Hedge Fund Manager's Lawyer Questions Petters Fundraiser

Jun 6 2013 | 11:01am ET

Ponzi schemer Thomas Petters' top fundraiser was grilled by lawyers for the hedge fund manager yesterday over aiding and abetting Petters' fraud.

James Fry's attorneys took aim at Frank Vennes' credibility during their questioning. Vennes is the first of two former Petters executives expected to take the stand as Fry's team builds his defense; whistleblower Deanna Coleman is expected to testify today.

Prosecutors allege that Fry lied to investors in his Arrowhead Capital Management, both about Petters' default on notes owned by the hedge fund and about Vennes' criminal record. Fry, who is not accused of knowing about Petters' fraud, claims he did not knowingly lie to investors.

Yesterday, Joe Friedberg, attempted to show that Vennes had sought to mislead Fry with a letter from another Petters executive, Bob White, explaining that problems in Asia were contributing to late deliveries of close-out merchandise—merchandise which did not exist.

Friedberg suggested that when Vennes asked White to "shore up the letter," he did so to mislead Fry and other Petters business partners. Vennes said he simply wanted an accurate explanation.

Vennes, White and Coleman have all pleaded guilty in the case.

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