JPMorgan and a U.S. Bancorp unit failed to stop executives at now-defunct Peregrine Financial Group from stealing their funds on deposit, according to former customers who lost money in a $200m swindle.
Bloomberg News reports that the customers sued the banks and others on Friday in the latest round of litigation stemming from the 2012 collapse of Peregrine. Peregrine, a futures trading firm based in Cedar Falls, Iowa, filed for bankruptcy after regulators discovered millions missing from the firm’s accounts. Its chief executive, Russell Wasendorf Sr., penned a confession before a failed suicide attempt. He was convicted of fraud and sentenced to 50 years in prison.
The customers said in a complaint in Manhattan federal court that JPMorgan transferred their funds from a segregated client account to a personal account of Wasendorf’s at U.S. Bank, a unit of U.S. Bancorp.
"The theft from the accounts at JPMorgan and U.S. Bank could not have occurred without the banks’ full cooperation and breaches of their legal duties," according to the complaint.
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