Petters Jury Forewoman Speaks

Read it and see it the Strib.

Stop The Petters Scam Foundation Sues Star Tribune

Via City Pages.

Here's the press release:

Stop The Petters Scam Foundation Sues Star-Tribune for Breach of Contract for Censorship of Advertising Series that Newspaper Contracted to Publish

Lawsuit Alleges that Unknown Parties Pressured Newspaper to Halt Publication Of Ads That Raised Questions About Handling of Petters Bankruptcy

MINNEAPOLIS, Dec. 17 /PRNewswire/ -- Stop The Petters Scam Foundation, a Minnesota non-profit corporation, today filed a lawsuit against the Star-Tribune Company alleging breach of contract and related charges, and against 30 unknown "Doe" defendants for interference with contractual relations and related charges.

The Foundation's lawsuit asserts that the Star-Tribune "admittedly was pressured by certain unidentified persons to abruptly stop the publication" of a series of 15 advertisements that it had contracted to publish. Although the Star-Tribune agreed to run all the ads and accepted payment for them, it "apparently succumbed to pressure from as yet unknown powerful interests, and breached a fully executed oral agreement and abandoned its journalistic obligation to educate and enlighten its readers," the lawsuit states.
"Ultimately, this lawsuit is about the value of free speech in America," said Garrett Vail, president of the Foundation. "The Star-Tribune concedes that they received pressure to halt our ad series. The public has a right to learn what's been going on in the handling of the Petters assets. Somebody doesn't want us to continue asking questions and raising embarrassing facts. We intend to identify who pressured the newspaper, and hold them and the Star-Tribune accountable."

After running the first nine ads in the series, "the Star-Tribune abruptly and unilaterally cancelled the remaining advertisements based upon its contention that it had received complaints from persons who it refused to identify, concerning the advertisements. It further contended that it had not had the opportunity to investigate the accuracy of the advertisements (even though it knows that investigation of the content of advertisements is not a role it assumes)," the lawsuit states.

"The Star-Tribune refused and failed to disclose what concerns had been made concerning the advertisements, and did not recommend any editing or clarification of the advertisements, or offer to accept any proof of the accuracy of same. Rather, it made the blanket and unqualified statement that it would not permit any more advertisements to be made concerning the Petters Saga by Plaintiff, apparently because of the pressure it received from certain unidentified persons to desist further publication of the advertisements."

The lawsuit names 30 unidentified "Doe" defendants, and says that "Plaintiff will move expeditiously to conduct discovery to determine the identity of the responsible Doe defendants and to promptly amend the Complaint to name such responsible defendants."

The lawsuit seeks damages from the Star-Tribune and the unknown defendants. The damages arise in part from the Foundation's lost ability to publicize the planned airing of a $250,000 documentary film about the Petters case. The Star-Tribune's decision to halt the advertising series resulted in the Foundation not being able to air the documentary on any Minneapolis area network television stations, the lawsuit states.

The Foundation is represented in the case by Minneapolis attorney Dean Barkley, the law firm of Villaume and Schiek and by nationally prominent First Amendment attorney Anthony Glassman. Mr. Barkley, former United States Senator representing the State of Minnesota and independent candidate for the U.S. Senate seat in 2008, is an associate in the law firm Villaume & Schiek, P.A. Mr. Glassman in the past has obtained close to $10 million in jury verdicts against the New York Times on behalf of the then-largest shareholder of Santa Barbara Savings and Loan; won a $500,000 settlement on behalf of the founder of Seagate Technology against the Consumer Attorneys of California; successfully defended Playboy founder Hugh Hefner against personal defamation claims and successfully sued Larry Flynt and Hustler Magazine for invasion of privacy.

The Stop The Petters Scam Foundation was formed to raise public awareness of the handling of the bankruptcy and receivership proceedings involving companies and assets formerly owned by convicted Ponzi Scheme operator Thomas Petters, and to seek a just and fair resolution regarding the disposition of those assets. The Foundation's advertising series raised questions about the handling of the Petters assets, and related issues.

SOURCE Stop The Petters Scam Foundation

Sheeesh, what a mess....

UPDATE: More from MPR...

In a statement released this week, the Stop the Petters Scam Foundation said it will seek damages from the Star Tribune and 30 unknown defendants for interference with contractual relations and related charges.

The group also claims the Star Tribune's decision to halt the advertising series prevented the group from airing a $250,000 documentary film about Petters "on any Minneapolis area network television stations," according to the statement.

The foundation alleges the newspaper "apparently succumbed to pressure from as yet unknown powerful interests, and breached a fully executed oral agreement and abandoned its journalistic obligation to educate and enlighten its readers," according to the statement.

The Star Tribune called the allegations "preposterous" in a statement released after the lawsuit was filed.

"The Star Tribune made an independent judgment to stop publishing the 'Stop the Petters Scam' ads," the statement said. "We were not pressured by anyone to do this. It was absolutely our own judgment based on the content of the ads and the direction they were going."

The company said it discussed the decision with the Stop the Petters Scam Foundation before the lawsuit was filed, and fully refunded the money for the ads, including those that had already run.

"Suing for their money back after they have already received it makes no sense to us," the statement said.

The Polaroid Collection & Petters

A. D. Coleman has an entire series of articles at Photocritic International asking what happened to a collection of photographs:

The planned break-up and sale at auction of the Polaroid Collection has many ramifications, none of them positive. With no pre-planning, in June 2009 this blog became action central in an eleventh-hour effort to save the collection. This effort continues. Links to pertinent posts in this blog, which in turn contain links to pertinent documents, news stories, and other related information, can be found here...

An interesting story that anyone concerned with intellectual property or the Petters case should read.

A. D. Coleman also had some kind words about the sketch-videos on this blog:

P.S. For coverage of the ongoing trial of Ponzi schemer Tom Petters, whose massive fraud has jeopardized the future of the Polaroid Collection, see the November 19, 2009 report by David Phelps of the Minneapolis Star-Tribune. Petters is charged with conspiracy, fraud, and money laundering, and faces a possible life sentence if convicted. Petters International, his holding company, acquired all the assets of the original Polaroid Corporation in 2004, then went belly-up in 2008. It sold off all of its Polaroid holdings at bargain-basement prices in April 2009 — everything except the Polaroid Collection, which the new purchasers excluded from the deal. If you want daily blow-by-blow accounts of the trial, go to Ken Avidor’s excellent blog, Petters Info. He actually sits in the courtroom every day and watches the prosecuting attorney deconstruct Petters, makes sketches of the proceedings, then assembles them into a video with voiceover that very evening. Something like a William Kentridge film. Great stuff.

Documentary - "The Second Fraud"

Website launched for the documentary by Ryan Frost of Hillside Productions:

Tom Petters has been found guilty of masterminding a $3.65 billion Ponzi scheme for more than a decade. Justice has been served…but has it?

What happens to the victims of Petters’ crimes, those who invested in the legitimate pieces of his empire? Where is their money?

The man appointed to protect their interests is Doug Kelley. Incidentally, Doug Kelley is the very same man retained by Tom Petters himself following the FBI raid of his offices in 2008. It doesn’t end there. Doug Kelley was also appointed bankruptcy trustee for PCI and PGW. In the Bernard Madoff case in New York these roles were filled by three different people.

Something is not right in MN….. Find out more in The Second Fraud.

There are clips from the documentary on the website.

The documentary is also mentioned in this ad from the Stop The Petters Scam website:

The Stop the Petters Scam Foundation, the sponsor of this series of ads revealing behind-the-scenes maneuvers in the Tom Petters criminal and bankruptcy cases, is expanding its efforts to secure justice for Petters’ victims and creditors.

Our efforts were interrupted when the Minneapolis Star Tribune, after printing nine of the ads, abruptly refused to publish the six remaining in the planned series. We now are running the ads in the Pioneer Press. Meanwhile, we have retained former U.S. Senator Dean Barkley as our general counsel. “We saw justice done when a jury convicted Tom Petters of cheating people out of billions of dollars, ”

Barkley says. “Unfortunately, it isn’t clear at all that justice is being done for the many victims and creditors who are looking to get at least some of their money back.” He will continue the Foundation’s review of its legal options following the Star Tribune’s sudden decision to yank the political advocacy ads. Barkley is well known to Minnesotans as the chairman of the
independent campaign that put Jesse Ventura in the governor’s of"ce in 1998. Barkley also completed the Senate term of the late Paul Wellstone and then ran for a Senate seat as an independent in 2008.

