The sentencing is over and barring a prison escape, there will likely be no more info about Tom Petters. Information about his whereabouts will likely be available at the Bureau of Prisons inmate locator.
I will keep the blog in mothballs for anyone doing research about the trial.
If you are interested in how I sketched the trial, read this excellent article by Beth Hawkins at MinnPost.
Thanks for dropping by.
For info about Frank Vennes go the Vennes Info blog.
April 8. 2010. Four months after Tom Petters was convicted for perpetrating the biggest fraud in Minnesota history, he stood before Judge Richard Kyle to find out if he was going to get the 335 year sentence the prosecutors requested or the four year sentence suggested by his lawyers or something in between.
The ex-CEO of Petters Group Worldwide that once owned Polaroid and Sun Country airlines wore a business suit and listened as his lawyer, Paul Enge challenged the sentencing guidelines. Enge said he thought the guidelines were "irrational" and wouldn't deter anyone from committing a similar white collar crime. Enge also said it was unfair that murderers got less time than Tom Petters. Enge said Petters was generous, that low level workers like janitors liked Petters. He also mentioned that Petters was cooperating with the receiver Doug Kelly.
Assistant U.S. Attorney Dixon told the judge the sentence should be based on Tom Petters, the crimes he committed and the harm he did to his victims. Dixon also said Petters did not cooperate until he was convicted and it was easy to be generous with other people's money.
Tom Petters got up and apologized to his family and said everyday his life was filled with pain. He thanked the receiver Doug Kelly and said the murder of his son was the worst thing that happened to him.
The judge said he was not passing a moral judgement on Petters and gave him 50 years with 41 months off for time served and what they used to call "good behavior". The judge also said Petters's trial testimony was "unbelievable".
After the sentencing, U.S. Attorney Todd B. Jones told reporters he hoped the severe sentence would help safeguard Minnesota's economy from similar scams.
The Bureau of Prisons will determine where Tom Petter goes after this.
Back in May, 2008, Pastor John Piper was all excited about a project in Minneapolis called Hope Commons:
The new place of ministry means moving the classes and library and offices to Hope Commons at 2300 Chicago Avenue South. This former hospital building will house Hope Academy (K-12), Minnesota Teen Challenge, TBI, and Desiring God and Children’s Desiring God. The building is free from a visionary donor. But the ministries must pay to build out the space. That is what we are praying toward now.
--snip--
I would like to be a part of this vision for the remainder of my life. I believe the church and the world need leaders shaped by this vision of God. I pray that you will find it compelling. If you would like to know more or to share in it, please contact Craig Howse, Director of Institutional Advance, Tim Tomlinson, Executive Director of TBI, or Tom Steller, Dean of TBI.
Now, here is the rest of the story (no longer on the ministry website, but cached here):
Important Building Update
Dear DG Friends,
We want to update you on some important, unexpected developments regarding the Hope Commons building, which is to house Desiring God’s new offices, and also to ask you to pray with us.
Hope Commons Construction Project Suspended
On October 7, five days after reaching our “Building Capacity” fundraising goal, we suspended construction in our leased space at Hope Commons until further notice. Our hope is that this suspension is temporary and we will resume the project soon.
We took this action after receiving information that the individual who purchased the building in 2006 was named at the end of September in the fraud investigation of Tom Petters and his associates conducted by the U.S. Attorney’s Office. Desiring God’s legal counsel reviewed the available facts and recommended we suspend construction until more is known.
Here is the essential information that prompted this action:
The anonymous donor (we do not make public the names of donors) who purchased Hope Commons and deeded it to a Christian nonprofit foundation is a close business associate of Mr. Tom Petters.
Mr. Petters has been charged with multiple serious crimes, including investor fraud, and is being sued by the United States government in civil court. Certain persons associated with Mr. Petters have already pleaded guilty to crimes involving fraud.
The purchaser of Hope Commons is named in the same civil action as Mr. Petters.
Our legal counsel is concerned that the ownership of and legal interests in Hope Commons could be adversely affected as a result of these developments, putting Desiring God’s occupancy and investment in Hope Commons at risk.
Please note that as of this time, it is our understanding that the purchaser of Hope Commons has NOT been charged with any crimes.
Again, we have NOT terminated our lease or the construction project. Suspending construction allows us to monitor the situation and research all of our options without continuing to spend donated resources on construction expenses in the event that a worse-case scenario unfolds. Our desire remains to move into Hope Commons as a tenant.
How Much Have We Invested in Hope Commons to Date?
At the time the project was halted, we were on schedule to move into the building in the second week of December. We have approximately $370,000 (37% of total project) invested in the project to date. Approximately 25% of the actual construction is completed. Because we may not be able to recoup these costs if the project is ultimately terminated, we intend to terminate the project only if there appears to be no other reasonable and viable option.
When Do We Expect to Know What Direction We Will Take?
We hope that in the next 30-60 days we will have enough information for the Desiring God Board of Directors to determine the best course of action. We will make a public announcement of our plans on the website and via other means at that time.
Please Pray With Us
Currently, the best course of action is not clear. Pray with us that the Lord will guide us and give us wisdom. And please join with us in praying that God will preserve Hope Commons as center for gospel-spreading ministry.
While this is a sobering and difficult situation, we are not anxious. We know that this does not take God by surprise. We trust him to provide for us and to use this to bring glory to his name. We are confident that:
“…he does according to his will among the host of heaven and among the inhabitants of the earth; and none can stay his hand or say to him, ‘What have you done?’” (Daniel 4:35)
In a court filing full of obscure literary allusions, defense attorney Paul Engh cites the 150-year sentence for disgraced New York financier Bernard Madoff for an even bigger fraud. If that case is used as a guide, Engh suggests, the math should work out to a sentence for Petters of just over four years.
UPDATE: No joke - They want Petters to serve only 4 years.
DEFENDANT S RESPONSE TO GOVERNMENT S POSITION WITH RESPECT TO SENTENCING FACTORS
Defendant Thomas Joseph Petters, by and through his undersigned attorneys and in accordance with D. Minn. L.R. 83.10, replies to the Government s absurd request for 335 years.
I. Government s Unreasoned Analysis
The Government s brief disappoints on a number of levels. In its name calling for starters, describing Mr. Petters conduct and argument shameless, and beyond comprehension and cynical. The victims and the Government join in same animus. Their argument for life in prison recalls Girard s theory of mimetic rivalry. Their agreed upon contagion is that Mr. Petters life become an object of scorn, with one version in competition for the other. See generally Rene Girard, Deceit, Desire and the Novel (Johns Hopkins University Press 1961) & Violence and the Sacred (Johns Hopkins University Press 1972). The 50-plus letters we submitted paint a far different picture, of a flawed but still virtuous human being. Mr. Petters has a family that loves him dearly. To say, as the Government does, that his grief for his son is insincere is heartless in a revealing way. Mr. Petters friends still support him. From the quantum of letters alone his life, Tolstoy would opine, has been a success. Moreover, the Government tellingly omits mention of Mr. Petters cooperation with the receiver, the kind of cooperation that, in the ordinary case, would result in a 5K1.1 motion which would be granted.
