Petters and Associates Raided by FBI
Petters and his company, Petters Co. Inc. (PCI) was the apparent target of federal law enforcement this past week, and all reports indicate that the authorities were looking for evidence of a massive fraud. Reports indicate that the alleged fraud could exceed $2-Billion. The Minneapolis Star Tribune has an extensive story on the raid by law enforcement authorities and the allegations.
Allegedly, the fraud scheme lured investors by claiming that their money was secured by merchandise purchased from certain wholesale vendors and sold to Wal-Mart, Sam’s club and other retailers. According to the FBI, these were all sham transactions; the purchase and sales orders were fictitious, and the wholesale vendors were shell companies allegedly used to launder funds to PCI.
The affidavit used for the search warrant was unsealed on Friday and states that that an unnamed cooperating witness wore a wire in meetings with Petters and his associates. The wire informant will apparently plead guilty to conspiracy. Petters allegedly, “talks about fleeing the country and creating fabricated defenses if the fraud scheme is discovered.” One of his associates is allegedly on tape as saying that the amount of the fraud could exceed $2 billion.
Recent reports indicate that the number of fraud indictments are up considerably across the country. What is going on?
I was also sorry to read about Tom Petters because in my opinion, the airline he owes (Sun Country) is the best ride to and from Minneapolis. I fear that these events will cut off needed funding to the airline.
I am always amazed that the people committing business fraud (and I am not prejudging Petters) always assume that they will not get caught. This seems to be an irrational belief that sophisticated victims are never going to notice.
We will watch the developments with interest.