The Stop the Petters Scam Foundation was founded by attorney Garrett Vail, who has been hot on Petters’ trail since 1999 when he "rst approached law enforcement of"cials with evidence of Petters’ frauds. Vail also announced that the Foundation has acquired a helping hand in its grassroots campaign for victims’ and creditors’ rights. Citizens Against Unjust Seizures, Inc. (CAUS), based in the Washington, D.C. area, is a new public interest group "ghting governmental abuses of its
asset-forfeiture powers in criminal and bankruptcy cases. CAUS has named Gary Nordlinger as its executive director. As a public affairs consultant, Nordlinger has provided political and communications strategy for hundreds of public offcials, associations, labor unions, and corporations in twenty-eight countries on six continents.

On still another front, independent "filmmaker Ryan Frost has produced The.Second.Fraud, a documentary about how Petters’ Ponzi scheme was followed by the efforts of a ring of professionals to loot Petters’ remaining assets. The Second Fraud will be screened in the Twin Cities soon — watch for show times and venues. Tomorrow: As citizens organize to !ght forfeiture and bankruptcy scams, which public of!cials will stand up for victims' rights?

Interesting.

FBI Press Release:

Federal Jury Finds Tom Petters Guilty of Orchestrating $3.65 Billion Ponzi Scheme

ST. PAUL, MN—Late last night, a federal trial jury convicted Thomas Joseph Petters, 53, of Wayzata, Minn., of orchestrating a $3.65 billion Ponzi scheme. The verdict followed a month-long trial before U.S. District Court Judge Richard H. Kyle in the U.S. Courthouse in St. Paul, Minn. Specifically, Petters, who was originally indicted in December 2008, was found guilty of 10 counts of wire fraud, three counts of mail fraud, one count of conspiracy to commit mail and wire fraud, one count of conspiracy to commit money laundering and five counts of money laundering.

According to the indictment and evidence presented at trial, Petters, aided and abetted by others, defrauded and obtained billions of dollars in money and property by inducing investors to provide PCI funds to purchase merchandise that was to be resold to retailers at a profit. However, no such purchases were made. Instead, the defendants and co-conspirators diverted the funds provided them for other purposes, such as making lulling payments to investors, paying off those who assisted in their fraud scheme, funding businesses owned or controlled by the defendants, and financing Thomas Petters’s extravagant lifestyle.

The investigation of this case began on Sept. 8, 2008, when co-conspirator Deanna Coleman and her attorney reported to federal prosecutors that she had been assisting Petters in executing a multi-billion-dollar Ponzi scheme during the previous 10 years. Coleman claimed she, Petters, and co-conspirator Robert White fabricated business documents to entice investors into lending Petters money purportedly to buy electronic goods to be sold to big-box retailers, such as Costco and Sam’s Club.

As a result of the meeting with federal prosecutors, Coleman agreed to work with law enforcement. She wore a recording device to tape conversations with Petters and others to substantiate her claims about the scheme as well as White and Petters’s involvement in it. Within the first few hours of Coleman’s recorded conversations, Petters was heard admitting that purchase orders were “fake” and claiming “divine intervention” was the only explanation for how he and his co-conspirators “could of got away with this for so long.” These recorded conversations chronicled the history of the scheme as well as the conspirators’ efforts to maintain it by obtaining new investor funds and lulling long-term investors. The recordings also detailed how the conspirators planned to avoid responsibility if the fraud was discovered.

On Sept. 24, 2008, agents from the FBI; the Internal Revenue Service, Criminal Investigation Division; and the U.S. Postal Inspection Service executed search warrants at Petters’s headquarters, Petters’s home, and other locations. They recovered numerous documents and evidence. Within days, PCI filed for bankruptcy.

Petters’s scam was an ordinary Ponzi scheme. Often potential investors were provided fabricated documents that listed goods purportedly purchased by PCI from various vendors and then sold to retailers. In some instances, investors also were provided false records indicating that PCI had wired its own funds to vendors, thus giving the appearance that PCI had money invested in the deals too. In addition, investors frequently received false PCI financial statements showing the company was owed billions of dollars from retailers. To induce investors further, Petters often signed promissory notes and provided his personal guarantee for the funds received. Those who invested, however, were not paid through profits from actual transactions. Rather, they were paid with money obtained from subsequent investors and, sometimes, even their own money.

As to this scheme, Shawn S. Tiller, Postal Inspector in Charge of the U.S. Postal Inspection Service, said, “The exploitation of the U.S. Mail in the furtherance of a Ponzi scheme, as committed by Mr. Petters and others, is a crime that is the job of the U.S. Postal Inspection Service to aggressively investigate to ensure the American public can have continued confidence in the integrity of the postal system.”

PCI, which was formed in 1994, is solely owned by Petters. Coleman was hired by Petters as an office manager in 1993. PCI conducted some legitimate business initially but engaged in fraud from its first day. Petters began inflating and falsifying purchase orders in an effort to obtain more money from investors, which, in turn, he used to pay other investors as well as his increasingly lavish personal lifestyle. When Petters could not pay an investor on time, he would employ delay and evasion tactics, such as promising payment in the near future, making up excuses about slow payments from retailers, or providing checks that bounced. As the scheme progressed, Coleman was responsible for fabricating the PCI purchase orders and transferring funds between investors.

In 1999, Petters wanted to give investors false bank statements to “verify” PCI’s purported bank transactions with retailers. Therefore, Petters turned to White, his friend, who agreed to prepare the false documents. Afterward, Petters hired White and gave him the title of chief financial officer of PCI. Among other things, White was responsible for fabricating the retailer purchase orders and PCI financial records.

In response to today’s verdict, Ralph S. Boelter, Special agent in Charge of the Minneapolis field office of the FBI, said, “Even post-trial, it is difficult to comprehend the scale of the financial loss perpetrated by Mr. Petters’s massive fraud scheme. Still, it is my great hope the many victims in this matter will find at least a measure of solace in today’s fitting and just verdict.”

To further his scheme, Petters recruited purported vendors to assist him. In 2001, he asked business associates Larry Reynolds and Michael Catain to launder billions of dollars of investor funds through their business accounts and back to Petters and PCI. Reynolds operated Nationwide International Resources, Inc. (“NIR”), and previously he had conducted deals involving shoes and clothing with retailers, including Petters. In 2001, Petters asked Reynolds to allow him to wire millions of dollars through Reynolds’s bank accounts and, in exchange, agreed to pay Reynolds a fraction of a percent of the funds as a “commission.”

Petters made a similar agreement with Catain. As a result, in early 2002, Catain created a sham company, Enchanted Family Buying Co. (“EFBC”), and opened a business bank account. He then directed funds from Petters through that business account and back to Petters and PCI, less a commission. EFBC did no real business. In fact, its headquarters was above Catain’s car wash, just a few miles from Petters’s headquarters.

Between January 2003 and September 2008, approximately $12 billion flowed through the NIR account into the PCI account. During that same time period, roughly the same amount flowed through the EFBC account into PCI. Although each company was purportedly a vendor, selling hundreds of millions of dollars in merchandise to PCI, bank records revealed no vendor income from those transactions. Instead, money flowed only from the two companies to PCI.

In April of 2001, PCI opened a new bank account that only Petters and Coleman were authorized to use. From January 2003 to September 2008, approximately $35 billion was wired into that account from investors, NIR, and EFBC. Although PCI supposedly was selling merchandise to retailers, none of the deposits into the account came from retailers. Moreover, while most of the funds in the account went to pay some returns to investors, millions went to Petters, Coleman, and White. Additional money from the account was used for bonuses for other Petters’s employees, most of whom did not even work for PCI. Tens of millions in account dollars went to Petters himself, while hundreds of millions went to fund Petters’s companies, including Petters Warehouse Direct and RedTag. Petters also used PCI funds to employ family members, purchase real estate for family members, and fund businesses for them.

Petters continued to purchase and operate companies in an effort to maintain the facade of a successful businessman and create a false air of legitimacy that would lure new investors. The companies he bought were purchased with proceeds of the PCI fraud, and they included Fingerhut, Polaroid, and Sun Country Airlines, which, collectively, became known as Petters Group Worldwide, or PGW. Each year PCI wrote off millions of dollars in losses based on the losses it incurred from funding these other companies. However, the companies provided Petters the appearance he needed to keep the scam going.

