Petters Info

Blog in Mothballs

2010-04-09T12:20:00.000-07:00

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.

Petters is Sentenced to 50 Years

2010-04-08T15:14:00.001-07:00

Tom Petters gets 50 Years for 3.65 Billion Fraud

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.

Petters Sentencing Tomorrow

2010-04-07T07:36:00.000-07:00

Will Petters be wearing a prison uniform like he did at this hearing last June?

The Sorry Saga of Hope Commons

2010-04-03T16:39:00.000-07:00

From a longer blog post at Dump Bachmann....

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)

Trusting in the Good Shepherd with you.

Jon Bloom
Executive Director

The comment on this You Tube video about Hope Commons:

Yeah, God is at work. He seized the place! BWAHAHAHAHA!!!!

April Fools Joke?

2010-04-01T15:53:00.000-07:00

AP:

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.

The Star Tribune has more.

Here's Paul Engh's argument (PDF):

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

Here's the Government's response (PDF):

GOVERNMENT’S RESPONSE REGARDING SENTENCING

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

Judge Kyle: Petters Personally Responsible for $3.5 Billion in Losses

2010-03-26T13:35:00.000-07:00

MPR:

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.

Judge Kyle Orders Forfeiture of Petters Property

2010-03-24T10:01:00.000-07:00

Strib:

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.

Thane Ritchie Wants to Start a New Political Party

2010-03-22T13:49:00.000-07:00

And the Strib says former Senator Dean Barkely is co-chair of the committee.

The Strib:

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."

The press release.

UPDATE: MinnPost's David Brauer is not happy about the news:

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.

You can read those ads at the Stop the Petters Scam website.

Good Article About Attorney Fees for Petters, Hecker

2010-03-11T16:13:00.000-08:00

Beth Hawkins at MinnPost:

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.

Read the whole thing.

Is Tom Petters' Medical Prognosis Grim?

2010-03-10T10:20:00.000-08:00

Likely not says Dr. Craig Bowron at MinnPost.com:

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.

Read the whole thing.

Sentencing Briefs on the MN DOJ Website

2010-03-09T18:38:00.000-08:00

PDF's on the MN DOJ Petters Info Website:

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.

Click here to read the government's sentencing position brief

Click here to read the defense's sentencing position brief

Click here to read the scheduling order on the related defendant cases.

Paul Engh's florid brief, quoting Walt Whitman and Albert Camus is a must read.

Prosecutors Want Life Sentence for Petters /Petters has Tumor

2010-03-08T16:06:00.000-08:00

Here and Here:

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.

Petters Defender Bradlee Dean's Videos - "Confronting Homosexuality in Minnesota"

2010-03-06T15:23:00.000-08:00

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.

Dean on his AM 1250 The Patriot Sons of Libery radio show also called President Obama a "domestic enemy"

Bradlee Dean is a stalwart supporter of Tom Petters and has compared Tom Petters to Jesus.

Bradlee Dean has also called a recent U.S. Marshal appointment illegal because she is a lesbian.

More at the Dump Bachmann blog

Vennes Property for Sale - 3515 2nd Avenue South

2010-03-05T09:40:00.000-08:00

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.

Judge Moves Ritchie Capital's Lawsuit to Minnesota

2010-03-04T17:19:00.000-08:00

John Welbes in the PiPress:

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.

Website With More Petters Info

2010-03-04T16:23:00.000-08:00

Bredagrantland.com:

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.

Chicago Tribune Article on Ritchie Capital

2010-03-03T11:02:00.000-08:00

Article about Thane Ritchie in the Chicago Tribune.

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.

Read the whole thing.

Minnpost Blog Calls Stop the Petters Scam Foundation Suit a "Fishing Mission"

2010-03-02T09:40:00.000-08:00

David Brauer in Braublog (Minnpost):

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.

Read the whole thing.

Petters Sentencing Rescheduled for April

2010-03-01T13:32:00.000-08:00

John Welbes, PiPress:

The sentencing of Tom Petters has been rescheduled for April 8, a court notice posted this afternoon says.

The wheels of justice grind slowly....

Pioneer Press Article About Richie Capital

2010-02-28T06:58:00.000-08:00

John Welbes has a long article about Thane Richie and the lawsuits:

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.

