Arrowhead Owner Pleads Not Guilty In Petters Case

Jul 27 2011 | 11:08am ET

Hedge fund manager James Fry has pleaded not guilty to charges that he aided and abetted the Thomas Petters Ponzi scheme.

Fry, the owner of Arrowhead Capital Management, entered his plea yesterday in Minneapolis federal court. He was indicted last week on a dozen counts of securities fraud, wire fraud and making false statements to the Securities and Exchange Commission, three months after Arrowhead's former finance chief, Michelle Palm, pleaded guilty to similar charges and pledged to cooperate with prosecutors.

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 is also charged in the case.

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

U.S. Magistrate Judge Jeffrey Keyes set bail at $100,000. Fry's trial is scheduled to begin on Feb. 6.

If convicted, Fry faces up to 60 years in prison. Petters himself is serving a 50-year sentence following his conviction for running the $3.65 billion scam.

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