“This case shows that the appearance of success can be a mask for a tangled financial web of lies,” said Julio La Rosa, Acting Special Agent in Charge of the St. Paul field office for the Internal Revenue Service, Criminal Investigation Division. “Ponzi schemes can thrive for a time on false claims about how the money is being invested and where the returns are coming from. But that time is gone, and as this verdict shows, it’s time for those responsible to face judgment.”

By the end of 2007, the conspirators were struggling to find new investors, and PCI was slow in paying hundreds of millions of dollars in promissory notes held by Lancelot Investment Management, which was operated by Greg Bell. Petters told Bell the slow payments were due to his retailers, who were late in paying him. As a result, Bell agreed to an extension on the payments so the notes would not go into default. In February 2008, Bell and Petters agreed Bell would receive replacement purchase orders from other retailers for the purported purchase orders held by Lancelot. Bell suggested they also exchange money so it would appear that PCI was paying its notes. Between late February 2008 and the date of the search warrants, Bell and Petters engaged in more than 80 “round trip” financial transactions intended to give the false impression that PCI was paying its obligations when due.

Petters continued to lull investors even after law enforcement executed search warrants on Sept. 24, 2008. Furthermore, on Oct. 1, 2008, Petters suggested to White and Reynolds that they flee prior to prosecution. Coleman, White, Reynolds, Catain, and Bell already have pleaded guilty for their roles in the scheme. Sentencing dates for them, however, have not been scheduled. James Wemhoff, Petters’s personal and business accountant, has pled guilty to criminal charges not related to the PCI Ponzi scheme.

Petters faces a potential maximum penalty of 20 years in prison for each wire fraud count on which he was convicted, 20 years for each mail fraud count on which he was convicted, 20 years for a single money laundering conspiracy count, 10 years for each of the money laundering counts on which he was convicted, and five years for a single count of conspiracy to commit mail fraud and wire fraud. Petters’s potential fine is $250,000 for each count on which he was convicted or twice the gross loss or gain by the defendant because of the crime, whichever is greater. Judge Kyle will determine his sentence at a future date. Asset forfeiture action relative to this case is pending.

This case is the result of an investigation by the FBI, the IRS-Criminal Investigation Division, and the U.S. Postal Inspection Service. It was prosecuted by Assistant U.S. Attorneys Joseph T. Dixon, John R. Marti, Timothy C. Rank, and John F. Docherty.

Bizarre Audio of Tom Petters, Bruce Prevost and Frank Vennes Jr. Talking Religion (and Money)

Note: This audio was removed after a complaint from Bradlee Dean.

An audio selection from the wire of Deanna Coleman. Tom Petters, Bruce Prevost and Frank Vennes Jr. at a meeting 9/9/08.

NSFW Wire Recording of Tom Petters's Breakdown 9/9/2008

This is an 17:30 minute excerpt from a recording from a wire Deanna Coleman agreed to wear for the FBI in a meeting in Tom Petters's office September 9, 2008.

You can hear Deanna Coleman, Bob White and Tom Petters discuss a visit from auditors. They discussed the phony purchase orders that were used to borrow millions of dollars.

Deanna Coleman tells Petters she is sick of lying about the fraud. Petters drops the F-bomb a lot and towards the end breaks down sobbing. Persons mentioned, but not present are feeder fund operator Frank Vennes Jr., lawyer David Baer and accountant Jim Wehnhoff.

Petters Promo Biopic in Two Parts

"He's been going a hundred miles an hour since the day he was born."

Starring Tom Petters, Deanna Coleman in a supporting role.

The Trial of Tom Petters - The Verdict

December 2, 2009

Day 22 in the trial of Tom Petters.

After 30-plus hours of waiting for the jury in the Petters fraud trial to bring in a verdict, after waiting in the Jury Assembly room on the ground floor of the Federal Courthouse in Saint Paul, after sketching the live feed from the empty courtroom on the seventh floor on the flat-screeen monitor, after sketching details of the Jury Assembly Room like the microphone, and the reporters waiting for the verdict in the Jury Assembly Room, after sketching the railroad lift bridge over the Mississippi, after hearing defense attorney Jon Hopeman say the deliberations could go three hours or thirty days, after sketching the televsion news truck and the truck's boom antenna from the seventh floor and the seventh floor and the photos of judges on the seventh floor and the bored, dozing witness from another trial on the seventh floor... just when I was starting to get really bored, we got the word at four o'clock that the jury had reached a decision.

Judge Kyle read the verdict;, guilty on all twenty counts.

Tom Petters showed no emotion as judge completed the formalities and dismissed the jury.

Tom Petters awaits sentencing for his a $3.5 billion Ponzi scheme.

While Waiting for a Verdict... More Stuff About Frank Vennes

A new comment on an 2008 article at MnINdy:

Gary
Comment posted November 23, 2009 @ 9:47 pm
Frank Venes is as crooked as Lombard St in San Francisco. He knew exactly what he was doing. I personally dealt with the man, he was trying to bankrupt me through litigation in Florida over a parcel of land next to his Merritt Island pad at the time. In the end, I had to sell it to him because he would not let me build and the court was accommodating him. I also left the area after that debacle.
The first conviction in 1987 was for small change, he now earned the privilege to be Bernie Maddoff’s neighbor once the Feds are through with him. Maybe that he will try to buy off Bernie’s cell.

An article in Florida Today:

But Dragon Point remains tied up in court: Palumbo and his former business partner, Frank E. Vennes Jr., sued each other, and their cases remain unresolved.

And federal prosecutors allege Vennes was a key participant in a $3.7 billion Ponzi scheme. A criminal trial is under way in St. Paul, Minn.

Meanwhile, curious kayakers and boaters gawk at the post-apocalyptic appearance of the property. Overgrown vegetation reaches up to the mansion's battered roof, which is reduced to tar paper, rotting boards and splintery holes.

The cantilevered swimming pool contains brown, murky water and trash. Nearly all the stained glass windows -- which depicted colorful scenes of dragons, cranes and other creatures -- are broken out. Plants grow in the Jacuzzi.

"It's a Space Coast landmark. That is the most unique property in all of Brevard," Palumbo said. "It's very frustrating right now that I can't continue what I wanted to do. Everything is in receivership."

In the City Pages this week - The fourth graphic narrative of the Tom Petters trial.

The Trial of Tom Petters Day 18

November 23, 2009

Day 18 of the trial of Tom Petters.

I arrived early to the courthouse today, but there was already a crowd of spectators lining up to watch the Government and the Tom Petters's attorneys give their final arguments.

Each side had ninety minutes with a short rebuttal for the Government.

First Assistant U.S Attorney John Marti said Petters's associates who had pled guilty and testified against Petters were, using defense attorney Jon Hopeman's words "instruments of darkness". But, Marti reminded the jury that Petters had admitted in his testimony that they were his instruments.

Marti played more tapes so the jury could again hear Petters admitting PCI was "one big fraud". Marti explained each of the twenty counts in the indictment and gave a summary of the evidence.

At the end, Marti reminded the jury of the small investors who testified about losing nearly all their money in the scheme and said the jury could "fix it" by convicting Tom Petters.

Petters's attorney Paul Enge talked about some of the evidence that could put a doubt in the Government's case, but there wasn't much. Enge filled up the rest of his statement with literary references from Samuel Becket to Gertrude Stein. Enge also mentioned Freud, Nietzsche, heuristics and cognitive dissonance.

Paul Enge's main point was that the jury should presume the defendant innocent until proven guilty as the Founding Fathers intended... Enge said that while jumping up and down for emphasis.

Assistant U.S. Attorney Tim Rank gave a twenty minute rebuttal in which he turned the jury's attention back to the tapes and Petters own words that the purchase orders were fake.

After lunch, Judge Kyle read the jury instructions. The fate of Tom Petters now rests with the jury.

Petters Trial Day 17

November 20, 2009

Day 17 of the trial of Tom Petters.

I was standing in the park overlooking the Missisippi river at Kellogg Avenue and Robert Street in Saint Paul reading a plaque commemorating the log church that Father Galtier built on this spot when the town was called Pig's Eye, named after Pierre "Pig's Eye" Parrant who owned a popular tavern here back in the pioneer days. The log church was named after Saint Paul and soon the new city changed it's moniker from Pig's Eye to the more respectable St. Paul.

A stone's throw from rock with the plaque is the Federal Courthouse where the Trial of Tom Petters continued today with the testimony of Tom Petters.

The gallery was filled with people in suits carrying legal pads.

Petters's attorney Jon Hopeman asked a few questions before turning over his client to the withering examination of Assistant U.S. Attorney Joe Dixon.