Read the entire article.

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.

Topix Forum Post About Tom Petters

2010-02-22T13:04:00.000-08:00

Why does "Petters Attorney Decries 'Rush to Judgment'" have 13,762 comments?

Saint Cloud Times Series on Petters

2010-02-21T06:36:00.000-08:00

Begins with article about Doug Kelly.

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.

His role in it, though, might surprise.

Read the whole thing.

Day Two of the series - The Money Chase: Team hunts globally for Petters' assets.

Petters Sentencing Moved to March 15th

2010-02-12T10:34:00.000-08:00

AP via Strib:

ST. PAUL, Minn. - Minnesota businessman Tom Petters' sentencing for orchestrating a $3.65 billion Ponzi scheme has been rescheduled to March 15.

U.S. District Judge Richard Kyle rescheduled the sentencing in an order Friday.

Polaroid Art Collection to be Auctioned Off

2010-02-12T06:18:00.000-08:00

The NY Times has the story.

A.D. Coleman comments on the NYT article at Photocritic International.

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.

Read the whole thing.

Land of 10,000 Ponzi Schemes

2010-02-11T13:53:00.000-08:00

Kare 11 reporter Trisha Volpe asks; Hecker just another Petters?

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.

But will there be audio like this?

Tom Petters Sentencing Scheduled for March 10

2010-02-08T10:16:00.000-08:00

AP via ABC News:

Minnesota businessman Tom Petters is scheduled to be sentenced March 10 on his conviction for orchestrating a $3.65 billion Ponzi scheme.

Cost of Peters Fraud in Fees etc.- $12 million

2010-02-06T22:26:00.000-08:00

Dave Phelps in the Strib:

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.

List of lawyers fees:

Felhaber, Larson, Fenlon& Vogt* Petters criminal defense $3.3 million

Kelley & Wolter Receiver for Petters & his co-defendants $1.9 million

Lindquist & Vennum Assisted receiver in asset search $1.7 million

PricewaterhouseCoopers Accounting work for receiver $1.6 million

Faegre & Benson Defense attorney for Frank Vennes $884,000

Oppenheimer Wolff & Donnelly Receiver for Vennes' estate $582,000

* Includes attorney Paul Engh's feesSource: U.S. District Court orders

$884,000 for Vennes? Interesting.

A a May 1st, 2009 affidavit from the Vennes receiver Gary Hansen about Vennes and his legal fees says they are for legal work both both civil and criminal. The legal fees for Vennes back them were only $178,603.50.

Email from the exhibits posted on the MN DOJ website:

Audio of Petters and Vennes talking religion:

Petters Trial Trading Cards... Free!

2010-02-05T12:33:00.000-08:00

All cards with sketches from the Petters trial at the Federal Courthouse in Saint Paul.

Click on the cards to make them bigger and download.

First Batch - Tom Petters, Larry Reynolds (Reservitz), Michael Catain and Deanna Coleman.

Second Batch - Greg Bell, Jim Wehmhoff, Tracy Mixon and Ted Deikel

Third Batch - Assistant U.S. Attorneys Joseph Dixon, Tim Rank, John Marti and Judge Richard Kyle.

Fourth Batch - Dean Vlahos, Bob White and defence attorneys Jon Hopeman and Paul Enge.

The Clawback Continues

2010-02-05T06:20:00.000-08:00

John Welbes in the PiPress:

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.

Northwestern College Trustee Fracas

2010-02-02T09:48:00.001-08:00

The Gospel Coalition asks; What’s Going on at Northwestern College and Radio?

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.

A letter (PDF) from from the Friends of NWC website (password protected):

October 27, 2008

To Friends of Northwestern College and Radio:

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

From the 990 form for the Fidelis Foundation:

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.”

-by Jacob Wielgus, news editor

And don't forget the "dirty money"....

Petters Defender Bradlee Dean Calls President Obama "a Domestic Enemy"

2010-02-01T08:07:00.000-08:00

Bradlee Dean, on his AM 1250 The Patriot Sons of Libery radio show
called President Obama a "domestic enemy"

Bradlee Dean is a stalwart supporter of Tom Petters and has compared Tom Petters to Jesus.

Bradlee Dean has also called a recent U.S. Marshal appointment illegal because she is a lesbian.

