[ by Howard Haykin ]

Wasendorf Introduces Hope Timmerman, a Mystery Woman Whose Role in Case is Unclear.

U.S. Bank, a unit of U.S. Bancorp, was named in a lawsuit filed by the son of Peregrine Financial Group Chief Russell Wasendorf Sr., who pleaded guilty to having stolen some $200mn of customer funds.  The company's bank, in turn, was charged with failing to properly supervise the movement during Senior's daliances.  

In the suit, the son, Russell Wasendorf Jr., president of Peregrine, and his wife, further allege that Mr. Wasendorf Sr. had help in covering up the years-long fraud that shook the U.S. futures industry.

Their Proof:  A woman purporting to be Hope Timmerman, an employee of the bank, told regulators in 2011 to use account balances that had been supplied by Mr. Wasendorf Sr., rather than figures that came directly from the bank, according to allegations in the suit, filed in Iowa State Court.

A spokesperson for the U.S. Bank, on Monday, said Mr. Wasendorf Jr.'s lawsuit was "entirely without merit" and "an outrageous attempt by the Wasendorfs to deflect the blame and the financial obligations from the collapse of Peregrine caused by Mr. Wasendorf Sr.'s criminal activity and the failure of their own management and internal controls."

Ms. Timmerman didn't respond to a request for comment.

Questions Raised by Lawsuit.   Regarding the May 2011 audit of Peregrine by the National Futures Association (NFA), an independent regulatory body that reports to the CFTC, . During the audit, Peregrine staff asked U.S. Bank to supply account information directly to NFA auditors, which showed the firm held about $7.2 million in a customer account, according to emails previously reviewed by The Wall Street Journal.

Yet, 3 days later, the NFA received a fax delivered via email that showed Peregrine account's balance at $218.7 million.  Before that fax, a woman identifying herself as Hope Timmerman told NFA auditors that the $7.2 million account balance was "erroneous" and a "corrected confirmation" showing the larger figure "would be faxed shortly," according to the lawsuit filed by Mr. Wasendorf Jr.

The lawsuit doesn't specify how Mr. Wasendorf Jr. came by the information. Nick Iavarone, Mr. Wasendorf Jr.'s attorney, declined to comment.  Representatives of the NFA also had no comment.

Mr. Wasendorf Jr. hasn't been charged with any wrongdoing in the matter and has cooperated with investigators, according to his lawyer.

[C-I Note:  What's terribly relevant about the arguments presented in this case is that in any trial or arbitration case, very little is "black and white."  There always can be significant grey information that casts some degree of doubt on the other party's story.  Until we find out who this Timmerman women is, the defense seems to have  a very strong piece of evidence.]

[WSJ, 9/17/12]