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 here.