Since the PFGBest scandal broke, investors have been calling for heads on a platter. They have wanted Wasendorf Sr. arrested (done), the NFA disbanded/sued/held liable (not yet), and pray for US Bank and their deep pockets to have some liability so they pay out investors (fingers crossed). Underneath all of that, however, has been the question of just how much others at PFGBest (and especially Wasendorf’s son – Russ Wasendorf Jr.) knew about the fraud.

Well, we may have a chance to find out.  Via the Chicago Tribune:

An Iowa grand jury is expected to hear testimony from Peregrine Financial Group’s president [Jr.] next week as it begins considering alleged wrongdoing at the failed futures brokerage. […] Wasendorf Jr., through his lawyer, has denied that he knew about wrongdoing at the company. Other top Peregrine executives, including the chief financial officer, also are expected to testify before the grand jury in Iowa, where the brokerage had its headquarters, lawyers have said.

Now, Wasendorf Jr. has steadfastly claimed he had no knowledge of the fraud, and his testimony, alongside the testimony of other executives, is not meant to be indicative of suspected guilt – just a part of prosecuting Wasendorf Sr. Indeed, Wasendorf Sr. has claimed from the start that he alone knew of the fraud. But as more and more details come out, we may have reason to pay close attention to the testimony and evidence in this trial. In fact, we’ve talked with more than a few PFGBest former employees who have serious doubts about the elder Wasendorf’s ability to operate a computer to the level needed to carry out the fraud. If what the NFA said about the deluge of forged documents is correct, it’s not that big of a leap to assume Wasendorf Sr. probably had help along the way.

However, Wasendorf Jr., in particular, has a bright light shining on him now. He was, after all, in charge of operations, and, by all accounts, the one actually running the firm the last few years; so the idea that he had no clue that nearly half of customer funds had been funneled away from the firm strikes most as ludicris. Add to this transfers of lucrative property from Wasendorf Sr. to Jr. back and last week’s report that Wasendorf Jr. was actually planning on leaving the firm… well, we wouldn’t be surprised to hear a lot of 5th amendment invocations during the testimony.

Of course, the prosecutors had Wasendorf Sr. handed to them on a silver platter via the confession in his suicide note – building the case against him wasn’t exactly a tough job. What comes next – ascertaining guilt outside of Wasendorf Sr. – could be a horse of a different color.