities he checked his father's claims by obtaining a bank statement that showed a balance of $6.3 million -- an account that regulators were told had $221.7 million as of December. The charges are a stunning downfall for Wasendorf. He ran the company for years from Chicago before relocating its headquarters in 2009 to Cedar Falls, where he was a highly regarded businessman and philanthropist.