Mr. Petters should get hundreds of years, it is argued, because someone may have higher culpability in the future and there must be a record beyond and above Bernie Madoff s point total. [Docket No. 388 at 6.] If nothing else, the argument is dehumanizing. We are to imprison this man into the 24th Century so the Government will have a favorable citation for its sentencing briefs? So that one of their lawyers can stand up at a future CLE and announce the record? And who will serve all the time? Will it be Mr. Petters ghost? To go through each of the enhancements would be a silly exercise. The Government argues as if this Court has no choice but to follow their additive sense of what justice should be. As if the law has only singular voice, the Government proposes a casting aside of discretion. It is a position of arbitrary power that Judges Rakoff, Pratt, Block and many others (discussed below) have rejected.
One enhancement warrants special mention, though the proposed obstruction points for Mr. Petters testimony. [Docket No. 388 at 14-17.] The Government wishes to punish Mr. Petters not only for the verdict, but for engaging in the glorious process that is the law. We have trials so that the parties can voice their disagreement in a neutral setting. Mr. Petters had the right to testify, Rock v. Arkansas, 483 U.S. 44, 49-53 (1987), 69824.1 3 and the obstruction enhancement may not be used to punish a defendant for the exercise of a constitutional right. U.S.S.G. § 3C1.1, Application Note 2. United States v. Dunnigan, 507 U.S. 87, 98 (1993) holds the enhancement is far from automatic. Our case falls into one of the key exceptions outlined in that case: The defendant s testimony may be truthful, but the jury may nonetheless find the testimony insufficient to excuse criminal liability or prove lack of intent. Id. at 95. Mr. Petters agreed to the facts, but disagreed as to his mens rea. The Government does not cite Dunnigan. The defense read the case before trial and prepared Mr. Petters examination to fall under its protection. It applies.
--snip--
We have addressed the guidelines counting mechanism in opening briefs. The Commission has never explained its rationale, particularly in a case where the loss is high. Adelson, 441 F. Supp. 2d at 510. It s oddly joyful, the Government s love of counting beans of years here, beans of years there, beans of years everywhere. It s an approach that misconstrues the sentencing process as an avenue for sheer rage. But since the Government prefers simple math, we suggest the Court use multiplication and division. The technique is just as arbitrary, but yields a fairer result.
Madoff s paper loss was nearly $65 billion, the actual loss over $21 billion and counting. Diana B. Henriques, Court Denies Madoff Aide s Request for Bail, N.Y. Times (Oct. 28, 2009), available at 29madoff.html>. He received 150 years about two and one-third years for each billion in paper losses. The loss here, calculated by Pricewaterhouse Coopers, is $1.8 billion (not, as the Government contends over and over again, the $3.8 billion paper loss). Under this application, 1.8 times 2.33 years, Mr. Petters sentence should be just over four years. Which is near akin to the Greenwood sentence twenty years ago, a case involving a greater loss in real dollars. A judge down the hallway felt that amount of time right and fair. And who is to say now that it was not. Our multiplication result does not vary too far from the twelve year, seven month sentence imposed in United States v. Forbes, 249 Fed. Appx. 233 (2nd Cir. 2007), where there was over $3 billion in actual loss. These are ranges grounded in law, fact, and reason, not anger. A Latin phrase comes to mind, per freta hactenus negata, which means to have negotiated a strait the very existence of which has been denied by the Government here. The phrase is, simultaneously, an expression of fear and accomplishment, the cusp on which human life finds its richest expression. Lopez, Arctic Dreams, Imagination and Desire in a Northern Landscape at 406 (1986). The Government fears what this Court should accomplish, which is to approach the cusp of fairness and find what has always been the essence of criminal law preserving the dignity of the fallen and imperfect defendant in the face of a request for excessive punishment.
Dated: April 1, 2010 __s/ Paul C. Engh Paul C. Engh, MN #134685
The defendant’s pitch to the Court is that he is a victim, that the story of his life is a poetic tribute to what might be. The reality as demonstrated at trial, is the defendant’s life was a fraud, based on deceit and corruption. The defendant’s purported “unbending faith that tomorrow all will be well” is founded on a refusal to recognize that actions and words have consequences, for himself and others. As he plainly demonstrated during his testimony, for Tom Petters, the truth is irrelevant; tohim, words are simply tools to manipulate and to deceive
Far from voicing contrition, the defendant espouses pride in the “reality” he created with real companies with real employees. The evidence at trial, however, demonstrated that the defendant’s companies were not operated as self-sustaining businesses, but were sustained with millions and millions of dollars in fraud proceeds. Salaries, bonuses, operating expenses were paid by fraud. The businesses were simply props for the defendant’s fraud and his desire to be a capitalist tycoon. The defendant argues he should be rewarded for this reality. In his pleading with the Court, the defendant makes no effort to address the staggering and unprecedented size and impact of his fraud on victims and the community. Instead, he asks this Court to give credence to his contorted view of life in which he is the victim. The defendant defiantly rejects personal responsibility. He is unrepentant. For the defendant, his wealth and status render him impervious to laws, rules, and consequences. The Court should reject the defendant’s efforts to deflect the full consequences of his fraud.
As eloquently written by one of his many victims: The fact that so many people trusted Tom Petters because he portrayed himself to be a committed follower of God, and a supporter of charitable organizations is highly disconcerting. Does this man not have a conscience? Does he not care for anyone other than himself? Does he have any understanding of the words – trust, caring, commitment?
Tom Petters has hurt and personally devastated so many, many lives – elderly people, nursing home residents, young families, retired people like myself . . . How could Tom Petters so blatantly lie to so many, many people, and then when apprehended continue to lie and refuse to take responsibility for his actions by trying to play on the sympathy of the jury. Lying while facing people and under oath, even when some of his close associates confessed to their parts in the scandal is almost inconceivable. I repeat . . . Does this man not have a conscience? Does he not care for anyone else but only his own selfish, greedy motives?
With a crime of this magnitude of $3.5 billion, and the personal devastation he has caused to so many, many people’s lives, I believe that Tom Petters needs to be punished to the full extent of the law, especially when he takes no responsibility for his actions. Like Bernard Madoff, Tom Petters obviously does not care for anyone other than himself and his own extremely selfish, selfcentered, greedy motives. Our society, unfortunately, is becoming plagued with too many people like this, and like Bernard Madoff. Tom Petters needs to learn that there are severe consequences for his incomprehensible behavior.
