Two Petters Co’s to Plead Guilty in Fraud Scheme
Two of Tom Petters' former companies will plead guilty to their roles in the $3.65 billion Ponzi scheme orchestrated by their former leader, according to the U.S. Attorney's Office in Minnesota.
Petters Group Worldwide, LLC, and subsidiary Petters Company, Inc., are scheduled to appear before U.S. District Judge Richard Kyle; a hearing was set for September 23 but was postponed mid-day Thursday, and a new date has not yet been set. At the hearing, they are each expected to plead guilty to single counts of mail fraud, conspiracy to commit mail fraud and wire fraud, and conspiracy to commit money laundering.
The guilty pleas are part of an agreement reached last month between the U.S. Attorney's Office and Petters' court-appointed receiver and bankruptcy trustee, Doug Kelley. The agreement was approved by a U.S. District Court judge on Tuesday but is still pending final approval from a bankruptcy court judge. Under the agreement, Kelley will enter guilty pleas for the two Petters companies, which were charged with fraud and conspiracy-and in exchange, the government won't seek criminal or civil forfeiture or attempt to acquire corporate assets of still-operational companies associated with Petters, like Sun Country Airlines.
The agreement aims to speed up the process of distributing fraudulently obtained funds to victims of Petters' fraud scheme.
Assistant U.S. Attorney Joe Dixon said by phone Thursday that he expects the rescheduled hearing for the guilty pleas to take place within the next three weeks.
Earlier this week, Kelley told several news organizations that he recently asked former employees of Petters Group Worldwide to return their year-end bonuses from previous years-thereby providing another means to help repay investors who lost money in the Ponzi scheme. Kelley sent about 70 letters to former employees, and amounts being sought reportedly range from about $5,000 to more than $2 million.
Former Wayzata businessman Tom Petters was found guilty in December of 20 felony counts relating to fraud, conspiracy, and money laundering, for orchestrating a $3.65 billion Ponzi scheme that spanned a decade.
Petters, who maintains his innocence, was sentenced to 50 years in prison in April. His attorney filed a formal notice of appeal later that month.
Four of seven co-conspirators who pleaded guilty to charges related to the fraud scheme-Deanna Coleman, Michael Catain, Larry Reynolds, and Robert White-were sentenced earlier this month. The other three are scheduled to be sentenced within the next few weeks-James Wehmhoff on September 21, Gregory Bell on September 30, and Harold Alan Katz on October 1.