More at the Dump Bachmann blog

"Building the Dream"

2010-01-31T08:35:00.000-08:00

A You Tube video uploaded December 08, 2008.

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

Tom Petters Defender Bradlee Dean Calls U.S. Marshall Appointment "a Crime"

2010-01-16T17:39:00.000-08:00

Minnesota Independent:

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.

Bradlee Dean, a special friend of Congresswoman Michele Bachmann, had this to say about Lubinski's appointment today on his AM 1250 The Patriot Sons of Libery radio show:

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:

Bradlee Dean was a big defender of Tom Petters:

Attorney General's Palm Beach Speech About Financial Fraud Mentions Tom Petters

2010-01-10T08:43:00.000-08:00

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.

Palm Beach has been nicknamed "Ponzi Island".

Minnesota Teen Challenge Received Millions from MN

2010-01-09T07:37:00.000-08:00

Andy Birkey at MnIndy:

Minnesota Teen Challenge describes itself as a “para-church” ministry that completes the “spiritual restoration” of Minnesotans dealing with drug addiction, yet over the last seven years it’s received more than $10 million in government funds — and twice the Minnesota Legislature has singled the program out for a raise.

The arrangement raises questions about the constitutional separation of church and state, and some experts say the state has overstepped its bounds in contracting with Teen Challenge.

--snip--

Klobuchar would go on to help secure a federal earmark for the program as U.S. Senator in 2008 along with former Rep. Jim Ramstad. And the organization has secured the support of a number of other elected officials. First Lady Mary Pawlenty was a past member of the board of directors, and Gov. Pawlenty has donated a large sum of campaign funds ($85,892) to the program. Rep. Michele Bachmann donated $9,200 in campaign funds related to the Tom Petters Ponzi scheme scandal, but Teen Challenge later returned the “tainted” funds.

More at Truth Wins Out.

Lady Gaga - Polaroid Creative Director

2010-01-08T11:48:00.000-08:00

Lady Gaga's Twitpic:

Discusion at Livejournal and MnSpeak.

Judge Rules MN DOJ Can Post Petters Trial Exhibits on the Web

2010-01-06T13:43:00.000-08:00

WCCO (AP):

ST. PAUL, Minn. (AP) ― The judge in the Tom Petters fraud case has given prosecutors permission to post the trial exhibits on their Web site.

U.S. District Judge Richard Kyle gave the go-ahead Wednesday to the U.S. Attorney's Office for Minnesota.

Kyle is also backing prosecutors' efforts to find more victims. Under his order, the U.S. Attorney's Web site can now list scheduled public proceedings and provide impact statement forms that victims can send in.

Petters was convicted last month of running a Ponzi scheme that cost investors $3.65 billion. The exhibits introduced include covert audio recordings and the Wayzata businessman's e-mails.

A sentencing date has not been set, but he could get life in prison. Petters' attorneys say he's innocent and plans to appeal.

U.S. Attorney's Office for Minnesota: http://www.justice.gov/usao/mn

The following documents are linked at this web page:

Tom Petters Indictment
Tom Petters Verdict
Tom Petters Civil Complaint
Deanna Coleman Information
Deanna Coleman Plea Agreement
Robert White Information
Robert White Plea Agreement
Michael Catain Information
Michael Catain Plea Agreement
Larry Reynolds Information
Larry Reynolds Plea Agreement
James Wehmhoff Information
James Wehmhoff Plea Agreement
Greg Bell Information
Greg Bell Plea Agreement
Harold Katz Information
Harold Katz Plea Agreement
U.S. Attorney's Office pretrial brief

A Victim Impact Statement can be downloaded there also.

Petters Jury Forewoman Speaks

2009-12-21T07:02:00.000-08:00

Read it and see it the Strib.

Stop The Petters Scam Foundation Sues Star Tribune

2009-12-18T09:02:00.000-08:00

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

2009-12-17T09:11:00.000-08:00

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"

2009-12-16T20:09:00.000-08:00

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.

