The SEC charged two Minnesota-based
hedge fund managers recently in connection to the $3.65 billion Petters
Ponzi Scheme. James N. Fry, of Long Lake, and Michelle W. Palm, of Edina, allegedly
facilitated the multi-billion dollar Ponzi scheme by falsely assuring
investors and potential investors that their funds would be protected
via collateral accounts. They are also accused of helping to cover up
the scheme by hiding problems with payments from investors.
In July 2009, the SEC charged Tom Petters with orchestrating a "massive"
Ponzi scheme that defrauded investors out of $3.65 billion. The investment
scheme ran from as early as 1995 through 2008, when Petters’ co-conspirator
Deanna Coleman reported the scheme to the authorities. Petters was sentenced
to 50 years in prison - the longest imprisonment term ever ordered for
financial fraud in the state of Minnesota - in early 2010.
Fry and Palm are the not the first hedge fund managers to be charged in
connection to the Petters Ponzi scheme. Hedge fund managers in Illinois,
Florida, and Connecticut have been charged as well. For additional information,
read the SEC’s latest litigation release