Petters-Linked Hedge Fund Manager's Trial Delayed After Surprise Guilty Plea

Feb 5 2013 | 2:25am ET

The chief fundraiser for convicted Ponzi schemer Thomas Petters unexpectedly pleaded guilty to fraud charges Friday, putting a halt to the trial of a hedge fund manager charged with aiding the scam.

Frank Vennes, who has repeatedly denied the charges against him, entered his new plea in St. Paul, Minn., court, just days before he and Arrowhead Capital Management founder James Fry were to go on trial for wire fraud, bank fraud, securities fraud, money launder and making false statements. That trial has now been postponed; a new date has not yet been set.

Vennes had faced 26 counts at trial but pleaded guilty to only two. He could get up to 15 years in prison on the aiding and abetting securities fraud and unlawful monetary activity convictions.

Fry's lawyer said he was "mystified" by Vennes' guilty plea. It is unclear how it could affect Fry, the only one of the 13 people charged in the whose case lacks a conclusion. Eleven of the 13 have pleaded guilty and Petters was convicted and sentenced to 50 years in prison.

Fry, who was first charged in 2011, allegedly lied to investors about Petters' default on notes owned by Arrowhead and failed to tell clients about Vennes' criminal past.

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