2009-12-06T12:06:00.000-08:00

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)

2009-12-03T18:15:00.000-08:00

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

2009-12-03T11:26:00.000-08:00

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

2009-12-03T07:31:00.000-08:00

"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

2009-12-02T19:35:00.000-08:00

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

2009-12-02T04:33:00.000-08:00

A new comment on an 2008 article at MnINdy:

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

An article in Florida Today:

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

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

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

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

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

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

The Trial of Tom Petters Day 18

2009-11-23T20:09:00.001-08:00

November 23, 2009

Day 18 of the trial of Tom Petters.

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

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

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

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

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

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

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

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

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

Petters Trial Day 17

2009-11-20T14:44:00.001-08:00

November 20, 2009

Day 17 of the trial of Tom Petters.

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

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

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

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

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

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

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

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

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

Petters Trial Day 16

2009-11-19T20:31:00.000-08:00

November 19, 2009

Day 16 in the trial of Tom Petters.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Day 14 -Tom Petters Trial

2009-11-17T19:36:00.000-08:00

November 17, 2008

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

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

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

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

Tom Petters will testify again tomorrow.

The Trial of Tom Petters Day 13

2009-11-16T18:52:00.000-08:00

Monday, November 16, 2008

Day 13 in the trial of Tom Petters.

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

The Government rested their case at 11:40.

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

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

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

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

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

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

The defense resumes tomorrow.

Petters Trial Day 12

2009-11-13T17:19:00.000-08:00

Friday, November 13, 2009

Day 12 in the Trial of Tom Petters.

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

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

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

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

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

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

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

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

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

Tom Petters Trial Day 11

2009-11-12T20:40:00.000-08:00

November 12th 2009

Day 11 of the Trial of Tom Petters.

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

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

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

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

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

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

Tomorrow, more Greg Bell testimony.

Petters Trial Day 10

2009-11-10T19:20:00.000-08:00

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

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

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

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

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

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

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

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

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

Petters Trial Day 9

2009-11-09T20:26:00.000-08:00

November 9, 2009

Day 9 of the trial of Tom Petters.

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

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

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

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

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

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

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

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

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

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

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

Judge Kyle denied the motion.

Tomorrow, Michael Catain is scheduled to testify.

Petters Trial Day 8

2009-11-06T16:49:00.001-08:00

Petters Trial Day 7

2009-11-05T18:28:00.001-08:00

Petters Trial Day 6

2009-11-04T19:28:00.000-08:00

Petters Trial Day 5

2009-11-03T18:52:00.001-08:00

Petters Trial Video - Day 4

2009-11-02T19:42:00.000-08:00

Deanna Coleman's first testimony:

Video: Tom Petters Trail - First Week

2009-11-01T19:01:00.000-08:00

Day 3 Petters Trial

2009-10-30T16:31:00.000-07:00

More testimony about phony purchase orders for imaginary electronic stuff.

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

Deanna Coleman will likely testify on Monday.

Petters Trial 2nd day

2009-10-29T16:33:00.000-07:00

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

Reuters:

* U.S. introduces evidence it says shows forgery

* Petters accused of deceiving investors, retailers

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

Pencil drawings from Wednesday.

AUSA Joseph Dixon gives the opening statement for the Government:

Hopeman for the defense:

Petters & attorney:

Petters Trial 1st Day

2009-10-28T19:08:00.000-07:00

I was there.

Jury selection and opening statements.

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

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

Here's the Strib article.

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

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

Petters Trial Tomorrow

2009-10-27T15:50:00.000-07:00

Last minute rulings... WCCO:

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

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

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

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

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

Petters Trail Delayed Another 2 Days

2009-10-23T14:16:00.000-07:00

MPR:

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

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

Petters Jury Selection Delayed Until Monday

2009-10-21T11:46:00.000-07:00

Strib:

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

KSTP has more about pre-trial motions:

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

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

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

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

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

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

PiPress Preview of Trial

2009-10-18T08:53:00.000-07:00

PiPress:

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

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

The article by John Welbes has this timeline:

AN EMPIRE FALLS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2009-10-15T06:36:00.000-07:00

Strib:

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

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

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

Petters Lawyers Ask for Change of Venue

2009-10-14T16:50:00.000-07:00

KSTP:

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

Gregory Bell Pleads Guilty

2009-10-07T10:17:00.000-07:00

Strib:

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

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

Two Strib Stories About Petters Trial ( October 26)

2009-10-03T16:09:00.000-07:00

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

.... and....

