* US seeks maximum sentence of 50 years for Wasendorf
* He sought to appear rich to avoid discovery of fraud -U.S.
* Peregrine was never actually profitable -prosecutors
* Wasendorf sentencing scheduled for Jan. 31 in Iowa
By Ann Saphir and Tom Polansek
SAN FRANCISCO/CHICAGO Jan 22 (Reuters) - Peregrine Financial Group's former chief executive stole more than $215 million from customers of his now-defunct futures brokerage and should be sentenced to the maximum 50 years in jail, U.S. prosecutors said on Tuesday.
Russell Wasendorf Sr., 64, who founded the firm, has pleaded guilty to embezzlement but wants a lighter sentence, saying the loss was less than $200 million and that he used "very basic, simple means" to carry out his fraud, according to documents filed by U.S. prosecutors.
Wasendorf, whose attempted suicide sent his firm into bankruptcy last July, is in jail in Iowa and will be sentenced on Jan. 31.
U.S. prosecutors say the large loss, the sophisticated nature of the crime, and the sheer number of victims - more than 10,000 - justify his spending the rest of his life behind bars.
"While some of defendant's individual acts might be characterized as simple in isolation, they were part of an exceedingly complex scheme whereby defendant's entire business was used as a mechanism to gather and purloin investor funds," prosecutors said in their sentencing memorandum, promising to fight any attempt by Wasendorf to receive a sentence of less than 50 years.
Prosecutors put the exact loss at $215,530,547, based on Peregrine's bank records, and will call Brenda Cuypers, the firm's chief financial officer, as a witness at the sentencing hearing next week.
They had previously pegged the embezzlement only at "more than $100 million," to which Wasendorf pleaded guilty.
Wasendorf's public defender has a policy of declining to comment on cases, and did not reply to an email from Reuters seeking comment.
The collapse last July of Peregrine Financial, known as PFGBest, dealt a blow to confidence in the U.S futures industry, already reeling from $1.6 billion hole in customer pockets left when giant brokerage MF Global failed nine months earlier.
Futures traders had never before suffered such large losses as a result of a brokerage failure.
"To see (Wasendorf) go to jail could give some people some hope," said James Koutoulas, co-head of the Commodity Customer Coalition, which fought to get customer money back in both bankruptcies. "In MF Global, justice hasn't been done."
No one has been charged with wrongdoing in MF Global's collapse.
Regulators have scrambled to patch perceived gaps in customer protections at brokerages and exchanges that handle contracts valued at some $2.5 trillion a day.
Tat figure is set to rise as new rules push over-the-counter swaps onto regulated trading venues.
The sentencing memorandum offers new details in the government's account of the fraud, which Wasendorf said in a July confession began in the early 1990s after he was hounded by an overzealous regulator.
The fraud began even earlier, prosecutors said in Tuesday's filing, when he stole at least $250,000 from customers' accounts to pay back the original financier of his brokerage, a person referred to in the document only by the initials "J.C."
"Using a copy machine, defendant fabricated a bank statement to conceal the theft of funds," the document said. For the next nearly 20 years, prosecutors said, he faked bank balances, fabricated deposits, and used a rented post office box in Cedar Falls, Iowa, to intercept letters from his auditors meant to check up on his balances at U.S. Bank.
He even went so far as to fly from Chicago, where his firm did most of its business, to Iowa to prevent the near-discovery of his fraud, ultimately convincing Peregrine and U.S. Bank employees that nothing was wrong, the document said.
All the while he worked to make Peregrine Financial seem much bigger and more successful than it was, they said.
Wasendorf believed that "if he could make himself appear rich, the auditors and regulators wouldn't be concerned with the state of his personal finances and not discover it was all a fraud," prosecutors quoted Wasendorf as saying in a sealed presentencing report.
But Peregrine was never actually profitable, even though by its demise investors had entrusted more than $376 million to him and his firm, they said.