If you’re going to read mainstream media coverage of the PFGBest scandal, and you’re not reading the Wall Street Journal – particularly Jacob Bunge – you’re doing it wrong. Today they report:

The note and the statement, which a person familiar with the situation said were left by Peregrine Chief Executive Russell Wasendorf Sr., blames the fraud on “mean spirited” regulators that dogged his firm, saying they were looking to put firms out of business rather than protect commodities investors. The statement also said that deceiving the regulators was “relatively simple.”

“Most of the misappropriated funds went to maintain the increasing levels of Regulatory Capital to keep [Peregrine] in business and to pay business [losses],” said the signed statement, which was reviewed by The Wall Street Journal. The statement says the misappropriated customer funds also were used to build Peregrine’s headquarters in Cedar Falls, Iowa, and to “pay Fines and Fees charged by the regulators”

At first glance, one might think this news item is a bad thing. After all, he’s saying the money was spent.  But hey- at least it’s not in some Swiss bank account we’ll never find. If much was spent on hard assets – like his private jet – that may be better for the customers as they can expect to get some sort of value from their sale, even if it is just cents on the dollar. Every penny counts.

Another silver lining? The NFA – those regulators that bungled this “relatively simple” fraud for two decades – are the ones who received the money. The problem is that it wasn’t theirs to receive; Wasendorf Sr. stole it from the client segregated funds. However, what this means is that they know exactly where it is (in their war chest).  We’re here to ask them to immediately return said funds to the courts to be included in the bankruptcy proceedings.

We can see from the NFA’s website that PFG has paid the NFA and CFTC $870,000 over the years. We are reaching out to various legal representatives to argue that those funds should be put towards making clients whole. True, this is hardly enough to make up a $200 million shortfall, but it is certainly enough to get things started in the right direction.

 Dear NFA – please send $870,000 to the customer assets pool of the bankruptcy immediately.