Tuesday, 27 September 2016
Last updated 6 min ago
Jun 13 2013 | 10:06am ET
Hedge fund manager James Fry was found guilty yesterday of misleading investors about his firm's ties to Ponzi schemer Thomas Petters.
The St. Paul, Minn., federal jury convicted the Arrowhead Capital Management founder of all 12 fraud and making false statements to the Securities and Exchange Commission charges on their third day of deliberations, agreeing with prosecutors that Fry had lied to his clients. The hedge fund manager, who was not accused of having knowledge of Petters' $3.65 billion fraud, nonetheless sought to help Petters cover up his default on notes owned by Arrowhead, and also lied to clients about the criminal history of Petters' chief fundraiser, Frank Vennes.
Fry is only the second person convicted by a jury in the case, after Petters himself, who is serving a 50-year prison sentence. All of the other defendants in the case, including Vennes, who was originally set to be Fry's co-defendant, pleaded guilty.
Fry faces up to 135 years in prison. U.S. District Judge Richard Kyle allowed him to remain free pending sentencing, rejecting prosecutors' arguments that he is a flight risk.