By Douwe Miedema

WASHINGTON (Reuters) - The top U.S. derivatives regulator on Wednesday sued a unit of U.S. Bancorp over unlawfully using customer funds from Peregrine Financial Group, the futures brokerage that collapsed in July 2012.

The CFTC complaint alleges that U.S. Bank N.A. used funds of Peregrine customers as security on loans and improperly held the funds in an account that it treated as Peregrine's commercial checking account.

Russell Wasendorf Sr., the former chief executive of Peregrine, began serving a 50-year sentence in February for bilking $215 million from customers.

"(The bank) knowingly facilitated Wasendorf's transfers of millions of dollars of customers' funds out of this account to pay for Wasendorf's private jet, his restaurant, and his divorce settlement, among other things," the CFTC said.

The CFTC's complaint in the U.S. District Court for the Northern District of Iowa alleges that the bank accepted customer funds as security on loans to Wasendorf, his wife and his construction company, to build an office complex for Peregrine in Cedar Falls, Iowa.

"This lawsuit is without merit and represents an inappropriate attempt to reassign blame to U.S. Bank," U.S. Bank spokesman Tom Joyce said. "U.S. Bank was also a victim of the same fraud - one that the CFTC failed to detect."

Peregrine Financial's trustee, Ira Bodenstein, is also contemplating a potential lawsuit against U.S. Bank to recoup customer funds, and the CFTC lawsuit does not change that, Bodenstein's lawyer, Bob Fishman, said.

(Additional reporting by Ann Saphir in San Francisco; editing by John Wallace and Matthew Lewis)