As the PFGBest bankruptcy case has proceeded, as painfully slow as it has been, what has become clear is that the fraud that took place was likely not facilitated via simple, identifiable transfers. As the Trustee had indicated in prior comments, there are pervasive concerns about the integrity of all the accounts on record. It is possible that some of the individual accounts on the books at PFGBest might have been shell accounts used to funnel away client money, and if that were the case, it would be entirely plausible that the total assets the firm reported as under their control would be substantially lower. Lending credence to this idea is a recent Wall Street Journal article:

The lawyer for Russell Wasendorf Sr., who last week pleaded guilty to embezzlement and mail fraud in the scheme, also said his client would be better able to help authorities track down missing money if he were freed from jail ahead of his sentencing.

“While the dollar amount involved in this case is admittedly large, defendant does not agree with the government’s statement that the parties have agreed there was a ‘shortfall in customer funds exceeding $200 million,’” wrote Jane Kelly, Mr. Wasendorf’s defender, in the filing.

The disputed figure highlights the challenge confronting law enforcement and court-appointed authorities as they sift through the finances of Peregrine and Mr. Wasendorf in an effort to repay customers and creditors.

This is both good and bad news. On one hand, it could mean that there is actually more money available than previously thought. It’s also a plus that Wasendorf Sr. might be able to help expedite the process. The bad news is that revelations like these may stretch out the distribution process even further, and no one wants to hear that. Even more infuriating is the bogus claim that Wasendorf cannot help from a jail cell. Wanna bet? Here’s an idea, Russ – have a conversation, and explain the mechanisms you used to siphon money. Tell the investigators where to dig. Verify what they’re finding. And while you’re at it, call the Trustee and tell him which accounts are your shells. Then, if you please, go straight to hell.

Good news: possibly more money. Bad news: Wasendorf doesn’t seem at all serious about helping.