Dixon read quotes from emails and transcripts of taped conversations in which Petters admitted having knowledge of the fraud. Petters kept insisting that his statements were open to interpretation.

Petters insisted he was going to take care of the money problems at PCI and investigate the fraud. Petters said Deanna Coleman was "mentally ill" when she was wearing the wire and that she asked him "prefabricated questions that set me up".

Petters also said the raid on his business "made matters worse".

By ten o'clock, both the defense and the Government rested their cases.

The judge held a few sidebar conferences with the attorneys and announced that the trial would continue Monday with closing statements and jury instructions.

Petters Trial Day 16

November 19, 2009

Day 16 in the trial of Tom Petters.

Defense lawyer Jon Hopeman continued the direct examination of Tom Petters. Hopemen asked Petters to explain some of the incriminating remarks we heard on the recordings and testimony of witnesses in the trial.

Petters said the business was filled "with nonsensical excuses and stories".

Petters said that faked purchase orders was the way they did business at PCI.

He also admitted to having been prescribed Adderall and Klonopin for his ADD. He said the dosage was tripled and made him sound "like a maniac" on the tapes.

Petters got way emotional when Hopeman asked him about the day Petters resigned. He leaned back in his chair and choked back the tears.

Assistant U.S. Attorney Joe Dixon began the redirect examination by asking Petters about his tax returns that "year after year" showed "zero income".

Petters was evasive about the tax returns, blaming his accountant. He claimed he just signed the tax returns.

Dixon asked Petters whether he had sex with Deanna Coleman. At first, Petters refused to answer the question, but admitted he had a sexual relationship with her in Italy.

Dixon asked Petters if he had told his personal assistant, David Margolis that he had sex with Deanna Coleman in a gondola. Petters said yes.

Dixon hammered away at Petters on his business dealings and the statements he made on tape and in emails that indicated he knew PCI was a fraud. Dixon told Petters he had "Ponzied" his father-in-law. Petters denied knowing he was running a Ponzi scheme.

When Dixon asked Petters about his Bentleys, Petters replied that he was not a "Bentley guy" after Dixon showed a receipt for one of posh cars, Petters said, "okay, I'm a Bentley guy".

Petters lost his cool at times as Dixon pressed Petters to admit PCI was a fraud that kept his other companies afloat. Petters admitted PCI was "the cash cow for all my companies" and that he was "involved" in the scheme, however he still maintained that he was not responsible for the scheme.

Dixon asked Petters if his former associates were "instruments of darkness", borrowing the phrase Jon Hopeman used in his opening statement. Petters said, "yes, they were my instruments".

Dixon said Petters former associates had made millions of dollars and Petters took $400 million. Petters said, that's what got put in my companies".

There will be more testimony from Tom Petters and very likely closing statements tomorrow.

Day 14 -Tom Petters Trial

November 17, 2008

In the morning, Steve Ratliff, former President of Red Tag testified about working for Tom Petters. He testified that Tom Petters was loved by his employees and gave lots of money to charity. On redirect, Assistant U.S. Attorney John Marti asked Ratliff about Tom Petters's posh homes, cars and showed pictures of the PCI corporate jet. Ratliff said Petters used the jet for business and pleasure.

A few more people testified; A shipping manger, an accountant who wasn't allowed to look at bank statements, Tom Petters's speechwriter and the human resource manager at Petters Worldwide... but everyone, including Tracy Mixon, Tom Petters's fiancee was waiting for the main event - the testimony of Tom Petters.

Tom Petters took the stand at four o'clock and talked about growing up in Saint Cloud and his start in the merchandise diverting business. Petters said the merchandise diverting business had a lot of people who did nasty stuff like bounce checks. He admitted he bounced checks too.

Petters said he said he was not guilty. He admitted participating in the fraud, but blamed others he said he trusted too much.

Tom Petters will testify again tomorrow.

The Trial of Tom Petters Day 13

Monday, November 16, 2008

Day 13 in the trial of Tom Petters.

The Government wrapped up their case today with the testimony of IRS Special Agent Kathy Klug. Documents relating to the 20 charges against Tom Petters were entered as evidence. There were all sorts of big spending on casinos and fancy cars.

The Government rested their case at 11:40.

The lawyers for Tom Petters called their first witness, a former employee at Circuit City who testified that Tom Petters was "a very bright fellow, but management wasn't his strong suit.

The next witness was Karl Petters, a cousin of Tom Petters who testified about working for Petters. He said most of the people in the business, "you wouldn't want over for dinner". He said he left the company because the business Petters was in was "horrible" and he did not like working for his cousin. Karl Petters said he "loved the man, but hated the boss".

Karl Petters also testified that Larry Reynolds threatened to kill him.

The next witness said he knew Petters when he was selling hangover pills and lip balm. He testified that Peters was not a micromanager.

The next witness was John Hagen, Tom Petters's father-in-law who said Tom Petters "buried himself in his work" after the murder of John Petters.

George Danko testified about working for Tom Petters. He testified that Bob White was a "totally unreliable person".

The defense resumes tomorrow.

Petters Trial Day 12

Friday, November 13, 2009

Day 12 in the Trial of Tom Petters.

Today we heard from more businessmen about documents forged and deals gone bad.

An assistant buyer who used to work at Circuit City. He testified he didn't sign one of the documents Tom Petters used to borrow money.

Next, businessman Irwin Jacobs was called to testify about a deal that didn't go very well with Petters back in the 1990's.

Greg Bell returned in his white sweater. On direct and indirect examination, Bell talked about what he did when he learned in 2008 that Petters was in deep trouble. He moved millions offshore to trusts in islands all over the world.

Businessman Ted Deikel took the stand next and talked about the deal he had made with Petters in June, 2008. As we have heard from other withnesses, Deikel had a difficult time getting Petters to repay the loan. Petters bounced checks on Deikel and and made a lot of crazy excuses. Deikel received partial payment of the loan but he lost seven and a half million dollars.

The next witness was Petter's nanny Jennifer Wolter who testified that she had not signed one of the documents Petters had used to buy time on his loans.

The next witness was Ray Ross, a retiree living in Arizona. Ross was involved with Charis MInistries when he met Frank Vennes in jail. Ross invested his $491,000 nest egg with Vennes and Vennes invested it in Petters and now it's all gone and Ross and his wife have to live on Social Security.

The final witness of the day was Special Agent Kathy Klug. Assistant U.S. Attorney Joe Dixon asked Kathy Klug to connect each of the counts in the indictment to documents. That part of the Government's case will be finished on Monday and then we will hear the attorneys for Tom Petters make their case.

Defense attorney Jon Hopeman told reporters that no decision has been made about Tom Petters testifying, but that decision is entirely up to Tom Petters.

Tom Petters Trial Day 11

November 12th 2009

Day 11 of the Trial of Tom Petters.

The Government continued to build its case against Tom Petters with more testimony from businessmen. Michael Liss, an investor described Petter's stalling tactics when Petters couldn't repay a loan. Liss said Petters made all kinds of excuses while he continued to live like a "big-time wheeler-dealer"... like a "swashbuckling industrialist" with his "Blackberry abuzz".



But it wasn't just banks and hedge funds that lost money with Tom Petters. Little people were wiped out too. A widow, Janet Leck testified that Frank Vennes Jr. persuaded her to invest nearly everything she owned... now she faces foreclosure on the home she lived in for thirty years.

Another Petters associate, Michael Catain took the stand next. A few years before he was arrested for his role in the Petters fraud, Michael Catain got into trouble with his neighbors. According to a 2006 police report, Michael Catain was observed screaming at a neighbor, "You wanna come after my wife? I'll fucking kill you."

Even after Petters was busted and Catain's property was put in receivership, Catain couldn't stay out of trouble. A report of an investigation by receiver Doug Kelly in January, 2009 said Michael Catain skimmed nearly $14,000 in proceeds from the Bay Car Wash he owned in Excelsior and removed several items from his home "including expensive chandeliers".

Catain testified today about his role in the scam, laundering of twelve billion dollars for Tom Petters and other stuff. He used code words like cabbage to signal when he would wire money.

After Catain, Greg Bell took the stand. Bell is being held in Anoka County jail. Bell testified about how he started the Lancelot hedge fund which was invested almost entirely in PCI.

Tomorrow, more Greg Bell testimony.

Petters Trial Day 10

The prosecution played the rest of the September 17, 2008 recording of a meeting in Tom Petters office. The recording was made with a wire planted on Deanna Coleman.

