NEW YORK: US regulators has launched the first lawsuit against a bank tied to the blow-up of brokerage Peregrine Financial, alleging US Bancorp knowingly let Russell Wasendorf Sr use customer money held at the bank to fund his lavish lifestyle.
Peregrine founder Wasendorf, who has been dubbed ‘the Midwest Madoff’ for his near two-decade long scheme, began serving a 50-year sentence in February for bilking US$215mil from customers. The lawsuit, brought by the US Commodities Futures Trading Commission (CFTC), alleges a unit of US Bancorp let Wasendorf secure loans and other funding against money it knew belonged to his brokerage’s customers.