Hedge Fund Owner Charged In Petters Case

Jul 20 2011 | 11:22am ET

Federal prosecutors have indicted the owner of hedge fund Arrowhead Capital Management in the Thomas Petters Ponzi scheme case, and added to the list of charges against the $3.65 billion fraudster's chief fundraiser.

James Fry, who had not been previously charged in the case, faces 12 counts of securities fraud, wire fraud and making false statements to the Securities and Exchange Commission. Fry's indictment comes just three months after Arrowhead's former finance chief, Michelle Palm, pleaded guilty to similar charges promising to cooperate with prosecutors.

Palm admitted knowing that payments being made to Arrowhead were coming from Petters Co. itself rather than from the retailers who we supposed to be making the payments. She said that Fry had told her not to tell investors about the actual source of the payments.

According to the U.S. Attorney's Office in Minneapolis, Fry lied to investors in his Minnetonka, Minn.-based hedge funds about Petters' default on the notes owned by Arrowhead, with the help of Petters' chief fundraiser, Frank Vennes, who saw the number of charges against him rise from five to 25 yesterday.

Fry is also accused of not telling investors about Vennes' criminal past.

If convicted, Fry faces up to 60 years in prison.

Petters himself is serving a 50-year sentence following his conviction on fraud charges.


In Depth

Malik: The Science of Deal Sourcing 201

Aug 27 2015 | 5:35pm ET

Deal sourcing is understandably a hot topic among private equity firms because it...

Lifestyle

Rolling Art Advisors Marketing Collectible Car Fund As Uncorrelated Alternative

Aug 27 2015 | 6:47pm ET

A new fund is trying to provide investors with greater access to an emerging asset...

Guest Contributor

Agecroft Partners: Hedge Fund Industry Assets to increase $250B by Summer 2016

Aug 11 2015 | 11:29am ET

Assets will continue to flow into the hedge fund industry despite long-standing...

 

Editor's Note