Tom Petters, Deanna Coleman, Jim Wehmhoff and Bob White were attempting to brainstorm about how they would handle some frustrated investors who were sending auditors to Minnesota

Coleman said she couldn't take the lying anymore. She said she "couldn't stomach it anymore"

Wehmhoff said they needed an excuse to keep Coleman away from the auditors.

Bob White agreed and said she should pretend to get sick. White added that he thought they could "buffalo their way through it".

Tom Petters also said he couldn't lie anymore and cried and cried... Coleman said she had to go.

After the recording ended, two investors testified about losing lots of money after PCI was raided in September 2008.

After the investors, Petter's accountant Jim Wehmhoff took the stand. He looked like an old grandpa and it was pathetic to hear how he participated in the fraud, moving money around and filing fraudulent tax returns.

Tomorrow is Veterans Day, so the trial won't continue until Thursday when the prosecution has Michael Catain and Greg Bell scheduled to testify.

Petters Trial Day 9

November 9, 2009

Day 9 of the trial of Tom Petters.

The prosecution started off with some people who worked for companies like Walmart and 3M testifying. Most of the testimony was about the phony purchase orders alleged to have been used to get big loans that fueled the Petters Ponzi scheme, or as Bob White put it, "feed the demon".

At 10:00, Larry Reynolds took the stand. Judge Kyle read his plea agreement and Assistant U.S. Attorney John Marti questioned Reynolds about his criminal activity years ago before Larry Reynolds, then Larry Reservitz ended up in the Witness Protection Program (WitSec).

Marti asked Reynolds if he was a member of La Cosa Nostra. Reynolds said, "The last time I checked, they don't accept members of the Jewish faith."

Reynolds testified about his business dealings with Tom Petters, the phony invoices, the fake warehouses, and the money laundering.

Reynolds talked about visiting Tom Petters in his suite at the Bellagio in Las Vegas and how Petters considered making Deanna Coleman the fall gal for the scheme.

When Reynolds visited Minnesota in October of 2008, Petters drove him to the airport. As he drove, Petters told Reynolds that Bob White would flee the country and suggested Reynolds flee also. Reynolds was arrested after he arrived home in Los Angeles.

Defense attorney Paul Enge challenged the witness's credibility in redirect examination., referring to Reynold's criminal history again and again. The prosecution objected often and Judge Kyle sustained most of the objections. After a few more minutes, Judge Kyle called the attorneys to the bench.

Paul Enge was done questioning Larry Reynolds and the prosecution proceeded to play another recorded conversation from the wire Deanna Coleman wore to a meeting in September, 2008.

Frank Vennes called to warn Tom Petters about auditors from the Palm Beach hedge fund heading to PCI to check the books.

Petters tells Coleman and White, "This is one big fucking fraud and I'm dealing with it."

Around 4:30, the tape was stopped and the jury filed out. Paul Enge complained to the judge that his client was being denied his right to a public trial guaranteed by the sixth amendment to the Constitution because he thought the public needed to know what was in Larry Reynold's WitSec file. Enge called for a mistrial.

Judge Kyle denied the motion.

Tomorrow, Michael Catain is scheduled to testify.

Petters Trial Day 8

Petters Trial Day 7

Petters Trial Day 6

Petters Trial Day 5

Petters Trial Video - Day 4

Deanna Coleman's first testimony:

Video: Tom Petters Trail - First Week

Day 3 Petters Trial

More testimony about phony purchase orders for imaginary electronic stuff.

Also, the guy from Interlachen who lost $60 million.

Deanna Coleman will likely testify on Monday.

Petters Trial 2nd day

Today, there was testimony about a loan... sort of dull:

Reuters:

* U.S. introduces evidence it says shows forgery

* Petters accused of deceiving investors, retailers

* Defendant accused of running Ponzi scheme (Adds new testimony, defense strategy on cross-examination)

Pencil drawings from Wednesday.

AUSA Joseph Dixon gives the opening statement for the Government:



Hopeman for the defense:



Petters & attorney:

Petters Trial 1st Day

I was there.

Jury selection and opening statements.

Joe Dixon's opening argument was excellent. He outlined the scam without getting into too much detail. He played a few excerpts of recorded conversations with Tom Petters dropping the F-bomb in nearly every other sentence.

Hopeman previewed the defense argument; Petters was too busy to notice because he was a workaholic and distraught over the murder of his son.

Here's the Strib article.

I have some good drawings from opening day, I'll post them later.

This one I did a few days ago from photo reference:

Petters Trial Tomorrow

Last minute rulings... WCCO:

A judge has denied the defense's request to move Tom Petters' trial out of the Twin Cities, just a day before the trial is supposed to start.

The judge also ruled that incriminating recordings made by Deanna Coleman, the whistleblower in the case, can be played before the jury.

Petters also asked that he be moved from the Sherburne County Jail in Elk River to the Ramsey County Jail in St. Paul during his trial, but the judge said no to that too.

Jury selection in the case starts at 9 a.m. Wednesday.

Earlier this month, U.S. District Judge Richard Kyle denied Petters' bid to move his trial out of the state.

Petters Trail Delayed Another 2 Days

MPR:

Petters' trial in St. Paul had been scheduled to begin this week, but U.S. District Judge Richard Kyle delayed it until next Monday. On Friday, Kyle delayed the trial by another two days but did not give a reason for the delay.

Jury selection will begin Wednesday, and opening statements will likely come later in the week.

Petters Jury Selection Delayed Until Monday

Strib:

Jury selection had been scheduled to begin tomorrow, with the estimated six-week trial beginning Monday. U.S. District Judge Richard Kyle said today at a pre-trial hearing that the fraud trial would begin in his St. Paul courtroom as soon as the jury could be seated. That could come as soon as Monday afternoon, but likely would be Tuesday morning.

KSTP has more about pre-trial motions:

Wednesday attorneys defending Wayzata businessman Petters against charges of fraud filed 28 pretrial motions. In one they renewed their motion for a change of venue due to the possibility of pre-trial publicity tainting the jury pool.
Judge Richard Kyle denied the motion and said he would only reconsider his decision if something unusual comes up during jury selection, now scheduled to begin on Monday.

Kyle granted a defense motion to exclude details of Petters' lavish lifestyle and spending along with accusations of drug and prostitution use. The defense argued such evidence would become a side show and distract from the actual legal case.
The judge left open the possibility for the prosecution to ask for another ruling on the lifestyle issues.

The judge did not yet rule on a motion from the prosecution to disallow evidence of Petters' former charitable giving. However the judge did shoot down the defense argument that the evidence speaks to Petters' character. Judge Kyle compared the argument to a bank robber who gives the money he stole to the "Little Sisters of the Poor." He said it doesn't change the fact the money was stolen.

Also among the 28 defense motions was a request for more access to documents about defendant Larry Reynolds. Reynolds is the alleged co-conspirator who used to be in the Federal Witness Protection Program. The defense said proving he helped set up Petters is a big part of their defense. Prosecutors said the argument is just a "red herring" and that Petters attorneys want to turn this into a trial about the witness protection program. The judge took the motion under advisement and will issue a ruling later.

In another ruling, the judge agreed with the defense argument to exclude evidence of past allegations of criminal business dealings from Colorado in the late 1980s. The ruling will likely restrict the prosecution to Petters' dealings from 1994 through 2008. However, the judge decided to allow evidence of past tax and bank fraud.

The defense also made a motion to transfer Petters from the Sherburne County Jail to the Ramsey County Jail. The attorneys said it takes them an hour to get to the Sherburne jail to talk to their client. The judge said he will look into it, but said security issues, expense and available space might prevent a transfer.

PiPress Preview of Trial

PiPress:

Petters, 52, has pleaded not guilty to a 20-count indictment on fraud charges. The trial is expected to run a month or more.

Prosecutors call the evidence against Petters "overwhelming." They'll arrive in court having reviewed thousands of documents, Petters' company computer files and e-mail messages he sent to associates about the alleged scheme. Those same associates indicated at their plea hearings that they have the inside knowledge to tie the whole case together.

The article by John Welbes has this timeline:

AN EMPIRE FALLS

Sept. 24, 2008: Federal agents raid the Minnetonka headquarters of Petters Group Worldwide and the home of its chief executive, targeting a little-known financial division called Petters Co. Inc.

Sept. 29, 2008: Tom Petters resigns as CEO of Petters Group Worldwide. Minneapolis attorney Doug Kelley takes over.

Oct. 3, 2008: Tom Petters is arrested at his Wayzata home and held without bail. Larry Reynolds is arrested the same day in Las Vegas. Both are charged with mail fraud, wire fraud, money laundering and obstruction of justice.

