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New York (HedgeCo.Net) - A prestigious New York City lawyer has been arrested and charged with masterminding a $100 million real-estate scheme that targeted large institutional investors and hedge funds.
Marc Dreier, of Dreier LLP on Park Avenue, was arrested on Sunday at LaGuardia Airport and is now facing both federal charges of securities and wire fraud, along with civil fraud charges filed by the U.S. Securities and Exchange Commission. In addition, Dreier was already dealing with criminal impersonation charges brought on by Canadian authorities.
"Our complaint alleges a stunning, brazen fraud that targeted some very sophisticated institutional investors," said Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement.
Among the allegations, Dreier allegedly marketed bogus promissory notes that included ones tied to a real estate development company based in New York. Prosecutors said Dreier then covered it up by producing phony documentation and false financial statements to keep the investors from discovering the scheme.
According to the prosecution, Dreier convinced hedge funds to purchase these notes by highlighting the discount they would receive due to the original investors facing a cash crunch brought on by the current economic turmoil. Though the hedge funds weren’t specified, prosecutors say that one New York fund wired $100 million to one of Dreier’s accounts, while another fund in Connecticut wired about $13.5 million.
"This is a very complicated matter, and the facts are beyond reach of a sound bite," Dreier’s lawyer, Gerald Shargel told reporters at the scene.
Marc Dreier is a 58-year-old graduate of Harvard Law School. His bail hearing is scheduled for this Thursday.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York (HedgeCo.Net) - South Florida-based hedge fund Palm Beach Finance Partners LP says it lost more than $1 billion to the company run by famed fraudster Tom Petters.
Petters headed Minnesota-based Palm Beach Finance Holdings Inc. before being charged in September with money laudering, obstruction of justice and mail and wire fraud that were used to fund his extravagant south florida lifestyle.
Petters allegedly masterminded a scheme that bilked over $3 billion out of trusting investors by setting up fake companies in which he supposedly was invested in. Petters has been slammed with lawsuits in recent months, forcing a judge to freeze any further lawsuits until things can be sorted out.
According to the Palm Beach Post, five investors in Palm Beach Finance Partners have appointed New York law firm Sadis & Goldberg to probe deeper into whether the hedge fund properly managed their funds and whether or not the highly recommended due diligence was performed.
Petters, who currently resides in a Minnesota jail far from his $9 million oceanfront mansion, insists he is innocent. He currently has over 30 civil suits pending against him.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York (HedgeCo.Net) - Former hedge fund manager turned ponzi-schemer Tom Petters is being sued by so many parties that the Minneapolis federal judge actually had to call a “timeout” yesterday.
Judge Ann Montgomery called the cease-fire after court-appointed receiver Doug Kelley pointed out that the dozens of mounting civil legal actions are interfering with their attempts to salvage some of Petter’s enterprises.
“We’re seeking some amount of breathing room to fulfill the receiver’s responsibilities,” law partner Steven Wolter told Judge Montgomery.
Petters multiple businesses, many of which are in bankruptcy, have been reduced to a single case. U.S. Bankruptcy Judge Gregory Kishel gave the order to consolidate 10 companies into one bankruptcy petition so that they may be easily dealt with.
The civil suits against Petters are coming from multiple states, with the count now over 30. Wolter argued that both time and money are issues when it comes to trying to find legal representation for the companies.
Petters Group Worldwide filed for Chapter 11 bankruptcy earlier this month after feds launched a probe into the alleged $3 billion scam orchestrated by Tom Petters. He was arrested and sent to jail on charges on money laundering, wire fraud, mail fraud and obstruction of justice.
For now, all of the civil suits are frozen until further notice. No new suits can be filed at this time.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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.
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Telegram.com - Convicted swindler Amit Mathur will remain in federal custody for the next three months, a federal judge ruled today.
In denying Mr. Mathur’s bid to be released on bail until his sentencing, scheduled for Sept. 5, U.S. District Court Judge F. Dennis Saylor IV said there were too many reasons to believe the former Shrewsbury investment counselor might flee the country to avoid spending as much as 14 years in a federal prison.
Mr. Mathur, 37, was convicted May 15 on 20 counts of mail and wire fraud after a two-week trial in which he was accused of stealing or misappropriating some $13 million from people who had invested in a hedge fund he established in 1999 called Entrust Capital Management. Among the victims of the fraud were prominent city businessman David G. “Duddie” Massad; his daughter, city lawyer Pamela Massad; and Mr. Mathur’s uncle, Alok Mathur of Westport, Conn.
Amit Mathur’s parents had offered to put up their home, valued at $580,000, and more than $300,000 in retirement savings, and family friends had pledged to come up with any additional money to cover the pre-sentencing bail sought by Mr. Mathur.
Judge Saylor, however, said one aspect of the situation deeply troubled him.
“It gives me great pause and weighs heavily in my decision,” the judge said, that a family member was among those from whom Mr. Mathur stole money.
Alok Mathur testified during the trial that he lost $530,000 he had invested with his nephew.