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.