Faith community counts losses in Petters investments:

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

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

"Junkyard Prophet" Bradlee Dean Speaks Up for Tom Petters

2009-09-29T06:39:00.000-07:00

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

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

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

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

2009-09-23T12:14:00.000-07:00

Karl Bremer in the Stillwater Gazette:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Jon Tevlin Column About Reynolds/Reservitz

2009-09-16T09:33:00.000-07:00

Jon Tevlin:

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

Until this week.

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

Read the rest here.

Larry Reynolds = Larry Reservitz

2009-09-14T22:23:00.000-07:00

Strib:

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

-snip-

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

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

Strib: Petters Sealed Motion About Reynolds

2009-09-11T21:15:00.000-07:00

Strib:

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

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

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

Hedge Fund Executive Charged

2009-08-29T07:15:00.000-07:00

Strib:

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

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

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

A look Back at the Petters Empire

2009-08-08T10:58:00.000-07:00

At Dumpy Strip Malls:

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

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

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

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

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

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

Chicago Tribune Story about Greg Bell and Lancelot

2009-08-08T10:31:00.000-07:00

Chicago Tribune:

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

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

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

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

Read the whole thing.

PiPress Article on Gregory Bell

2009-08-02T07:13:00.000-07:00

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

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

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

--snip--

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

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

--snip--

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

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

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

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

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

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

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

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

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

Greg Bell Denied Bail

2009-07-21T16:44:00.000-07:00

Biz Journal:

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

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

Petters Trial Delayed (Again)

2009-07-16T11:14:00.000-07:00

Just in time for Halloween.

DOJ: Gregory Bell a Flight Risk

2009-07-15T11:06:00.000-07:00

John Welbes PiPress:

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

--snip--

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

UPDATE: Bell free on bail.

UPDATE: Held awaiting appeal.

Kudos for Teri Buhl

2009-07-14T14:57:00.000-07:00

Matthew Goldstein at Reuters:

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

--snip--

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

Who is Next to be Indicted from Ponzi Island?

2009-07-13T18:35:00.001-07:00

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

Dealbreaker.com speculates:

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

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

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

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

Stay tuned...

SEC Freezes Lancelot Assets - Greg Bell Arrested

2009-07-11T20:01:00.000-07:00

Star Tribune:

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

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

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

The Pioneer Press:

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

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

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

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

SEC press release here.

Strib Files Motions to Open Up "Mystery" Motions

2009-07-08T18:46:00.000-07:00

Newspaper intervenes in Petters case:

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

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

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

2009-06-11T09:46:00.000-07:00

Strib:

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

Brian Lambert at MinnPost:

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

Petters Bank Balance - $54.09

2009-05-06T08:06:00.000-07:00

Strib:

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

Tom Petters Speaks About "Core Values"

2009-05-03T19:18:00.000-07:00

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

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

2009-04-28T18:48:00.000-07:00

Strib:

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

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

This is what happened:

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

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

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

More Revelations About Petters Associate and Politician

2009-04-20T12:43:00.000-07:00

Karl Bremer has the scoop at The Minnesota Independent :

Last fall, the Minnesota Independent reported that Rep. Michele Bachmann’s campaign made a $9,200 charitable contribution to the faith-based drug treatment program Minnesota Teen Challenge on Oct. 3, 2008, in an effort to wash its hands of tainted contributions from Tom Petters associate Frank Vennes, Jr.

The Minnesota Independent has recently learned that Minnesota Teen Challenge returned the donation to Bachmann two weeks later.

“We didn’t want to be involved if it was dirty money,” Rich Scherber, executive director of Minnesota Teen Challenge, told MnIndy.

The article continues to describe the relationship between Bachmann, Vennes and MNTC.

Bachmann apparently delayed disclosure of the money being returned:

Rep. Bachmann failed to report the money being returned to her campaign until her first quarter 2009 campaign filing, a possible violation of Federal Election Commission rules.

The $9,200 — the same amount Vennes and his wife had contributed to Bachmann’s campaign in 2008 — did not show up on Bachmann’s pre-election, post-election or year-end quarterly FEC filings. According to federal rules, the returned contribution should have shown up on one of these reports if it was returned to Bachmann’s campaign in October, as Scherber claims.

