Saturday, 13 February 2016
Last updated 21 hours ago
Sep 22 2009 | 11:14am ET
An Illinois hedge fund manager charged with fraud in the Thomas Petters Ponzi scheme case may be making a deal.
Gregory Bell was formally charged on Thursday with wire fraud. But prosecutors filed a criminal information against the Lancelot Investment Management founder, indicating that a plea arrangement may be in the works. Earlier this month, prosecutors struck a plea deal with Lancelot’s former vice president of finance, Harold Katz.
According to the Securities and Exchange Commission, which has filed separate civil charges against Lancelot and Bell, the hedge fund steered nearly all of the money it raised—some $2 billion—to Petters’ alleged $3 billion Ponzi scheme. When that fraud began to unravel last year, the SEC says Bell and Petters cooked up a series of bogus payments to cover up Petters’ delinquency on more than $130 million in allegedly phony notes sold by Petters to Lancelot.
Bell was charged last week with creating 86 so-called “round-trip” transactions, totaling $1.4 billion, to hide Petters’ troubles from investors. He faces up to 20 years in prison if convicted.
As part of the criminal information, prosecutors demanded that Bell forfeit any property he acquired through the alleged fraud.