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.

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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.