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

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Tags: advisory-services, brokerages, court-decision, doug-kelley, due-diligence-service, estate-deals, guilt, investment-trusts, prison-term, real-estate-investments, scam-artists, sun-country-airlines, taking-aim

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

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!
Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com

Tags: bankruptcy-code, enterprise-investment-scheme, keith-gilabert, pence, politicians, publishing-company, q3, real-estate-investments, reversals, rules-of-civil-procedure, scam-artists, sun-country-airlines, trimtabs, valencia-ca

New York (HedgeCo.Net) – The SEC has targeted hedge funders David Myatt and William Eichengreen, both of Directors Performance Fund, with charges of fraud. 

The two men allegedly took $25 million of their investment advisors money and put it into a “prime bank” scheme.  This kind of scheme generally involves investors fraudulent claims that funds will be used to purchase “prime” financial instruments, usually in overseas markets, with the promise of high returns.  Most of the time, neither the instruments nor the markets they supposedly trade on through special “access” even exist.  In this case, Myatt and Eichengreen promised returns in excess of 10% per week with minimum risk.

Eichengreen then falsified documents pertaining to performance while lying about the fund strategy and asset allocation.  The hedge fund also raked in performance fees that were based on the doctored numbers. 

Investors in the fund should receive their money back, after a previous suit resulted in the court being responsible for distributing the assets back to investors.  Myatt also previously pleaded guilty to an obstruction of justice charge that was brought against him in connection with this hedge fund.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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!
Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com

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