From the October 01, 2012 issue of Futures Magazine • Subscribe!

In PFG fraud, everyone loses — except the lawyers

Just the fax, ma’am

Among the more intriguing developments in the PFG case was the revelation that on Friday, May 13, 2011, Hope Timmerman, an assistant manager at US Bank, sent an email to PFG’s compliance officer, Susan O’Meara, who was herself a former NFA auditor. Timmerman copied the message to the NFA and attached a document showing alleged confirmations of both PFG’s US Bank customer segregated and house accounts. 

PFG’s segregated bank account balance was inexplicably filled in by hand and showed a balance of $7,181,336.36. This confirmation had the PO Box 706 address on it and also identified the account at “Peregrine Financial Group Inc. Customer Segregated Account” (#621011845) and asked for information as of NFA’s audit date of March 31, 2011. 

“The email chain suggests that O’Meara had been corresponding with Timmerman and she previously had attached a copy of the confirmation template that NFA had completed with the PFG US Bank customer segregated account’s information,” the NFA wrote in an explanatory letter to Senator Tom Harkin. “During the time that both confirmations were received, NFA was in the middle of conducting on-site audit fieldwork of PFG.”

On the next business day, NFA received another email, this time containing a two-page PDF of a fax on US Bank letterhead and identified as “Corrected Bank Balance Confirmation.”

This time, the hand-written balance was $218,650,550.96.

It’s not clear who really sent the emails, but you can bet we’ll all know soon enough.

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