--snip--
Of course, compared to most economic crime cases, the gravity of this case is staggering. The impact of the fraud extended far beyond a simple financial loss (and financial ruin in many cases). Tom Petters betrayed friends, family, employees, business associates and numerous other people and organizations (including charitable organizations) who entrusted the defendant with so much. The defendant’s conduct throughout the years of his fraud, his subversion of charitable organizations and real corporate assets to promote his fraud, and his unrepentant, calculated perjury at trial sets him apart, even in the context of the most significant financial fraud cases. There are hundreds of victims. By way of example, one victim wrote the following:
We had our entire savings including the full equity of the mortgage on our house invested with Petters. This was 57 years of savings! I knew Tom Petters personally and he knew we had our entire life’s savings invested with him. . . . I think it would be horrible if he received anything less than a life sentence. He needs to be held responsible for the thousands of lives he has destroyed. . .. Tom Petters also stole millions from Christian ministries, pastors and good non-profits. Many of these ministries give their lives to help the needy. This is as low as one can go. Another of the defendant’s victims addressed the impact of the fraud in this way: I raised five children as a single mother, pay all the bills on time, and was looking forward to retirement and more time with my children and grandchildren. . . . I don’t know when I’ll be able to quit working now, I have no home to retire in (I currently rent a room in someone’s home). . . What have I lost? My ability to choose, hope for my own little retirement home to putter around in, and the resources to see my out-of-state children and grandchildren.
Yet another describes his loss in this fashion:
I gave up the fun things in life, such as boats, snow machines, a bigger and nicer home and worked at the same job for 38 years to save for my retirement. I invested my money with Tom Petters and he has taken my dreams and retirement from me.
Defendant’s claim that he has not committed one of the most serious offenses does not pass muster. Simply put, the defendant’s fraud has devastated lives. The sentence imposed in this case should be sufficiently significant that it will provide fair warning to potential future fraudsters, young and old, that committing fraud is simply not worth the risk. History and Characteristics of the Defendant As demonstrated at trial, the defendant’s life history as a businessman is a history of fraudulent conduct, culminating in one of the most substantial frauds in history.
The defendant now argues that he is not likely to re-offend. (Def.’s Position at 12 & 14 (“For Mr. Petters, perhaps unlike Mr. Gall, the deterrent value of the case has already reached fruition. Adverse media coverage has ruined his reputation and name.”) How can he seriously contend he will not re-offend when he has not even admitted he has committed a crime? How can he argue that his reputation has been wrongly ruined by factual reporting regarding the evidence of the defendant’s conduct and statements? The argument is less than frivolous.
Purported “Cooperation”
The defendant even claims he has been cooperating with the authorities from the “get go” and should be rewarded for his efforts. The defendant miscasts the facts. By November 2008, the government had already obtained overwhelming evidence against the defendant, including recordings, email, and cooperator testimony. Although not required to do so, prior to indictment, the government provided the defendant and his defense counsel with access to the evidence. The government hoped to avoid the unnecessary expense of a long investigation and trial, to start paying restitution to the victims as quickly as possible, and to avoid a substantial delay in the recovery efforts resulting from the fraud. As noted in his pleading, on November 24, 2008, after seeing the evidence amassed against him, the defendant sent his attorney to negotiate a cooperation agreement with the government. The government declined to enter into a cooperation agreement with the defendant (his perjurious testimony validates that decision). Importantly, however, the government offered the defendant an opportunity: if the defendant agreed to plead guilty and accept responsibility for his conduct, the government promised it would inform the Court of any assistance the defendant provided to law enforcement. The defendant rejected the offer, which the government thereafter confirmed in correspondence with defense counsel. Instead, the defendant determined to go to trial, deliberately gambling that he could overcome the overwhelming evidence and avoid his accountability for his crimes by deceiving the jury. Tom Petters did not care about the consequences of this decision on his victims or others. Notably, the government made the same offer to Larry Reynolds. Reynolds quickly accepted the offer, pleaded guilty, and accepted his responsibility for the fraud. The government also made the same offer to Greg Bell. Bell also quickly accepted the offer, pleaded guilty, and accepted his responsibility for his own fraud. The defendant remains uniquely unrepentant.
The defendant now claims he is now working hard to assist the receiver recover assets. Even now, defendant misrepresents his cooperation with the receiver, advising the Court that he “provided a listing of his assets and assisted in the location of the same.” (Def.’s Position at 19.) Defendant apparently forgets his effort to conceal assets from the receiver following his arrest. See Special Report of the Receiver dated Jan. 22, 2009, Civ. No. 08- 5348 (reporting defendant diverted $50,000 in corporate assets and concealed them with a family member while using the funds). The defendant touts his recent meetings with the receiver, but they began only after the defendant was convicted, sixteen months after the receiver began his efforts to restore to victims the proceeds of the fraud. Once again, the defendant has demonstrated that in his world, his interests come first. He will offer assistance when it is of benefit to him.
Charitable Contributions
The defendant also points to his charitable donations as a reason for a more lenient sentence. First and foremost, the defendant deserves no credit for the charitable donations he made with other people’s money. The defendant’s charitable donations are traceable to the proceeds of his fraud. In fact, the defendant caused these charitable organizations harm through these donations of fraud proceeds as these same organizations are now required to return the money. Moreover, the defendant purposely used his persona as a charitable philanthropist to further the fraud. The receiver has reported that the foundation established by the defendant in the name of his murdered son – the organization on which the defendant purportedly spent most of his time and effort – was used largely to fund gala events featuring the defendant and to support the defendant’s company, Petters Group Worldwide. The receiver’s accountants have determined that approximately twenty percent of donations went to student scholarships. Indeed the evidence at trial proved the defendant used the charitable events to entice new investors. See Gov’t Ex. 280 (Petters: “John would want me to make deals and raise money for his foundation at the same time.”) The defendant’s true civic character was also made plain by his tax returns, which revealed the defendant paid almost no taxes despite hundreds of millions of dollars in income and remarkably extravagant personal expenditures. He was recorded laughingly admitting that he cheated on his taxes.
Blaming the Victims
Throughout the trial, the defendant chose the unseemly trial tactic of blaming his victims, referring to them as “giant loan sharks” and other names. He continues that tack even now – notwithstanding the testimony of his friends and associates and people like Janet Leck and Ray Ross – arguing that he should not be punished for his fraud and his deceit, because the victims chose to invest based on his promises of substantial rates of returns. The evidence demonstrated that the investors, including unsophisticated “little old ladies,” all took the defendant at his word. Now, he argues they deserved what they got. His argument makes plain that the defendant would repeat the offense if given the opportunity. He should be incarcerated to protect the public. The defendant spent most of his career obtaining money from investor/victims through deceit and fabrications. The defendant took money from individuals without a second thought, saying whatever he needed. If there came a time when he was required to repay an investor, for example the Breckners or GE Capital, the defendant simply worked his remarkable talent, calling new and old potential investors and tricking them into giving him more money. If Petters indeed had an “unbending faith in tomorrow,” it was his faith that he was always capable of separating new victims from their money. The recordings adduced at trial reflected this mentality, the defendant’s race to beat the clock and his confidence that he could do so. But for the government’s investigation in September 2008, who can really say how many tens of millions of dollars more would have been lost. The defendant now also blames the regulatory system for its failure to capture him sooner. (Def.’s Position at 19.) This is an odd argument. The defendant blames the government for not stopping his fraud earlier, but then asks this Court to release him sooner. According to the defendant’s logic, were the Court to impose a sentence permitting the defendant to leave prison, any subsequent frauds perpetrated by the defendant would then be the government’s fault, as it could have prevented them.