Oct. 6, 2008: Mendota Heights-based Sun Country Airlines files for Chapter 11 bankruptcy protection. U.S. District Judge Ann Montgomery puts the other Petters Group companies into receivership under Kelley and freezes their assets.

Oct. 8, 2008: U.S. Magistrate Jeffrey Keyes denies Petters bail, calling him a flight risk. Petters' associates Robert White, Deanna Coleman and Michael Catain plead guilty of mail fraud, money laundering and conspiracy.

Oct. 11, 2008: Petters Group Worldwide files for Chapter 11. Among the creditors: Illinois hedge fund company Lancelot Investment Management, which says it is owed $1.5 billion.

Oct. 23, 2008: Larry Reynolds pleads guilty of money laundering.

Oct. 31, 2008: U.S. District Judge Michael Davis denies Petters' second request for bail.

Dec. 1, 2008: A federal grand jury in St. Paul indicts Petters, charging him with two counts of conspiracy and 18 counts of mail fraud, wire fraud and money laundering. He pleads not guilty the next day.

Dec. 18, 2008: Polaroid Corp., owned by Petters since 2005, files for Chapter 11. The company later is sold to liquidators for $88 million in a contested auction.

Dec. 19, 2008: James Wehmhoff, an accountant for Tom Petters and Petters Group Worldwide, pleads guilty of filing false tax returns.

Jan. 2009: Trial is postponed from February to June.

March 2009: Petters' lawyers ask to withdraw, saying they're worried about getting paid. The motion is denied.

July 2009: Petters' defense attorneys say their client was duped by Larry Reynolds, who they say has an extensive criminal history and was in the federal witness-protection program. Petters' trial is delayed again, to Oct. 26.

Oct. 7, 2009: Hedge fund founder Gregory Bell pleads guilty of wire fraud for feeding more than $2 billion of client assets to Petters' alleged Ponzi scheme.

Tom Petters, 52, has pleaded not guilty to a 20-count indictment on fraud charges.

DOJ Outline of Case - Petters Bounced Checks Worth $38.5 million in 2000

Strib:

According to the government's timeline, the Petters operation faced one of its toughest tests in 2000 when General Electric Credit Corporation (GECC) became concerned over late payments by PCI on promissory notes that were supposed to fund transactions with Costco.

GECC contacted Costco about the transactions and learned that Petters had supplied the lender with copies of bogus purchase orders. Costco then contacted Petters, who apologized and said the person responsible had been fired, the government says. Petters then "angrily" confronted GECC about contacting "his" retailer instead of working through PCI.

Petters tried to resolve the dispute by paying GECC $38.5 million with eight checks, but they bounced. Eventually, using investor funds, Petters was able to repay the notes and GECC closed down the line of credit, the government says.

Petters Lawyers Ask for Change of Venue

KSTP:

Attorneys defending Wayzata businessman Tom Petters against charges he ran a Ponzi scheme have renewed a request for a change of venue.
In February, Petters' lawyers asked for the trial to be moved out of Minnesota to either Wisconsin or Iowa.
The attorneys argued it would be impossible for Petters to get a fair trial in Minnesota because of publicity that "has been extensive, disdainful, relentless."

Gregory Bell Pleads Guilty

Strib:

Bell acknowledged that he helped engineer multiple financial transactions between his hedge fund and Petters Co. Inc. to create the appearance that Petters Co. Inc. was repaying investments made by Bell's funds.

Bell faces a maximum of 20 years in prison and a $250,000 fine.

Two Strib Stories About Petters Trial ( October 26)

It's been a long year for Tom Petters' many victims.

.... and....

Faith community counts losses in Petters investments:

....Vennes is the common tie among Anderson's clients, Teen Challenge and Fidelis. Vennes is a felon turned Christian who had a 14-year relationship with Petters and steered investments of $1.2 billion his way, according to federal documents. Vennes told authorities that he earned $38 million in commissions in 2007 alone from the Petters operation. Although his assets were put in receivership a year ago and he is identified in an FBI search warrant as a participant with Petters and others in conversations about the crumbling operation, Vennes has not been charged with a crime in the case.

"His status hasn't changed. He has not be charged," said Vennes' attorney, James Volling. "I'm waiting just like everyone else to see what happens."

"Junkyard Prophet" Bradlee Dean Speaks Up for Tom Petters

Is Tom Petters being treated fairly by the USDOJ and the media?

Controversial Christian rock musician and right-wing radio personality Bradlee Dean doesn't think so:




UPDATE: The Minnesota Independent has an article about YCRBYCH, Bradley Dean and Michele Bachmann.

Karl Bremer: "Would Pawlenty, if Elected President, Pardon Vennes?"

Karl Bremer in the Stillwater Gazette:

If Tim Pawlenty decides to run for president of the United States, at some point he's going to have to explain his relationship with campaign contributor, Tom Petters associate and convicted money-launderer/cocaine-and-gun runner Frank Vennes, Jr.

This relationship is especially relevant in light of Pawlenty's recent donation of nearly $86,000 from his defunct gubernatorial campaign fund to Minnesota Teen Challenge (MnTC), a controversial Christian chemical dependency program that was once closely affiliated with Vennes and allegedly lost millions on account of that affiliation.

Like his Republican cohorts Norm Coleman and Michele Bachmann, Pawlenty's connections to Vennes are intertwined in several ways: campaign contributions, a request for a presidential pardon for Vennes' federal crimes, and now MnTC, where Vennes and Pawlenty's wife, Mary, served on the board of directors together.


Vennes and his family have contributed thousands of dollars to Pawlenty's gubernatorial campaigns. Kimberly Vennes (Frank's wife), Gregory Vennes, Stephanie Vennes (Gregory's wife), and Colby and Denley Vennes, who have shared an address with Frank and Kimberly, each donated $2,000 to the Pawlenty for Governor Committee in 2002. Frank, Kimberly, Gregory, Stephanie, Colby and Denley Vennes each contributed $250 to Pawlenty in 2004 and $2,000 apiece in 2006.

Coincidentally, the same year the Vennes money started to flow into Pawlenty's campaign coffers, Pawlenty's name appeared in a request for a presidential pardon for Vennes sent by Senator-elect Norm Coleman.

In a letter dated Dec. 20, 2002, and sent to President George W. Bush c/o Karl Rove, then-Senator-Elect Coleman said he was "well acquainted with Frank (redacted portion) and that I want to join "my friend, (former Minnesota GOP chairman) Ron Eibensteiner and Governor-elect Tim Pawlenty in urging President Bush to grant Frank Vennes a presidential pardon."

The roles of Pawlenty and Eibensteiner in seeking a pardon for Vennes are unclear. A Freedom of Information Act request did not turn up pardon letters from either one, and Pawlenty's office did not immediately respond to requests for an explanation.

The pardon Coleman, Pawlenty and Eibensteiner sought was for Vennes' conviction in 1987 on federal charges of money laundering, cocaine distribution and illegal firearms sale, to which he pleaded guilty and no contest.

Vennes was sentenced to five years in the Sandstone Federal Correctional Facility, where he reportedly "found God" and was released in 1990. Following his release from prison, Vennes filed a petition for a pardon, which has never been granted.

Meanwhile, Vennes was a board member of MnTC as recently as 2008. Pawlenty's wife, Mary, also sat on MTC's board of directors during at least a portion of the time that Vennes served on the board.

But that organization now stands to lose millions of dollars as a result of MnTC's investments that Vennes allegedly steered to his associate, Tom Petters, in Petters' alleged multibillion-dollar Ponzi scheme.

Vennes is alleged to have been a facilitator, or conduit, used by Petters to lure primarily Christian organizations into investing in Petters' companies through Metro Gem - one of Vennes' companies - or through the Fidelis Foundation, which served as a fiscal agent for Minnesota Teen Challenge. Among those investors was Minnesota Teen Challenge, which allegedly lost $5.7 million in investments in Petters companies.
On Sept. 24, 2008, federal agents raided Vennes' $5 million Shorewood home on Lake Minnetonka and his $6 million oceanfront home in Jupiter, Fla., in connection with the Petters investigation.

According to the federal search warrant, Vennes was alleged to have hauled in more than $28 million in commissions for his role in luring five investors to pony up $1.2 billion in Petters' alleged giant Ponzi scheme. On Oct. 6, the assets and records of Vennes, Petters, Petters' companies and other Petters associates were frozen by a federal judge, and many seized assets of Vennes and Petters have been sold off to compensate victims of the alleged fraud.

