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.