Long-Term Medical Prognosis
Finally, desperate for any argument, the defendant points to his medical condition – a pituitary tumor – as a ground for leniency. Notably, in October, the government requested access to the defendant’s doctor. Through counsel, the defendant denied the government’s request. Based on what is publicly known of his condition, there is substantial question whether the defendant’s pituitary tumor represents a significant medical problem. See Dr. Craig Bowron, “Tom Petters’ pituitary-gland tumor: reason for leniency or just another fraud?”, MinnPost.com (March 10, 2010) (noting that 10 percent of population have pituitary adenomas without symptoms). More to the point, the defendant’s medical condition is irrelevant to a determination of his proper sentence. The defendant, by his conduct, has earned for himself a life sentence, whatever that might be.
CONCLUSION
The defendant argues that he is “worthy for the nod of mercy.” (Def.’s Position at 23.) The defendant has done nothing to merit this Court’s mercy. A life sentence is just punishment for the defendant. Dated: April 1, 2010 Respectfully Submitted,
B. TODD JONES United States Attorney
s/ Joseph T. Dixon III
BY: JOSEPH T. DIXON III Attorney ID No. 0283903 JOHN R. MARTI TIMOTHY C. RANK Assistant U.S. Attorneys
St. Paul, Minn. — A U.S. District Court judge said Friday businessman Tom Petters will be held personally responsible for losses his investors suffered from a multi-billion-dollar fraud scheme.
U.S. District Court Judge Richard Kyle says a judgment in the amount of about $3,522,880,614.10 will be entered against Petters. That's a result of Petters' conviction last December on fraud and money laundering charges.
Forfeiture will be part of the sentence scheduled for April 8.
A federal judge ordered the forfeiture Wednesday of several pieces of property owned by convicted businessman Tom Petters, including his former primary residence in Wayzata and the Plymouth home where his girlfriend and his two young children currently live.
The face of the movement is Thane Ritchie, a Chicago area investor/hedge fund manager who has sued imprisoned Minneosta Ponzi scheme operator Tom Petters for what Ritchie said were $150 million in losses that Petters' bamboozled from him.
"Ordinary, practical Americans deserve another option, a different path to address 'real solutions to the real issues' they face at their kitchen tables each night," said Ritchie. "So [Tuesday] I am announcing the formation of an ad hoc committee to explore the possibility of establishing a new political party here in Illinois and ultimately nationally."
Displaying a paranoia Ross Perot could appreciate, and a conspiracy theory Ventura would applaud, Barkley and Ritchie have tried to subpoena U.S. Senator Amy Klobuchar and ex-Sen. Norm Coleman among other "powerful interests" to see if they influenced the Strib's decision to cancel a 16-part Foundation's ad series. The ads ripped the courts and politicians for not letting Ritchie recoup more of the money he lost on Petters, who has since been convicted on 20 counts of wire fraud, mail fraud, conspiracy and money-laundering.
The popular perception of a complex white-collar criminal case is of a bottomless font of billable hours for the attorneys involved. But the reality is often far different: The massive swindles and Ponzi schemes that have dominated local and national headlines for the last year have revealed just how hard it can be for the lawyers handling them to get paid.
From the statement given by his defense attorneys, Petters appears to have an incidentaloma: a stable tumor that isn't growing and doesn't require medical therapy or surgery.
So is his appeal for leniency on that basis just another fraud? From this distance it sure looks like the latter, but U.S. District Judge Richard Kyle will be the one to pass judgment on that. One thing can be said for certain: Petters' brain carries pathological features.
Sentencing for Thomas Petters has been rescheduled by U.S. District Court Judge Richard H. Kyle for 9 a.m. Thursday, April 8, at the U.S. Courthouse in St. Paul. A restitution hearing will be scheduled 60 days after sentencing. See the restitution order.
They say the 52-year-old Petters "has earned for himself a life sentence." But since federal law requires a sentence in years, they're formally asking for the maximum on all 20 counts of wire fraud, mail fraud, money laundering and conspiracy. That adds up to 335 years in prison.
In a separate filing...
Defense attorneys are asking for mercy at the sentencing for Minnesota businessman Tom Petters, saying he's suffering from a tumor on his pituitary gland.
Tattooed, right-wing-Xtian rocker Bradlee Dean and his sidekick Jake apparently crashed a DFL meet & greet in Cokato a couple weeks ago and "confronted" gubernatorial candidate John Marty on his support for marriage equality.
Document 941. Filed 02/17/10. United States of America, Plaintiff vs. Frank E. Vennes, Jr., et al., Defendants. (PDF):
ORDER APPROVING AND CONFIRMING THE SALE OF CERTAIN REAL PROPERTY LOCATED AT 3515 SECOND AVENUE SOUTH, MINNEAPOLIS, MINNESOTA AND DIRECTING DELIVERY OF DEED
Upon consideration of THE STIPULATION, together with its Exhibits, by and between Plaintiff United States of America, Defendant Frank E. Vennes, Jr., (“Defendant Vennes”), and Receiver Gary Hansen (the “Receiver”) [Docket No. 932], who stipulate to the approval of the sale of the property located at 3515 2nd Avenue South, Minneapolis, Minnesota (the “Property”), the Court finds:
1. The Property is currently owned by 3515 2nd Avenue South, LLC(“Seller”). Seller is an entity formed by Defendant Vennes to hold title to the Property.
2. The Property is located at 3515 2nd Avenue South in Minneapolis, Minnesota.
3. The Property is a rectangular shaped lot consisting of a total land area of 8,123.22 square feet. The Property contains a 2.5 story boarding house constructed in 1923. The Property is in need of a substantial rehabilitation and is currently vacant. The City of Minneapolis conducted a Code Compliance Inspection of the Property and noted several deficiencies that must be corrected before the Property may be deemed code compliant and habitable.
A Chicago investment fund's federal lawsuit against former executives from Petters Group Worldwide can proceed, though the case will move from Chicago to the Twin Cities.
U.S. District Court Judge John Darrah made those decisions today. His written ruling said the case's "strong connection" to Minnesota weighed heavily in favor of a transfer. He also wrote that the transfer to Minnesota — which the defendants requested — will "promote more efficient, unified discovery."
