Petters Trial Begins

Oct 28 2009 | 3:32pm ET

The trial of Minnesota businessman, hedge fund manager and accused Ponzi schemer Thomas Petters finally gets under way today, almost exactly one year after his arrest on fraud, money laundering and obstruction of justice charges.

Petters’ defense team and federal prosecutors are picking a jury today in Minneapolis to hear the evidence of an alleged $3.65 billion fraud that involved a score of hedge funds. Opening statements could come tomorrow in a case that is expected to last as long as six weeks.

Petters has been accused of ripping investors of by selling phony notes linked to consumer electronics sales which allegedly never happened. According to prosecutors, Petters and his co-conspirators told investors they were purchasing bulk electronics which were then sold on to big-box retailers. But the government says it was all just a Ponzi scheme, funding a lavish lifesyle as well as Petters’ purchase of Polaroid Corp. and Sun County Airlines.

At least 20 hedge funds were the chief victims of the scheme, according to the complaint, and at least one allegedly helped Petters cover up his scam. Earlier this month, Lancelot Investment Management founder Gregory Bell pleaded guilty to mail fraud, admitting he co-engineered a series of bogus “roundtrip” transactions with Petters designed to hide losses and keep the Ponzi scheme afloat.

Bell is just one alleged Petters accomplice who is scheduled to or believed to be taking the stand against Petters.

Petters has pleaded not guilty to 20 counts. He says the fraud was the work of his alleged co-conspirators, working behind his back and without his knowledge.

At the time of Petters’ arrest last October, his alleged Ponzi scheme ranked as the biggest fraud ever discovered. It was a dubious distinction that he held for just two months, until Bernard Madoff was arrest for a Ponzi scheme nearly 18-times larger.


In Depth

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

A Hard Look At Your ‘Soft’ Hedge Fund Marketing Information

Dec 8 2016 | 9:03pm ET

Conventional wisdom holds that due diligence examines quantitative as well as qualitative...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR