A former business associate of convicted Ponzi schemer Tom Petters made a last-minute plea deal on Friday, admitting to fraudulently securing investments for the $3.65 billion scheme.

Frank Vennes, who was indicted in 2011 with a long list of charges, was scheduled to go on trial with co-defendant James Fry, a Minnesota hedge fund manager, beginning Tuesday. Vennes previously denied the charges but did an about-face Friday, pleading guilty to one count of securities fraud and one count of money laundering, according to Minnesota’s U.S. Attorney’s Office.

From 1995 through 2008, Vennes and his company, Metro Gem, solicited money for investment in Petters Company, Inc. (PCI) promissory notes. PCI was owned and operated by Petters, who is currently serving a 50-year prison sentence in Leavenworth, Kansas. Petters raised money to perpetuate a Ponzi scheme by selling PCI promissory notes to hedge funds, which purportedly would finance the purchase of consumer goods to be resold to big-box stores; in reality, no such transactions took place.

Vennes helped create hedge funds known as the Arrowhead Funds for securing investments in PCI, and between 1999 and 2008, the year in which the Ponzi scheme unraveled, all of the paperwork between PCI and Arrowhead went through Vennes or one of his employees. Vennes received more than $48 million in commission payments from Petters for brokering the deals, the U.S. Attorney’s Office said.

Vennes was aware of the fact that investors were being lied to; for example, investors were told that whenever a retailer purchased goods from PCI, the retailer paid for them with funds deposited into a bank account controlled by a management company. Vennes, however, was aware that no payments were received from retailers and they instead came from PCI, according to the U.S. Attorney’s Office.

Meanwhile, investors were also left in the dark about Vennes’ prior criminal record; he was previously convicted on federal narcotics, firearms, and money laundering charges that were unrelated to Petters, and he reportedly served time in prison for his crimes. Vennes later billed himself as a born-again Christian and turned to the faith community when seeking early investors in the Petters operation, according to a report by the Star Tribune.

Vennes faces up to 15 years in prison, and U.S. District Court Judge Richard Kyle will determine his sentence at a future hearing, which has yet to be scheduled.

Minnesota’s U.S. Attorney B. Todd Jones said in a statement that his office is “taking action to recoup the financial losses suffered by so many because of this fraud” and is confident that “the court will appropriately sentence Mr. Vennes for his related crimes.”

Fry was charged in 2011 with five counts of securities fraud, four counts of wire fraud, and three counts of making a false statement to the U.S. Securities and Exchange Commission. He pleaded not guilty and his trial, which was expected to begin Tuesday, will “more than likely” be moved to a later date, given the fact that co-defendant Vennes has changed his plea, a spokeswoman for the U.S. Attorney’s Office said Monday.

If convicted, Fry faces up to 20 years in prison on each count of wire fraud and five years on each count of securities fraud and false statement.

Two Florida hedge fund managers—David Harrold and Bruce Prevost—pleaded guilty in April 2011 to playing a role in the fraud scheme. Each awaits sentencing on four counts of securities fraud, according to the U.S. Attorney’s Office.

The outcome of Vennes’ and Fry’s cases are expected to close a chapter in the long and complicated Petters saga. Vennes’ plea deal makes Fry’s case the last one unresolved among the 13 people who faced fraud-related charges from the Petters scheme, according to a report by the Pioneer Press.

Petters, meanwhile, broke his silence in 2012, speaking from prison in an exclusive interview with Twin Cities Business Editor in Chief Dale Kurschner about how the nation’s third-largest Ponzi scheme occurred on his watch. To read the resulting feature story, click here.

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