The defendants in the civil lawsuit — former Polaroid CEO Mary Jeffries and Camille Chee-Awai, who led another business unit at Petters Group Worldwide — had asked Darrah to dismiss the case. He denied that motion.
This website is under construction. While we're waiting on my new home page to be completed you can use the web links below to access files from cases related to the Ponzi scheme prosecution of Thomas Petters, and similar receivership cases of Hoffman (D. Minn.) and Madoff.
Documents, spreadsheets on fees, assets charts and more - check it out.
On Thursday, Ritchie's civil racketeering suit against the former CEOs of Polaroid and Petters Capital is set for a hearing in federal court in Chicago, Ritchie Capital spokesman Lew Phelps said. The former executives of Petters and Polaroid are seeking to have the suit dismissed, Phelps said. If that fails, they'll ask that the court to move the case to Minnesota.
I’ve termed that suit “dangerous” — a rich guy’s attempt to bleed a publication through a bogus case. More on that in a bit. As part of Ritchie’s fishing mission, his suit names 30 “John Does” who may have pressured the Strib to pull the 15-part series after nine ads ran.
Led by Thane Ritchie, the firm got stiffed for about $260 million when Petters' Ponzi scheme imploded in 2008.
Later this week, a civil racketeering lawsuit that Ritchie Capital brought against two former Petters executives is scheduled for a hearing in federal court in Chicago.
The Petters executives named in the suit are former Polaroid Corp. CEO Mary Jeffries and Camille Chee-Awai, who was the CEO of Petters Capital. Neither has been charged with any crime. But Ritchie claims that the two were part of a fraud — separate from the Petters Ponzi scheme — that cheated Ritchie out of a secured position in Polaroid, and $260 million.
At the Chicago hearing, Judge John Darrah will be asked to rule on motions from Jeffries and Chee-Awai to dismiss the racketeering suit and, separately, to move it to federal court in Minnesota if he doesn't throw it out.
--snip--
As Tom Petters' criminal trial wrapped up in December, an organization called "Stop the Petters Scam Foundation" started running ads in the Minneapolis-based Star Tribune. The ads laid out a long list of complaints about how the case had been handled by federal authorities. The foundation is supported by Ritchie Capital.
When the Star Tribune cancelled the ad run after nine installments had appeared, the foundation sued the newspaper for breach of contract. The foundation claims the Star Tribune was pressured by persons unknown to stop printing the ads.
The foundation's case is without merit, said Ben Taylor, a spokesman for the Star Tribune. The Star Tribune's own judgment was used in the decision to stop running the ads, he said. The remaining ads appeared in the St. Paul Pioneer Press.
The foundation hasn't backed off that lawsuit, and in the last couple of weeks has subpoenaed a series of prominent Minnesotans. "We're just trying to determine who, if anybody, involved in the Petters case contacted the Star Tribune to get ads dropped," said Phil Villaume, an attorney representing the foundation.
Subpoenas have gone out to U.S. federal district Court Judge Ann Montgomery, who's handling the Tom Petters civil case; former U.S. Sen. Norm Coleman; U.S. Sen. Amy Klobuchar; Doug Kelley; and Deanna Coleman, a Petters executive who led federal investigators to the Ponzi scheme, pleaded guilty to fraud and testified against Petters at his trial.
People close to the case said several of the subjects of the subpoenas would contest being forced to give depositions.
I just took a look at the Stop the Petters Scam website. The website looks a little shabby - some of the links are broken. This pop-up has a picture of Judge Ann Montgomery - the caption says "Dean Vlahos" (click on screenshot to make bigger):
Speaking of broken links, there are many links from this blog to the petters-fraud.com website which is no longer online.
With a history of finding himself in the middle of some of the most high-profile cases, it’s no surprise Kelley is at ground zero of the Tom Petters fraud case.
Vogel gets one substantial fact dead wrong when she writes, “To pay off creditors, a bankruptcy court in Minnesota is forcing Polaroid to sell a portion of its collection at Sotheby’s in New York on June 21 and 22.” The Minnesota Bankruptcy Court is definitely not “forcing Polaroid to sell a portion of its collection at Sotheby’s.” The Minnesota Bankruptcy Court has merely endorsed the debtors’ fervent plea to allow this sale to go forward; it didn’t require it of them. In short, the current holders of the collection initiated this sale, not the court; the fact that this will happen under a ruling known generically as a court order should not get interpreted as the court requiring reluctant parties to conduct a fire sale. In this case, the sellers can’t wait to get rid of the stuff, in which they have no interest outside of its cash value.
It’s also important to point out that the entity selling off the collection is neither the original Polaroid Corporation nor the company now marketing products under the Polaroid brand name. It’s PBE Corporation, formerly known as Polaroid Corporation, a segment of the husk of Petters Group Worldwide, which got dismantled as a result of the collapse of a Ponzi scheme that operated under the name Petters International. (Petters has now been tried and convicted for that crime.) I know this gets arcane, but as journalists we need to exercise great precision in using the name Polaroid to identify a legal entity at this juncture, given that it applies to two now-defunct corporations and can also get construed as referring to the current holders of that brand name. In point of fact, no extant legal entity now goes by the name Polaroid Corporation.
The charges are about the same. The amount of money at issue in the criminal charges is very different. Petters was convicted in a more than $3 billion dollar ponzi scheme. Hecker is charged with allegedly defrauding lenders and others of several million. If found guilty, Hecker could still go to prison for a very long time.
In addition, legal fees for Frank Vennes, a heavy investor in the Ponzi scheme, are at $884,000 even though Vennes was not charged. Fees incurred by the receiver who is liquidating the Vennes estate are another $580,000 and rising.
On Monday, a request for another $485,000 in fees will be before U.S. District Judge Ann Montgomery who is overseeing the Petters and Vennes receiverships.
The task of recouping the cash that flowed out of the Tom Petters fraud scheme continues. Paying it back won't necessarily be an easy task, even for those being asked to return relatively small amounts.
Cathedral High School in St. Cloud had nothing to do with the scheme. But Petters, who graduated from the school in 1975, gave four separate gifts totaling $252,900. Now, the school is being asked to give it back, Mike Mullin, the school's president, said Thursday.
The money was used a couple of years ago to build an elevator at the school. "None of it is sitting around," he said.
Right now, all Cathedral has is a letter from Doug Kelley, the court-appointed receiver in the Petters case, asking for the money back. Cathedral hasn't received a court order, Mullin said. Regardless, the school doesn't have an easy way to raise the cash.
"One thing we've resolved is that we are not going to negatively impact our current or future families," Mullin said. The school's other options are limited. Mullin mentioned fundraising "or taking the elevator and shipping it" to the Twin Cities as payment.
A federal jury in St. Paul found Petters, 52, guilty of 20 counts of fraud in early December following a six-week trial. The Minnetonka businessman was at the center of a $3.5 billion Ponzi scheme that collapsed in 2008 and led to a flurry of criminal charges, bankruptcies and many investors left with nothing.
