Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
New York (HedgeCo.Net) – Barclays Bank Plc has sued Chicago-based Ritchie Capital Management and the hedge fund’s principal Thane Ritchie, accusing them of concealing a $150 million investment in the controversial and now collapsed Petters Group Worldwide LLC.
According to the complaint filed on November 18th, Thane Ritchie gave the go-ahead to invest “significant sums” from two of Petters’ hedge funds, at a time when the funds were “supposed to be winding down.”
Barclays is seeking $380 million they believed they are owed from Ritchie and 19 other related businesses.
“Barclays’ lawsuit lacks merit as a matter of law and is premised upon inaccurate and misleading factual contentions,” said Justin Meise of River Communications who handled Ritchie’s public relations. “We will vigorously defend this baseless action.”
Tom Petters, head of the now bankrupt Petters group is being held without bail in a Minnesota jail after suspicions of leading a $3 billion fraud. Although Petters is in custody, he has not yet been charged with anything.
Ritchie has claimed that they lost a total of $275 million in the Petters matter. Ritchie Structured Investments Ltd. And Ritchie Targeted Investments Ltd, the two hedge funds being targeted by Barclays, are ironically not listed on Petters’ debt schedule.
Ritchie set a precedent earlier this year when a Chicago judge denied a request by investors to open up Ritchie’s books after its Multi-Strategy Fund experienced losses.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Bloomberg – Ritchie Capital Management and Thane Ritchie, the hedge fund manager’s principal, were sued by Barclays Bank Plc over accusations they concealed more than $150 million in investments made in the collapsed Petters Group Worldwide LLC and affiliates.
Now bankrupt, Petters Group, based in Minnetonka, Minnesota, was raided in September by FBI agents acting on information that the company may have cheated at least 20 investors. Principal Tom Petters, accused of leading a $2 billion fraud, is being held without bail in a Minnesota jail.
“Thane Ritchie made the decision to invest significant sums” from two of his firm’s hedge funds with Petters, at a time when those funds “were supposed to be winding down,” Barclays said in a complaint filed Nov. 18 in Illinois state court in Chicago.
New York (HedgeCo.Net) – Petters Group Worldwide has filed for Chapter 11 bankruptcy protection after feds launched a probe into an alleged $3 billion scam that was said to be orchestrated by the founder. The subsidiary company under investigation is Petters Co. Inc., a Minneapolis-based venture capital firm.
In a ponzi-like scheme, Tom Petters allegedly used new money brought in by investors to fund his lavish lifestyle by creating false retail transactions.
The company has not made any comments on the pending fraud case, only that filing for bankruptcy was “in the best interest” of the business and that the receiver will “assess the business and develop plans for them that best serve the interests of their creditors, employees, suppliers and customers.”
In addition to the federal probe, PCI also has big-time Chicago hedge fund Ritchie Capital Management to deal with. Ritchie has claimed that it lost $275 million as a result of the scam, and they want that money back.
However, there is some question as to whether Minnesota or Illinois should have jurisdiction regarding the Ritchie case. R.J. Zayed, the attorney representing Ritchie, wants the matter handled in Illinois court, saying, "We’re not just creditors, we’re victims of fraud."
This is the second fraud-related scheme that Ritchie Capital has found itself in the middle of as of late. The fund had recently purchased several hundred million dollars of life insurance from Coventry First, a Pennsylvania-based life insurance company. It was eventually found out that Coventry was defrauding clients out of millions of dollars by paying insurance brokers to suppress competitive bids.
Tom Petters was arrested earlier this month with charges of money laundering, wire fraud, mail fraud and obstruction of justice. He was denied bail.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
West Palm Beach (HedgeCo.net) – Holiday airline Sun Country filed for bankruptcy yesterday, just 3 days after the arrest of investor Thomas Petters, founder of Petters Group Worldwide, the firm that owns Sun Country among other investments.
Petters was charged with mail and wire fraud, money laundering and obstructing justice.
"We were forced to take this action as a result of recent events at Petters Group Worldwide," said Sun Country Chairman and CEO Stan Gadek. The airline said that it would continue to fly its regular schedule.
A federal judge in Minneapolis order Petters to be held without bail after a taped phone conversation revealed that the disgraced entrepreneur planned to leave the country. A hearing is scheduled for Tuesday.
Petters has stated that he plans to fight to be released from custody and maintains his innocence.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Bizjournals.com – A Minneapolis hedge fund has sued Petters Group Worldwide, alleging it was defrauded out of $60 million in a deal involving “imaginary televisions.”
Interlachen Harriet Investments, a Cayman Islands-based unit of Minneapolis-based Interlachen Capital Group, filed the suit Wednesday, saying that it gave $60 million to Petters Co. Inc. to purchase electronic merchandise such as televisions. PCI, a unit of Petters Group Worldwide, was to resell the televisions at a profit. Interlachen alleges that PCI never purchased any merchandise, and used the investment to fund former CEO Tom Petters’ other business ventures, pay down debt and for personal use.
The suit is similar to federal allegations made last week that Petters and several associates bought and sold nonexistent goods with investors’ money for more than a decade by creating the image of a successful retail business.
Bloomberg – Hedge-fund managers Gottex Fund Management Holdings Ltd. and Acorn Capital Group LLC are among at least 20 investors the FBI said may have been victimized by a fraudulent lending scheme that could exceed $2 billion.
The alleged fraud was disclosed last week after an FBI raid at the Minnetonka, Minnesota, headquarters of Petters Group Worldwide, a closely held investment company that owns Polaroid Corp. and Sun Country Airlines Inc. Chief Executive Officer Thomas Petters resigned on Sept. 29, according to Petters Group spokeswoman Andrea Miller.
Petters, 51, had been running a fraudulent investment operation since at least the mid-1990s, siphoning off money for his own use, according to an affidavit by Timothy Bisswurm, a special agent with the Federal Bureau of Investigation. Bisswurm said in the affidavit that investors made loans to companies owned by Petters, believing the money would be used to buy merchandise and sell it to retailers including Costco Wholesale Corp. and Sam’s Clubs, a unit of Wal-Mart Stores Inc.
The purchases were never made, Bisswurm said in the affidavit, which was filed in U.S. District Court in Minneapolis. Instead, Petters used the money “for his other business ventures and to support his extravagant lifestyle,” according to the Sept. 19 affidavit.
