Friday, 6 March 2015
Last updated 3 hours ago
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.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…