Kelley said he has recovered about $200 million in assets from the individuals involved in the scheme so far. But bigger fish are still on his line, as he's identified $500 million worth of additional "clawback" actions, much of it from investors who got more out of the scam than they put in.
For example:
A 38-foot 2008-model Fleetwood Bounder motor home — valued at $110,000 and belonging to Deanna Coleman, a onetime Petters executive — was sold recently. A court filing by Kelley this week says the Fleetwood was sold along with a Haulmark trailer and a heated storage unit for $148,500. The money goes into a fund that eventually will be used to give something back to victims and creditors.
At parent company Petters Group Worldwide, Coleman worked closely with Tom Petters and was central to the fraud scheme that attracted investors by promising substantial returns. She went to federal authorities in 2008 and exposed the scheme, later pleading guilty to one count of conspiracy to commit mail fraud. She testified against Petters at his trial in the fall.
For the past few years I’ve been hearing that something is going quite wrong at Northwestern College in St. Paul, MN, under the leadership of President Alan Cureton.
There’s now a website–Friends of Northwestern College & Radio–that seeks to provide some explanation and documentation of what’s going on there. The most recent posting, I believe, is a letter from five former Trustees.
We whose names are listed below have all served on the Board of Trustees of Northwestern College and Radio, and we possess a continuing passion for its future and for the glory of Jesus Christ in its ministry. We humbly ask that you read what follows with a prayerful, open mind. What we share is public information, but not all of it is yet widely known.
Over the past year, a total of seven people –about 1/3 of the Board of Trustees of Northwestern College and Radio –have voluntarily resigned from the Board, or have been removed or denied continued appointment by the Board’s majority. Some were among the longest serving trustees. All were thoughtful voices of occasional dissent and consequently considered to be impediments to the President’s leadership. When demanded by the Boar to give the President their “complete and unfettered support,” the seven trustees, in good conscience, could not comply. They had too many concerns to do so.
These, now, ex-trustees are not alone. Many current employees of Northwestern College and Radio share the deep concerns that these trustees attempted to raise at the Board level, but they cannot speak freely. We believe their concerns need to be aired. They raise issues of integrity and leadership performance, as well as institutional direction and governance.
What’s going on? The culture of Northwestern College and Radio appears to be changing rapidly and drifting from a heritage that is firmly grounded in commitment to the authority of Scripture and theological conservatism. The reality of the state of affairs in both the college and the radio ministries is difficult for the public to discern, but indications of institutional change are evident to many within.
The campus is badly divided, and many recognize that thoughtful dissent is neither welcomed nor tolerated. Those expressing concerns are silenced or marginalized. An atmosphere of fear and distrust has been documented by campus surveys. Some employees have been intimidated and pressured to resign. Others have been disciplined after having been promised that they could voice opinions freely without retribution. Still others have chosen to leave and find work elsewhere, yet they remain troubled and prayerful about what’s happening in both Northwestern’s educational and media ministries.
The leadership publicly avows that all is well, that nothing has changed, that Northwestern remains committed to its historic positions, and that any concerns being voiced are coming only from a small group of disgruntled people. We believe the leadership knows otherwise. Our purpose for raising these matters is that Northwestern College and Radio might, by God’s gracious intervention, be spared the fate of so many other institutions that have witnessed the dying of the light because they drifted from and, eventually, abandoned their Christian heritage. We ask that you pray with us for the truth to be known and for Northwestern to truly claim its historical vision, articulated by President Bill Berntsen, to be “a first-rate, trustworthy, dependable, distinctively Christian, faith-affirming, overtly conservative College...uncompromisingly committed and loyal to God’s Word, the Bible…”, for the glory of the Lord Jesus Christ.
If you choose to explore the matter further, please visit www.friendsofnwc.com. You will find some individual stories and other important materials posted there.
Earnestly and prayerfully,
Galen Call
John Helmberger
Bruce Pearson
Paul Sentman
Gary Shaffer
Fidelis Foundation
3189 Fernbrook Ln. N.
Plymouth, MN 55447-5320
Type of Grantmaker: Public charity
IRS Exemption Status: 501(c)(3)
Additional Descriptor: Organization that normally receives a substantial part of its support from a governmental unit or from the general public
Financial Data (yr. ended 9/30/07): Assets: $31,383,893; Total giving: $3,003,894
EIN: 300006857
990: 2006 2005 2004 2003 2002
Last Updated: 7/27/2008
Purpose and Activities
The foundation helps Christian ministries fulfill their missions by providing financial support for their programs, as well as resources to maximize their effectiveness.
Fields of Interest
Subjects
Christian agencies & churches
Officers and Directors
Note: An asterisk (*) following an individual's name indicates an officer who is also a trustee or director.
G. Craig Howse,* Chairperson
Joseph L. Smith,* President Garth Warren, Vice President
L. John Buyse
Sam Crabtree
Bruce Pearson
The NWC Column explains the relationship between Vennes and the college:
Former board member implicated in fraud case
A former Northwestern College trustee has been implicated in a multi-billion dollar fraud. Frank Vennes Jr., who resigned from the college board in December, collaborated with Twin Cities businessman Tom Petters, who is currently under federal investigation. Northwestern avoided any financial entanglement with the scheme, but not all local organizations were so fortunate.
Vennes, who served on the Board of Trustees for four years, was described by the FBI as a broker with investors in Petters’ companies. Vennes is quoted in the document, warning Petters and others that if investors were to send auditors to visit warehouses where non-existent merchandise was supposed to be located, “the scheme would implode.”
That statement came in an FBI affidavit used to obtain nine warrants allowing the FBI to search Petters’ Minnetonka business headquarters and Wayzata home. The FBI stated that the money Petters was raising through his equity company, Petters Co. Inc., was actually being used to fund personal expenses and other business ventures. Vennes’ home was also searched.
This isn’t the first brush with the law for Vennes. In May 1987, Vennes was indicted for money laundering, firearm violations and drug offenses. According to the 1994 Court of Appeals case detailing the incident, “an undercover agent, posing as a Chicago investor, contacted Vennes and asked for help in transferring cash abroad. Vennes later admitted that in the next three months he and his codefendants received $370,000 from the undercover agent and transferred it, minus their substantial commissions, to the Bahamas, the Isle of Man, and Switzerland without complying with federal currency transaction reporting laws. In the last transaction, Vennes personally delivered $100,000 to Switzerland, where his associates “lost or stole it.”
Following the loss of the $100,000, the undercover agent told Vennes that he was not a Chicago investor, but rather a member of the Chicago underworld, and that he must recoup the loss, or the Mafia would dismember his children and kill his wife. Vennes claimed that because of these threats he began illegally selling firearms and drugs as a way to make up for the lost money.
