Peregrine Financial Group chief executive officer Russell Wasendorf Sr. on Monday pleaded guilty to embezzling more than $100-million (U.S.) from customers of his futures brokerage, lying to regulators to cover his tracks, and mail fraud.
Previously expected to be set free from jail pending his sentencing, Mr. Wasendorf was told he will remain behind bars while a judge determines whether he is a flight risk.
Mr. Wasendorf, 64, agreed earlier this month to plead guilty to embezzlement, lying to regulators and mail fraud after confessing in July to stealing from his customers for nearly 20 years.
In a small courtroom in Cedar Rapids, Iowa, Magistrate Judge Jon Scoles confirmed that Mr. Wasendorf wanted to plead guilty to each of the charges.
"Are you pleading guilty because you are guilty?" Judge Scoles asked the former futures-industry executive, who was wearing an orange prison jumpsuit and shackled at the wrists and ankles.
"Yes, your honour," Mr. Wasendorf replied.
Prosecutors said in court that Mr. Wasendorf should spend the rest of his life behind bars. Mr. Wasendorf's public defender argued for a sentence of about 24 to 30 years in prison, which could be a life sentence given his age.
A date for his sentencing was not set.
Mr. Wasendorf attempted to kill himself on July 9 near the headquarters of his Cedar Falls brokerage. He was arrested on July 13 and charged with 31 counts of lying to federal regulators.
The search continues for the money he stole. Former clients are still unable to access funds frozen since the firm's bankruptcy on July 10.
Mr. Wasendorf previously was expected to be released from the Linn County Jail in Iowa, where he has been held in isolation and under suicide watch since his arrest, after he pleaded guilty on Monday.
In approving the release last week, Judge Scoles said Mr. Wasendorf's chances to flee were limited because he had surrendered his passport and assets to authorities.
However, prosecutors on Monday objected to the plan and Chief Judge Linda Reade of the U.S. District Court of the Northern District of Iowa ruled that Mr. Wasendorf "shall remain detained pending further order of the court," according to a court filing.
A date for the next order was not released.
The public defender representing Mr. Wasendorf has declined to comment.
Prosecutors argued Mr. Wasendorf should stay behind bars because there is a "serious risk" he might flee.
"Defendant's crime is nothing short of breathtaking," prosecutors said in a court filing.
The total amount Mr. Wasendorf stole is not clear.
Prosecutors, in a court filing, said Mr. Wasendorf stole about $200-million and that there was a serious concern he could access assets that may be hidden from authorities.
"If even the smallest portion of such a vast amount of money were hidden away, it could be all [the] incentive and means that defendant might need to flee a probable life sentence," prosecutors said.
The Commodity Futures Trading Commission has filed a lawsuit against Mr. Wasendorf and his firm, saying the CEO misappropriated more than $200- million in customer funds over several years.
Mr. Wasendorf has co-operated with authorities working to piece together his crime and track down his assets. However, prosecutors said in a filing that his co-operation was "primarily designed to bolster his argument for release."
Mr. Wasendorf was set to move in with Linda Livingston, a local pastor in Iowa who has counseled him in prison. She attended the court hearing on Monday but did not speak to reporters.
Mr. Wasendorf has told authorities he is no longer suicidal.
Prosecutors said in a filing that "none of what defendant says can be taken at face value."