Still, the multimillionaire Vennes has not yet been charged with any crimes in connection with the Petters case. Nor has he been named as a defendant in any of the lawsuits filed against Petters and his associates by alleged victims of the fraud.

Michele Bachmann received tens of thousands of dollars in campaign contributions from Vennes and his family and also wrote a letter of request for his presidential pardon. However, she retracted it after Vennes became embroiled in the Petters scandal.

Bachmann initially donated a portion of her campaign contributions from the Vennes family - $9,200 - to MnTC in an apparent attempt to wash her hands of it. However, MTC returned the check to Bachmann, calling it "dirty money." Bachmann later sent the money to another organization affiliated with MnTC.

Similarly, after the Petters scandal broke, Coleman donated $14,600 to the Boys and Girls Club in October, which represented the amount of money Tom Petters had donated to his campaign in this election cycle.

Gov. Pawlenty's office did not immediately return requests for information about Pawlenty's relationship with Vennes or whether he intended to return any of Vennes' campaign contributions.

However, one other question remains: Would a President Pawlenty grant Frank Vennes Jr. the pardon he believes he deserves?

Jon Tevlin Column About Reynolds/Reservitz

Jon Tevlin:

Since the alleged Ponzi scheme involving Tom Petters broke, there have been few more vexing questions inside our newsroom, and among local defense attorneys, than the true identity of one of the participants, Larry Reynolds.

Until this week.

Petters' attorney apparently smoked him out and provided enough detail that our reporters, through dogged legwork, were able to show that Reynolds is in fact Larry Reservitz, a convicted drug dealer and swindler with mob connections from Boston.

Read the rest here.

Larry Reynolds = Larry Reservitz

Strib:

Newspaper clippings, court rulings and other public documents leave little doubt that the co-defendant known as Larry Reynolds is actually Larry Reservitz, a swindler and drug trafficker who had associations with the New England mob in the 1980s and eventually was placed in the government's witness protection program.

-snip-

Reynolds said he got about $6 million in fees from Petters for laundering $12 billion in funds between 2002 and 2008. He pleaded guilty in St. Paul to conspiracy to commit money laundering and faces up to 20 years in prison.

Petters' trial on mail and wire fraud and money laundering is scheduled to begin in late October. But his attorneys now want the case against him dropped, suggesting that Petters himself might have been duped by Reynolds in an elaborate con that unfolded under the government's nose.

Strib: Petters Sealed Motion About Reynolds

Strib:

Petters, awaiting trial on charges he ran a $3.5 billion Ponzi scheme, is now trying to get his case dismissed, claiming that during its investigation of him, the government hid the true identity of Larry Reynolds, an alleged co-conspirator who has pleaded guilty to money laundering in the case.

Attorneys for Petters apparently filed the motion earlier under seal, and refiled it Friday in U.S. District Court in St. Paul with the names blackened out. But the series of documents clearly appears to be about Reynolds, a key figure in the Petters investigation who was identified in earlier court filings as being in the U.S. Justice Department's witness security program.

The filing argues "information tends to show [name redacted] secretly led the scheme without Mr. Petters' knowledge."

Hedge Fund Executive Charged

Strib:

Federal prosecutors have charged a top accounting executive at an Illinois investment firm for helping to defraud investors connected to Wayzata businessman Tom Petters.

Harold Alan Katz, a vice president of finance and accounting for Lancelot Investment Management in Chicago, conspired to create fake banking transactions to make the fund's investors believing that Petters was repaying loans in a timely manner, according to documents filed with U.S. District Court in St. Paul.

The documents, unsealed Friday by U.S. District Judge Paul Magnuson, indicate that Katz has struck a plea agreement and will likely cooperate with prosecutors in their criminal case against Petters and Lancelot founder and owner Gregory Bell.

A look Back at the Petters Empire

At Dumpy Strip Malls:

Besides the baseball card shows, Mounds View Square’s focal point was the Petters Warehouse. Petters Warehouse closed in October 2008 after Tom Petters was charged with leading a large investment fraud scheme.

Now that Petters Warehouse is closed, where will I buy factory-second Levis and seperated lotion from?
Petters Warehouse was basically an “outlet” store, selling overstock, discontinued products, salvage merchandise, and customer returns. That said, you can imagine the junk you’d find in this store.

Now, to be fair, it wasn’t ALL junk. Petters Warehouse was one of those stores where it depended on what day you visited. Some days = junk. Other days = treasure. In my experience, it was mostly junk.

One time, I saw a boxes upon boxes of “Body Solutions, the Evening Weight Loss Formula.” Remember this shit?! Flashback to the early ’00s – every radio DJ in the Twin Cities hawked this snake oil shit! Lose weight while you sleep! Screw exercise! Fuck following healthy diet! Just drink a teaspoon of this magic liquid and watch the pounds melt away. If PAT EBERTZ was selling this crap, you know it didn’t work. You’d probably be better off wrapping garbage bags around your body and sitting in a sauna for a few minutes than drinking this potion.

They sold clothing here too. Mostly ugly stuff. Think orange waffle shirts from Kohls in odd sizes. Flannel shirts from Sears with one sleeve longer than the other. Machiavelli-Brand Tupac Jeans. Sweatshirts with thugged-out Looney Tunes characters. Nothing says “sophistication” better than getting your wardrobe from Petters Warehouse!

However, Petters Warehouse is closed for good since Mr. Petters is rotting in a jail cell, awaiting trial.

Chicago Tribune Story about Greg Bell and Lancelot

Chicago Tribune:

Gregory Belinkov came to this country when he was a teenager, his family fleeing repression in the Soviet Union. His life since seemed to be a classic immigrant success story, topped with the creation of his own successful Northbrook-based hedge fund.

Today, Gregory Bell -- his name Americanized long ago -- sits in a Minnesota jail, barred from posting bail because federal prosecutors fear he may flee the country. Through his hedge fund firm, Lancelot Investment Management, he is accused of aiding a giant alleged Ponzi scheme centered in the Twin Cities.

Lancelot invested virtually all of the money it raised, over $2 billion, with Tom Petters, a prominent Minnesota businessman. For years, Lancelot's stake with Petters paid Bell's investors handsome and steady returns while generating tens of millions of dollars in fees for Bell.

It all vaporized last fall when Lancelot collapsed after Petters was charged with fraud, conspiracy and money laundering. Last month, federal securities regulators fingered Bell, too, claiming he participated in Petters' alleged scheme, and charged him with fraud. Bell, a 44-year-old Highland Park resident, has not entered a plea but in the past has told his investors he is a victim of Petters.

Read the whole thing.

PiPress Article on Gregory Bell

PiPress article: "What did the money man know?"

But federal prosecutors say Shvartsman was taken into a scam, along with 250 other Lancelot investors. Their money was invested solely in notes issued by a subsidiary of Minnetonka-based Petters Group Worldwide, helping fuel a $3.5 billion Ponzi scheme, according to a complaint filed by the Securities and Exchange Commission. Tom Petters is in jail awaiting trial on 20 federal fraud counts. Petters has pleaded not guilty.

Bell was arrested in Chicago in early July and brought to the Twin Cities. Ever since, he's been in the Anoka County Jail, held on federal fraud charges tied to the implosion of the Petters empire. Bell has not been indicted, nor has he entered a plea. His attorneys declined to comment for this article.

--snip--

The SEC complaint accusing Bell of securities fraud says he told Lancelot investors about the Petters investments and the strategy of short-term financing for the purchase of consumer electronics. He described the investments as legitimate and told at least one investor he had driven by warehouses to confirm the existence of the consumer goods, the complaint alleges.

But the warehouses didn't exist, prosecutors say, and investors now say Bell knew exactly what was going on.

--snip--

Along the way, Bell made hundreds of millions of dollars in fees paid by investors.

"The management, performance and other fees paid by the (Lancelot) fund were staggering, to say the least," Tradex says in its civil suit. Lancelot Offshore, one of the hedge funds run by Bell, paid more than $115 million to Bell and affiliated entities between 2004 and 2007, the suit claims.

For years, the money Bell invested with Petters apparently did come back with interest as the alleged Ponzi scheme grew. But at some point in 2007, trouble started on Petters' end.

In December of that year, Bell agreed to extend the term of every Petters note held by Lancelot for an additional 90 days. But that move wasn't enough for the overextended Petters. "By February 2008, Petters was delinquent in paying over $130 million owed to the Lancelot Funds," the SEC complaint alleges.

