(Adds settlement details, bank comment, background, case citation, bylines)
By Jonathan Stempel and Douwe Miedema
NEW YORK/WASHINGTON, Feb 4 (Reuters) - U.S. Bancorp agreed to pay $18 million to former customers of Peregrine Financial Group Inc to resolve claims that the large U.S. bank aided a massive fraud by the failed futures brokerage's now-imprisoned founder, Russell Wasendorf Sr.
A consent order approved on Wednesday resolves claims by the U.S. Commodity Futures Trading Commission that the Minneapolis-based lender's U.S. Bank NA unit let Wasendorf treat an account meant to hold Peregrine customer funds as his "personal piggy bank."
The regulator's June 2013 lawsuit against U.S. Bancorp , one of the 10 largest U.S. banks by assets, was its first against a bank following Peregrine's bankruptcy 11 months earlier.
Prosecutors said Peregrine, which was also known as PFGBest, collapsed after Wasendorf stole roughly $215 million from more than 13,000 victims over nearly 20 years, covering his tracks by forging bank statements and submitting false regulatory reports.
The CFTC said about $36 million of the funds misappropriated by Wasendorf came from a U.S. Bank NA account. Peregrine had been based in Cedar Falls, Iowa.
U.S. Bancorp did not admit wrongdoing in agreeing to settle. "Like PFG's customers, U.S. Bank was subject to this sophisticated fraudulent scheme masterminded by PFG's CEO," bank spokesman Dana Ripley said.
Wasendorf, 66, is serving a 50-year prison term after pleading guilty in September 2012 to embezzlement, mail fraud, and making false statements to regulators.
The consent order was approved by Chief Judge Linda Reade of the federal court in Cedar Rapids, Iowa. It said U.S. Bancorp has taken "significant remedial action" to ensure that it properly handles customer funds that are meant to be held separately.
Reade had in November rejected U.S. Bancorp's argument that Wasendorf himself should make the restitution.
The case is U.S. Commodity Futures Trading Commission v U.S. Bank NA, U.S. District Court, Northern District of Iowa, No. 13-02041. (Reporting by Jonathan Stempel and Douwe Miedema; Editing by Susan Heavey, Bernard Orr)