Iowa broker admits 20-year fraud — will regulators admit they didn’t do their job?

In the dramatic conclusion to a week-long saga that has shaken trader confidence in the trillion-dollar U.S. futures markets, authorities released parts of a detailed statement in which one of the industry’s best-known veterans explained how he used little more than a rented P.O. Box, Photoshop and inkjet printers to dupe regulators in a more than $100 million scheme.

FBI agents arrested Russell Wasendorf Sr, 64, at the Iowa City hospital where he has been since trying to commit suicide on Monday. He was charged with making false statements to regulators, but prosecutors said they would seek more charges. He faces “decades in prison”…

In the signed statement, left along with a suicide note and released as part of the criminal complaint, Wasendorf said he began forging bank documents after the business he built from his basement risked failing without additional capital. The timeline suggests his deceit lasted almost the entire life of his brokerage…

“I guess my ego was too big to admit failure. So I cheated,” the note said. It was discovered on Monday in his car outside the company’s new Iowa headquarters, where Wasendorf had tried to kill himself by funneling in tailpipe exhaust.

The arrest ends much of the mystery that has enveloped the futures industry this week. But it will not ease the pain of betrayal in the small Iowa town that Wasendorf made his corporate home in 2009, nor the anger of a financial industry still smarting from the failure of rival brokerage MF Global…

Yet he also wrote in almost boastful detail about the “blunt authority” that allowed him to control the flow of documents into the company; how he used a simple post office box to trick “unquestioning” regulators; and his skill in turning out forged bank statements within hours that “no one suspected.”

First – convict this sleazy thug. He is a crook and shouldn’t be treated differently from any other crook just because he wears thousand-dollar suits.

Second – force regulators to do the job they are paid to do. Snoop, question, evaluate according to industry and government standards. This is part of what the word “govern” means.

Wasendorf’s note about “unquestioning” regulators is significant. No differant from anything admitted by Bernie Madoff – or the few Enron officials who eventually admitted guilt. Getting away with a crime is always made easier by bureaucrats who don’t perform the tasks they’re paid for.

The usual political leeches, conservative politicians who blather of free markets and the glories of enterprise will stamp their patent leather shoes and try to bring a halt to more government regulation. That’s what you get, folks, when you don’t do your own jobs. More oversight. Try taking responsibility for the personal corruption that inspired a thoroughly ordinary thief.

Third – throw away the key.

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