Tom Petters received his 50-year prison sentence more than a year ago. But charges continue to surface against his alleged co-conspirators.
Frank Vennes, who allegedly helped raise funds for Petters, was charged in April, along with alleged co-conspirators David Harrold and Bruce Prevost. Vennes was originally charged with four counts of securities fraud and one count of money laundering.
But Minnesota's U.S. Attorney's office on Tuesday announced that a superseding indictment was filed against Vennes-and the list of charges has grown significantly. He now faces eight counts of securities fraud, two counts of mail fraud, six counts of wire fraud, three counts of money laundering, three counts of bank fraud, and two counts of making false statements on credit applications.
The indictment also charges James Fry, a 57-year-old man from Orono, 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 during its investigation of his company, Minnetonka-based Arrowhead Capital Management.
Petters raised money to perpetuate a Ponzi scheme by selling Petters Companies, Inc. (PCI), notes to hedge funds, which supposedly would finance the purchase of consumer goods, when in fact it didn't. Prosecutors refer to Vennes as a "business associate of and primary fundraiser for" Petters-who was convicted in 2009 for orchestrating the $3.65 billion scheme.
Vennes allegedly began raising money for the purchase of PCI notes in 1995, through his company, Metro Gem, Inc.Between 1999 and 2008, he engaged in roughly 748 transactions "involving hundreds of millions of dollars of investors' money to purchase PCI notes," according to the U.S. Attorney's office.
Around 1998, Vennes allegedly sought out larger sources of financing for PCI, but former convictions made it difficult for him to obtain institutional financing. So he allegedly worked with Fry, among others, to solicit institutional investors.
Between 1999 and 2008, Arrowhead Funds engaged in about 780 PCI transactions, through which Arrowhead Funds invested more than $500 million of investors' money in PCI, the indictment states. All associated documents allegedly went through Vennes.
The indictment alleges that both men were aware of Petters' fraud, but they didn't disclose the information to investors and together received about $230 million in fees and commissions.
Vennes faces up to 20 years in prison on each mail, wire, and bank fraud counts, as well as the false statement count. He faces up to 10 years on each money laundering count and five years for the securities fraud charge. Fry faces a maximum sentence of five years for each count.
Vennes' attorney, James Volling, told the Star Tribune that he and his client intend to "vigorously defend against these charges." Vennes' trial is scheduled for February, according to the Minneapolis newspaper.