Bachmann’s first quarter report shows that the Minnesota Teen Challenge donation was returned to the campaign on Jan. 1, 2009.

“We reported it properly,” says Bachmann staffer Marston. “We reported it when it was received.” Marston confirmed that the contribution was received on Jan. 1, and she could not explain the discrepancy with Scherber’s claim that the funds were sent back in October.

The FEC prescribes financial penalties for “a failure to make the required disclosures … at the time and in the manner prescribed” or for “a failure to include any of the information required to be shown by such disclosures or to show the correct information.”

Read the entire article at MnIndy.

Here's the first of 4 audio files I uploaded to You Tube of Frank Vennes giving a talk in February of 2007 titled "God and Money":

WCCO's Esme Murphy asked Bachmann about the contribution from Frank Vennes Jr. in this interview:

(Cross-posted at the Dump Bachmann blog)

Petters Trial Court Date - September 14, 2009

2009-04-18T08:08:00.000-07:00

From the Petters-Fraud website:

Judge sets Petters Trial for September (PDF)

Also:

Deanna Coleman's hubby gets 1/2 of Bank account Returned (PDF)

Petters Lawyers Can't Quit... New Auction for Polaroid

2009-04-10T05:42:00.000-07:00

Strib:

InThe saga of Minnesota businessman Tom Petters played out in separate St. Paul courtrooms Thursday, with a federal district court judge telling Petters' criminal defense attorneys they can't quit, even though they haven't been paid yet for any work they've done this year, and a federal bankruptcy judge reopening the auction for Petters' Polaroid Corp. -- again.

Documents and more at Petters-Fraud.com.

What's This About?

2009-04-08T15:48:00.000-07:00

From Petters-Fraud.com:

Petters seeks to put pleading Under Seal (PDF).

Judge Grants Motion 2 SEAL (PDF).

WTF?

Legal Wrangling in Polaroid Auction

2009-04-07T08:48:00.000-07:00

The Business Journal:

A U.S. bankruptcy judge in St. Paul on Monday decided to reopen the auction of Polaroid Corp., following complaints from the company’s creditors, the Star Tribune reports.

New York private-equity firm Patriarch Partners won the auction last week with a $59.3 million bid, but creditors objected, saying a bid from PLR Holdings should have been given stronger consideration. PLR is a joint venture of Toronto-based Hilco Consumer Capital and Boston-based Gordon Bros. Brands.

After hearing those complaints Monday morning, Judge Gregory Kishel said he would allow Patriarch and PLR to each submit final, best offers for Polaroid, the Star Tribune reported.

The court will reconvene on Thursday, at which time a final sale of the company is expected to be completed.

The Petters-Fraud website has more about Petters and Polaroid.

Petters Muckety Chart

2009-04-04T06:48:00.000-07:00

Petters Boat for Sale / Larry Reynolds Freed From House Arrest

2009-04-02T20:02:00.000-07:00

KSTP:

Embattled Twin Cities businessman Tom Petters has agreed to sell his 2900 Coronet boat.

Petters bought it with proceeds from Petters Co. Inc and Petters Group Worldwide. The court-appointed receiver, who now controls his assets, is asking the court for permission to sell the vessel for $110,00.

The boat was purchased in 2004—the average running cost for the boat is $182,000.

KSTP:

On Thursday, a federal judge ordered Larry Reynolds no longer has to be under home detention because of his cooperation in the case.

He will have a curfew and must stay under electronic monitoring.
Reynolds’ attorneys argued other co-defendants don't have home monitoring and their client needed the freedom in order to look for a job.

Things seem to be heating up over at Petters-Fraud.com:

Research of Michael O'Shaughnessy and Lindquist & Vennum threatening this webmanager
as Lindquist Falsely stated Petters never vested in Element Electronics and MO has nothing to do with Petters
This lead us to discover that Doug Kelley was ORIGINALLY hired by Petters PGW (here)
and it gets worse Doug Kelley hand picks Jeffries for Polaroid and says she is not under investigation
Totally in Conflict of Interest Doug Kelley makes public statement that Creditors come LAST to Petters COs (here)
Doug Kelley appointed as Receiver only as a Knee jerk reaction to Illinois appointing their's
The DK L&V Receiver is shameful at best and bogus with vailed agendas patently being obvious