Petters-Linked Hedge Fund Managers Plead Guilty

Apr 25 2011 | 12:36pm ET

Two hedge fund managers indicted last week in the Thomas Petters Ponzi scheme case have pleaded guilty to lying to investors about the fraud.

David Harrold and Bruce Prevost, principals of Palm Beach Capital Management, entered their pleas on Thursday, just a day after their indictment. Each man faces up to 20 years in prison when they are sentenced.

According to prosecutors and the SEC, which sued the two men and their hedge fund in October, Palm Beach swapped old promissory notes it bought from Petters for new ones, hiding the exchanges from investors. Palm Beach's assets made up more than $1 billion of the $3.65 billion invested in the Petters Ponzi scheme.

The pleas from Harrold and Prevost come less than a week after another hedge fund executive, Michelle Palm of Arrowhead Capital Management, also pleaded guilty to misleading investors about the fund's relationship with Petters. All told, nine people have pleaded guilty in the case, including Gregory Bell and Harold Katz of hedge fund Lancelot Investment Management.

Petters himself was convicted by a jury and sentenced to 50 years in prison.

A third man indicted alongside Harrold and Prevost, former Petters associate Frank Vennes, has not entered his plea.


In Depth

Q&A: Open Season For Closed-End Funds

Aug 29 2014 | 10:00am ET

When Maury Fertig and Bob Huffman, former Salomon Brothers coworkers, launched...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.