## Facts

- On July 9, 2012, local police investigated a suspicious vehicle parked outside the offices of Peregrine Financial Group, Inc. (Peregrine).
- Police found Russell R. Wasendorf, Sr. unconscious inside the vehicle, with a hose running from the exhaust pipe into the car, along with vodka and sleeping pills.
- Police also found a note in which Wasendorf confessed to taking millions of dollars from Peregrine customer accounts over nearly 20 years; he estimated the loss exceeded $100 million.
- The note stated that much of the money was used to keep Peregrine operating; the government also alleged personal uses, including investing in a restaurant and supporting a construction company in Romania.
- The government alleged Wasendorf concealed customer-fund shortfalls by falsifying bank statements and by submitting or causing false regulatory materials, including reports to the Commodity Futures Trading Commission (CFTC) and statements to the National Futures Association (NFA).
- Wasendorf was arrested and, about two weeks later, met with federal agents and cooperated with their investigation.
- Wasendorf agreed to plead guilty to a four-count information charging: (1) mail fraud, (2) embezzlement of customer funds under the Commodity Exchange Act, (3) making false statements to the CFTC, and (4) making false statements to a futures association registered under the Commodity Exchange Act.
- A magistrate judge conducted detention proceedings and ordered that Wasendorf be released on conditions after the plea hearing.
- The government sought district-court review of the release order and also moved for detention pending sentencing after Wasendorf entered his guilty pleas.
- The district court accepted the guilty plea and then decided whether Wasendorf should remain released or be detained while awaiting sentencing.

## Issues

1. After a guilty plea and before sentencing, must the court apply 18 U.S.C. § 3143(a), and if so, did Wasendorf prove by clear and convincing evidence that he was not likely to flee or pose a danger if released?
2. In light of the guilty plea and the post-conviction detention standard, should the district court revoke the magistrate judge’s prior conditional release order?

## Decision

- The court applied 18 U.S.C. § 3143(a)(1), which directs detention after a finding of guilt unless the defendant proves by clear and convincing evidence that he is not likely to flee or pose a danger if released.
- The court granted the government’s request to revoke the magistrate judge’s release order to the extent it rested on the pre-plea framework and did not control after the guilty plea.
- The court granted the government’s motion to detain Wasendorf pending sentencing.
- The court found Wasendorf did not meet his burden under § 3143(a) given the admitted scope and duration of the fraud, the likelihood of a substantial prison sentence, and the circumstances of his attempted suicide and confession.
- The court concluded that proposed release conditions were not sufficient to satisfy § 3143(a)’s requirement of a clear and convincing showing that Wasendorf was not likely to flee and would not pose a danger.

## Legal Principles

- Once a defendant has pleaded guilty and is awaiting sentencing, release and detention are governed by 18 U.S.C. § 3143(a), not the pretrial provisions of § 3142.
- Section 3143(a) creates a presumption of detention after a finding of guilt; the defendant bears the burden to justify release.
- To obtain release under § 3143(a)(1), the defendant must prove by clear and convincing evidence that he is not likely to flee and does not pose a danger to any other person or the community.
- In evaluating flight risk, courts may consider the seriousness of the offense, the expected sentence, the strength of the evidence as shown by a guilty plea, and conduct suggesting avoidance of legal consequences (including self-harm tied to the offense).
- “Danger” under the Bail Reform Act is not limited to physical violence; serious financial misconduct and the ability to cause significant economic harm may support a finding of danger.
- A district court may review and set aside a magistrate judge’s release determination when the governing legal standard changes after a guilty plea and when § 3143(a) requires detention absent the defendant’s clear and convincing showing.

## Conclusion

The district court ordered Wasendorf detained pending sentencing because his guilty plea triggered § 3143(a)’s presumption of detention, and he failed to prove by clear and convincing evidence that he was not likely to flee or pose a danger, particularly in light of the admitted long-running, high-loss scheme and the circumstances of his attempted suicide and confession.


United States v. Wasendorf, 2012 WL 4052834 (2012)