Vennes pleaded no contest to one count of money laundering, one count of illegally selling a firearm, in addition to using a telephone to facilitate distribution of cocaine. His attorney urged that Vennes be sentenced to only two years in prison because he became “involved in the drugs and the guns” out of fear that he and his family would suffer if he did not recoup the $100,000. The court, however, sentenced Vennes to prison for five years – three for the money laundering, and one year for each of the other two offenses.
At the time of the 1987 case, Vennes, as part of a plea agreement, pleaded no contest to one count of the money laundering indictment, one count of illegally selling a firearm as well as using a telephone to facilitate distribution of cocaine.
Following his release from prison in 1993, Vennes commenced a Bivens action, seeking damages from unnamed agents for entrapment, outrageous conduct, and willful violation of the tax laws. Vennes tried to once again prove that the only reason he engaged in the illegal actions involving the guns and drugs was due to the outrageous threats given him by the undercover agent. In the end, the Bivens action was denied as the court could not verify Vennes’ claims.
For an institution such as Northwestern, the notion of change, forgiveness and believing in Christ’s ability to bring about transformation in lives certainly isn’t a foreign concept.
Vennes says he converted to Christianity during his stay in prison. Years later, when he was being considered as a member of the Board of Trustees in 2003, the board was convinced of the authenticity of his conversion.
President Alan Cureton commented on the circumstances that Vennes was brought onto the Board.
“None of the VPs were involved in his recruitment as a board member. In fact, I am the only person left on the board who was directly involved in his recruitment. The full board knew of his past and his conversion experience in prison. Disclosure was made. It was not our place to hold judgment regarding his past sins, but we did believe it was appropriate to offer grace and move forward. It is unfortunate what has happened…”
Brook Berry, Vice President of Marketing, was quick to speak of Northwestern’s need to believe in a God who can bring about change and hope in the lives of the hopeless. He stressed this need to forgive, saying: “Northwestern certainly believes in the power of Holy Spirit to transform lives – even the lives of those in prison. God can do miraculous things. Look at Chuck Colson, for example. It is important to remind our campus community that Frank Vennes is a fellow believer."
“We must not be too quick to condemn those who have might have fallen back into self-destructive behaviors. The Church has a long history of shooting our own wounded. Now, more than ever, we need to respond with grace and the hope of redemption. Northwestern should reflect the heart of the Savior who died for the sinful nature in us all.”
The Star Tribune, which originally broke the story of Petters’ indictment on Sept. 26, mistakenly described Vennes as a current member of NWC’s Board of Trustees. Vennes actually resigned from the board last December for personal reasons. The correction was printed in the Star Tribune’s Sept. 28 issue.
In an e-mail sent out to students and faculty Oct. 1, Northwestern’s Marketing and Communications said the college had no financial ties to Vennes or Petters, encouraging members of NWC to “Be assured that none of Northwestern’s investments are in any way involved with the Petters financial crisis.”
This is good news for Northwestern. Not all organizations were as fortunate, however.
Minnesota Teen Challenge, a faith-based, nonprofit organization focused on rehabilitation of drug addicts, invested with Petters. The Fidelis Foundation, a public charity that additionally acts as an investment agent on behalf of other public charities and nonprofits, including Teen Challenge, is facing losses of up to $27.6 million in Petters Co. notes.
Richard Scherber, the executive director of Teen Challenge, told the Star Tribune that Vennes was a member of the Teen Challenge board as well as the financial committee that reviewed the investment proposal with Petters’ business. Scherber says Vennes never pushed the board to make the investment with Petters Co..
The money that Teen Challenge had invested in Petters Co. was given through a single contributor, not through the donations of other contributors, said Teen Challenge’s finance director Ron Goodman.
Scherber told the Star Tribune, “It’s hit us in the jugular. [Teen Challenge] is saving lives. You can imagine financially how this has impacted us.”
Goodman says that Teen Challenge believes it is still owed approximately $5.8 million in principal and interest.
Berry grieved with Teen Challenge’s loss. “Our hearts go out to our friends at Minnesota Teen Challenge. It is a powerful ministry that can provide hope and second chances to young people trapped in desperate life situations. This must come as a serious blow.”
Sharon Lubinski was set to be sworn in as U.S. Marshal Friday morning in Minneapolis.
The Minneapolis assistant police chief was recommended by U.S. Sen. Amy Klobuchar last year, then nominated by President Obama and confirmed by the Senate.
Lubinski is widely regarded as the first lesbian to hold the position. She will serve in the District of Minnesota.
Just this week Obama and Amy Klobuchar in the state of Minnesota nominated Sharon Lubinski to United States Marshal in the state of Minnesota.
Now keep mind that I said sodomy and homosexuality are against the law in the United States.
But, what did Obama do and Amy Klobuchar do? They nominated Sharon Lubinski to the U.S. Marshal in the state of Minnesota. Not only is she the first woman, but she is the first lesbian to serve in such a position.
Again folks, this is against the law.
Later on, Bradlee Dean critiicizes Governor Tim Pawlenty for not blocking the appointment... listen:
Attorney General Eric Holder at the Forum Club of the Palm Beaches
West Palm Beach, Fla. ~ Friday, January 8, 2010
Thank you, Bob. I appreciate your kind words. And thanks to you and Gayle [Pallesen] for inviting me here today.
It’s a pleasure to join you. And it’s an honor to be included among the Forum Club’s roster of distinguished speakers.
This Club’s leadership, membership and its network of friends and partners have created a model for meaningful, thoughtful civic discussion. You’ve done so by encouraging a diversity of perspectives, and by refusing to shy away from our most pressing, and often most provocative, issues of national concern.
Already, this new year has brought new concerns. Already, as we enter a new decade, we have been reminded of why our government’s most important duty is – and must be – ensuring the safety of the American people.
Just yesterday, President Obama addressed the nation and reiterated his tireless commitment and focus on this work. The President also made clear that we must acknowledge recent failures. As we move forward, we must identify vulnerabilities. And we must transform our individual anger and anxieties into a collective, unwavering resolve – a shared striving toward a stronger and more effective security infrastructure. This is not a place for political gamesmanship- the safety of the American people is, I believe and hope, beyond the partisan, reflexive negativism that passes for legitimate criticism in Washington.
So let me say to you today, as clearly as the President has said it: In this time of war the protection of our national security is and will remain our top priority. And we will use every component of our power to keep the American people safe- from our military to our courts.
Yet even as we work to protect our cities and skies, our borders and our people, we must not neglect our responsibility to safeguard and strengthen the American economy. We cannot ignore the fact that protecting our economy is an essential component of our larger security goals.
Our prosperity, our prospects for growth and opportunity, and our position in the global marketplace must all be vigilantly defended. That’s why threats to our economic system must be addressed with the same seriousness and sense of purpose that guide our efforts to protect the American people.
One of the greatest and most glaring threats facing our economy is the presence of financial fraud, particularly in our securities and financial markets.