Even as the Ponzi scheme was falling apart, Bell's enthusiasm for the Petters investments didn't seem to wane. In the first eight months of 2008, Bell and Lancelot took in $243 million in new investor funds, according to the SEC complaint.

But by that summer, Bell had begun moving money overseas, prosecutors say. He moved $15 million to a Swiss bank account and made sure it was protected by an "asset protection trust" in the Cook Islands, prosecutors said, making him a flight risk. Bell's attorneys said in court last month they're trying to repatriate the money back into the United States.

In late September 2008, federal agents raided Petters Group Worldwide's Minnetonka headquarters, and Tom Petters was arrested at his home a few days later. As news of the trouble at Petters Co. spread, Shvartsman said he met with Bell three times. He wanted to know where his money was and whether he'd get some of it back. But the news was never good.

"(Bell) kept insisting that he lost everything," Shvartsman said.

It's a good article... read the whole thing.

Greg Bell Denied Bail

Biz Journal:

The owner of a Chicago hedge fund charged with helping Tom Petters fund his $3.5 billion alleged Ponzi scheme was denied bail Tuesday, reversing a bail decision last week, according to media reports.

Gregory Bell was sent back to Anoka County Jail, where he’s been held for the past week, the Pioneer Press reported. U.S. District Court Chief Judge Michael Davis made the decision based on prosecutors’ arguments that Bell is a flight risk because he put $15 million into foreign bank accounts last year.

Petters Trial Delayed (Again)

Just in time for Halloween.

DOJ: Gregory Bell a Flight Risk

John Welbes PiPress:

As a hedge fund executive tied to the Tom Petters fraud case awaits a court hearing today in St. Paul, U.S. prosecutors describe him as a flight risk with millions of dollars in off-shore accounts, including the Cook Islands and Switzerland.

--snip--

In August 2008, Bell wired $15 million from an account in the U.S. into a Swiss bank account, the prosecutors' filing says.

UPDATE: Bell free on bail.

UPDATE: Held awaiting appeal.

Kudos for Teri Buhl

Matthew Goldstein at Reuters:

The alleged $3 billion Ponzi scheme involving Tom Petters has never gotten the attention it deserved.

--snip--

Kudos to Dealbreaker.com and freelance journalist Teri Buhl for staying on the Petters story and speculating which other hedge fund manager may be on the SEC’s radar screen.

Who is Next to be Indicted from Ponzi Island?

Tom Petters and Bernie Madoff, both former denizens of Ponzi Island, now guests at the Graybar Hotel... will there be others?

Dealbreaker.com speculates:

Tom Petters was arrested for money laundering by the FBI last October and the SEC said there were $3.5 billion in losses for fund of hedge funds in his Ponzi scheme. For now, court proceedings in the Petters criminal case have been sealed - leaving the victims and the public with few answers about who else conspired in this maze of financial crime and abuse of investor confidence. One such person is a reformed convict turned multimillionaire Frank Vennes, who owns a spreads in Jupiter Island and Minnesota. Sources say Vennes met with Palm Beach's Prevost and Harrold several times in 2001-2002 at his Minnesota lake home to discuss how the managers would raise money solely to invest directly into Petters.

The first PB Finance fund was started in 2003 and grew to $250 million. The second fund began in 2004 with assets at the time of its shut down of $850 million - both were promoted by Jonathan Spring who raised institutional money for other big hedge funds such as Carrington Capital. The fund's operating agreements never discuss investing only with Petters. As late as November 2007, Spring sent a letter soliciting a chance to invest more in what were then closed Palm Beach funds. He wrote, "The risks of this strategy are relatively straight-forward and identifiable....risks I have thought carefully about for the past 4 years."

Vennes, Harrold, and Prevost have yet to be charged criminally for their involvement in Petters fraud. However, the MN US Attorney subpoenaed Vennes' emails when the feds reported that Vennes knew about the Petters Fraud back in 2007.

Not sure if Dealbreaker is correct in all it's facts (I pretty sure the two homes it mentions were turned over the receiver), but it does appear Palm Beach Capital may suffer the same fate as Lancelot Investment Management.

Stay tuned...

SEC Freezes Lancelot Assets - Greg Bell Arrested

Star Tribune:

In the latest twist in the federal racketeering case against Minnesota businessman Tom Petters, federal authorities say a hedge fund manager who claimed to be the biggest victim of Petters' alleged Ponzi scheme was actually a participant in it.

The Securities and Exchange Commission on Friday accused Illinois financier Greg Bell and his company, Lancelot Investment Management, with fraud. In charges filed in U.S. District Court in Minnesota, the SEC also moved to freeze Bell's assets, which include millions of dollars stashed in Swiss bank accounts in the names of Bell and his wife, Inna Goldman.

Separately, Bell was arrested Friday in Highland Park, Ill., and was taken to the Anoka County jail, according to Ron Peterson, a trustee for Lancelot's investors. A criminal complaint against Bell in U.S. District Court in Minneapolis was sealed, but Peterson said the fund manager could appear in court as early as Monday.

The Pioneer Press:

For more than a decade, Petters claimed his Petters Co. Inc. unit arranged to buy overstock consumer electronics and other merchandise for resale to retailers such as Wal-Mart and Costco, the SEC said in its complaint. The firm sought investor money because it purportedly paid for inventory up front and couldn't collect until delivery. It said transactions took about 180 days, according to the SEC.

In reality, there were no purchases or sales, and money raised by selling notes to investors was repaid by selling more notes, the SEC said. As of September, Petters Co. and its affiliates owed about $3.5 billion.

Bell formed Lancelot Investment Management in 2001 and had raised $2.62 billion from hundreds of investors, including pension plans and other hedge funds, by the time the Ponzi scheme collapsed, the SEC wrote in its complaint. "Virtually all" of the money had been steered to Petters Co., the complaint said.

Lancelot owned about $1.5 billion in promissory notes when the fraud unraveled, prosecutors said Friday in a criminal complaint. They "are now of little or no value," the complaint said.

SEC press release here.

Strib Files Motions to Open Up "Mystery" Motions

Newspaper intervenes in Petters case:

Attorneys representing accused swindler Tom Petters have filed motions seeking to dismiss the case, and they also want federal prosecutors sanctioned, presumably for some sort of alleged misconduct. But the details of those motions remain a mystery because the government got a judge to order the motions and all materials related to them to be filed under seal.

The Star Tribune filed motions Wednesday afternoon seeking to intervene in the case in an effort to get the motions and related materials opened to the public. The newspaper also objected to the cryptic notice on public dockets about the filings, which simply show that a dozen nondescript documents have been filed under seal between June 30 and July 2.

Strib:"N.D. bank claims it was duped in a loan to Petters"

Strib:

VISIONBank has filed a lawsuit alleging that Minnwest Bank Metro blindsided it in a $2.47 million deal involving accused swindler Tom Petters and Michael O'Shaughnessy, a business partner and former CEO of Polaroid Corp.

Brian Lambert at MinnPost:

Suffice it to say, you and I don't get $2 million this easily.

Petters Bank Balance - $54.09

Strib:

The jailed businessman had only $54.09 in his bank account on April 20, so the government says it will start taking property.

Tom Petters Speaks About "Core Values"

Excerpts from August 5, 2008 speech at the Carlson School of Business:

Strib: "Petters' bid to suppress comments to FBI denied"

Strib:

Minnesota businessman Tom Petters appears to be losing his fight to suppress comments he made to authorities last fall as they confronted him in his hotel suite in Las Vegas.

A U.S. magistrate judge in St. Paul on Tuesday denied Petters' motion to suppress the half-hour interview he conducted that morning in his bathrobe at the Bellagio, reasoning that Petters freely volunteered information, clearly wasn't under arrest at the time and didn't need to be read his Miranda rights.

This is what happened:

During the half-hour talk in his suite, Petters told federal agents "I'm in charge, I'll bite the bullet," according to court documents.

The conversation took place the morning of Sept. 24 as agents were executing search warrants on Petters' business in Minnetonka. Two FBI agents, an agent for Nevada Gaming Control and a hotel security manager took the back stairs to Petters' suite that morning and knocked on his door about 7 a.m.

Petters, gripping a cell phone, invited them in, according to court documents. The group sat at a dining table, and an FBI agent informed Petters they suspected he was running a fraud scheme. Petters "maintained a pleasant demeanor and appeared relaxed," according to court documents. He spoke briefly with an attorney on the cell phone and the agents left about 7:30 a.m.