Across numerous administrations, Democratic and Republican alike, the Department of Justice has worked hard to combat financial fraud and to recover ill-gotten gains for the benefit of those victimized by fraud. Despite these efforts, however, we know that financial fraud persists. Just this week, The Wall Street Journal reported that “crisis and fraud in the securities and investment banking industries are at their highest levels since records began.”
The simple truth is that financial crimes have become all too common. And the consequences of these schemes and scams are real, as this community knows all too well. Palm Beach is, in many respects, ground zero for the $65-billion Ponzi scheme perpetrated by Bernard Madoff -- the largest investor fraud case in our nation’s history.
Before the house of cards Madoff built collapsed in 2008, before he was sentenced to 150 years in prison last June, before he became a notorious criminal on the cover of newspapers around the world, he was one of your neighbors.
His former home sits just north of us. An 8,700 square-foot mansion that’s worth …. Well, we’ll know what its worth once the U.S. Marshals Service auctions it off and the proceeds are distributed to Madoff’s victims.
We all look forward to that day. But we also know that we are unlikely ever to recover all of the money that Madoff stole. And as a result of his crimes, too many people who once dreamed of retirement now fear that they will become burdens upon their families. Too many who once looked forward to the future now fear it. Too many promises can no longer be kept -- promises made to charities and schools, to churches and synagogues, to children and grandchildren.
The ripple effect of Mr. Madoff’s greed and deception is as breathtaking as it is heartbreaking. Unfortunately, his crimes, as significant as they were, merely represent a much larger problem, a problem that was brought into stark focus over the last year. In times of recession, when every dollar counts and each dollar is counted, financial wrongdoing comes to light. Unbalanced books are revealed. Pyramid schemes collapse.
Last year, Allen Stanford, Tom Petters and, most recently, Fort Lauderdale attorney Scott Rothstein – who is alleged to have run a $1 billion investment scam – joined Bernie Madoff in becoming headline news and household names. I’m proud that these men, along with more than 450 others convicted of corporate and securities fraud in 2009, have been taken out of the game. And I’m heartened that the Department of Justice, at last count, is moving forward on more than 5,000 pending Financial Institution Fraud cases.
But I also realize that this is just a snapshot of what we’re up against.
So how do we address a problem of such seriousness, size, and scope? We need a bold strategy equal to the challenge – a comprehensive, coordinated plan of action that strikes at the core of financial fraud schemes wherever they may be found.
This is precisely what our new, national effort will accomplish. The Department of Justice, working in concert with the White House and a network of government agencies, will use every tool at our disposal – including new resources, advanced technologies and communications capabilities, and the very best talent we have – to prevent, prosecute and punish financial fraud.
The cornerstone of this work is a new, interagency Financial Fraud Enforcement Task Force. This task force was established by Executive Order of the President. It was launched recently and is led by the Department of Justice.
In establishing the new entity, President Obama recognized that mortgage, securities and corporate fraud schemes have eroded public confidence – both at home and abroad – in the strength and integrity of America’s markets. These crimes have only added to the challenges we face in overcoming the financial crisis that has gripped our economy for the past two years. And they have led to a growing sentiment that Wall Street does not play by the same rules as Main Street.
These crimes have devastated and driven away many who were once willing to invest in our economy. They’ve robbed people of their homes and their economic security. They’ve depleted bank accounts and pension funds. In some places, they’ve dried up philanthropic giving and shuttered charities. They’ve placed unfair challenges before cash-strapped governments, local police departments, small businesses, and American workers and consumers.
But we are fighting back, and our newly-established task force is at the forefront of this effort. At the core of the task force’s mission is a more robust and strategic law enforcement effort. Through this effort, critical information will be shared in real time across the federal government – and with our state and local law enforcement partners – so that we can stop fraud schemes in their tracks.
We will focus on four key types of financial crime:
· Mortgage fraud -- from the simplest of “flip” schemes to systematic lending fraud in our nationwide housing market;
· Securities fraud – from traditional insider trading, to Ponzi schemes, to accounting fraud, to misrepresentations to investors;
· Recovery Act and rescue fraud – including the theft of federal stimulus funds and the illegal use of taxpayer dollars intended to shore up our financial institutions; and
· Financial discrimination – including predatory lending practices in minority communities and the sale of financial products that exploit the elderly and disadvantaged.
In combating these crimes, we will aggressively leverage the criminal and civil enforcement resources of the federal government. We will tackle every fraud case with the aim of recovering stolen funds for victims. We will protect the taxpayers’ investment in America’s economic recovery, and ensure that every American – regardless of age, race or national origin – has a chance to participate in that recovery. And we will enhance coordination and cooperation among the federal, state, local, tribal and territorial authorities, so that the perpetrators of these crimes are brought to justice.
The good news is that our new task force has a running head start. Even before the launch of the task force, the Department of Justice had responded to the financial crisis by redoubling our fraud-fighting efforts. In addition to prosecuting the Ponzi scheme fraudsters I mentioned earlier, last year we arrested the ringleaders of what has been described as the largest hedge fund insider trading case in history. And we secured 30-year and 25-year sentences for two executives of National Century Financial Enterprises following their convictions on conspiracy, fraud and money-laundering charges.
We’ve also devoted substantial attention to preventing and prosecuting mortgage fraud. No one in South Florida needs a lesson on the destructive consequences of widespread mortgage fraud. But you should know that, right now, the FBI is investigating more than 2,800 such cases, up almost 400 percent from five years ago.
The recently-enacted federal budget for 2010 will enhance these efforts. This budget represents the largest-ever, single-year enhancement to support and expand the Justice Department’s financial fraud programs. This will allow for additional FBI agents, prosecutors and support staff to aggressively pursue mortgage fraud, corporate fraud and other economic crimes.
Congress has also stepped up by providing the federal prosecutors with new tools to help investigate and prosecute financial fraud. Our task force will take full advantage of the legislative authorities Congress gave us last year in the Fraud Enforcement and Recovery Act of 2009.
I’m confident that with new authorities, new resources and a bold new plan of action, we can and will make measurable, meaningful progress. And we will succeed in restoring the integrity of our markets, preserving taxpayers’ resources and protecting the vast majority of workers, consumers, investors and corporate executives who play by the rules and adhere to the law.
To those who see the victimization of others as an avenue to wealth, take notice: If you fabricate a financial statement, if you propagate an investment scheme, if you are complicit in an act of financial fraud, you are writing your ticket to jail.
And to those who have lost their financial security and their confidence in our financial system: Know that we will work tirelessly to restore what you’ve lost, and to rebuild the trust that’s so essential to America’s economic recovery.
There is little doubt that our economy is now emerging from the financial crisis that has gripped the country over these past months. To sustain this recovery, we must marshal the best that our government and the private sector have to offer. We have our mission, and we are committed to fulfilling it. Working together I am confident that we can restore confidence, punish wrong doing and help get our economy back on track.
Thank you, and I look forward to taking your questions.
