Thomas Petters Prepares To Face The Music: A Double Madoff?
Thomas Petters, the embattled formerly successful entrepreneur and hedge fund manager of Petters Group Worldwide 
LLC is facing a long prison sentence. 335 years (more than twice the term give to Bernard Madoff). Petters was convicted of on different 20 criminal counts including wire fraud, mail fraud and money laundering and obstructing justice. Here is a video from the Minnesota local news (where Petters was based and was convicted) discussing his conviction:
The Petters Group owned Polaroid, an interest in Sun Country Airlines and at its peak employed over 3,200
employees. The whole thing was a $3.5 billion Ponzi scheme. Here’s a great old video for Polaroid commercial with James Garner (I’m sure he would be very proud of Mr. Petters…):
“The defendant’s fraud is beyond comprehension,” prosecutors said in a court filing. “A life sentence is wholly deserved and justified given the defendant’s corrupting influence on individuals and institutions, and his strident refusal to accept any responsibility.”
Here is a video where Petters discussed the importance of maintaining core values in corporate America:
Perhaps these were the kind of core values Petters was talking about:
Petters’ lawyers said their client should be sent to the Federal Medical Center in Rochester, Minnesota, because of hi
s health and because the national notoriety of his case would make him a “marked man” in prison. He has a pituitary adenoma (or tumor) and faces the risk of blindness and paralysis. Sentencing is scheduled for April 8. Stay tuned to see if the judge sends a message or takes sympathy….
Edward T. Stein’s Life Settlement – A Ponzi Scheme
Hedge fund manager Edward T. Stein was recently sentenced to nine years in prison. Mr. Stein ran a Ponzi scheme which took in at least $30 million ($46 million according this website) that preyed upon friends and acquaintances.
According to Bloomberg, Mr. Stein admitted today to four counts of securities fraud and one charge of wire fraud. Stein told the court:
“I used very poor judgment and I know what I did was wrong, I want to explain to the court how sorry and ashamed I am. Somewhere in the last 10 years I lost my sense of reality and as a result, everyone has suffered. I do want to offer my sincere apologies. I do regret the bad decisions I made.”
Stein will remain free on $2 million bail. He is being represented by attorney Brian Maas.
He was initially accused March 31 of cheating a client out of $6.5 million. Stein faces as much as 19 years and seven months in prison. In April of last year the SEC froze Mr. Stein’s assets.
The SEC also filed a separate civil action that accused Stein, who controls Gemini Fund I hedge fund, DISP LLC and Prima Capital Management Corp., of moving millions of dollars from at least 83 investors through accounts he controlled, according to the complaint filed in federal court in Manhattan.
Stein, who founded DISP, a firm investing in life- settlement policies, deceived clients since 1992 and resorted to stealing their assets, the SEC said in its civil suit.
Here is a sample chart how the life settlement process works. So simple amazing more people couldn’t spot the fraud in this process via operational due diligence….. :
Without telling investors, Stein arranged for Gemini to make its main investment in Detour Media Group Inc., the fashion-magazine publisher that filed for bankruptcy in 2003, the SEC said. Since then, he has used money from new investors to pay returns to “selected” Gemini clients, the agency claimed. He also used investor funds to buy a $1 million condominium in Manhattan, the SEC said.
Stein ran Prima Capital Management Corp. from his offices in Roslyn, New York. He agreed in his plea that he won’t appeal if he’s sentenced to less than 21 years and nine months in prison. Sentencing by U.S. District Judge Jack B. Weinstein is scheduled for September 28.
DiPascali’s on the move and Peter Madoff’s New Troubles
Bernard Madoff cohort Frank DiPascali is on the move – literally. Frank and his wife Joanne have agreed to surrender their Bridgewater, New Jersey home and all its furnishings, according to a court filing.
They are giving up the property so that it and all salable personal property may be sold by the U.S. Marshal’s Service to help satisfy the forfeiture. Other personal property being given up by the DiPascali’s includes a home theater system, multi-station gym and circuit-training equipment, a snowblower, artwork, two all-terrain vehicles and a blue and white Yamaha motorcycle, according to the order.
Frank’s Fishy Ways:
I guess Frank DiPascali’s should have seen the writing on the wall. His 61-foot Viking sportsfishing boat the “Darling-Jo” was previously sold as part of an auction of Madoff’s property. Here’s a picture of the boat:
Apparently, Frank was so into fishing that he even put his boat’s captain, Christopher Warrin, on the Madoff payroll. It might have been a good investment, since Frank won over $55,000 in a 2007 South Jersery Mid-Atlantic Tuna Tournament. Here’s the award ceremony photo:
Frank and Joanne, are the managing directors of Dorothy-Jo Sportsfishing LLC, which registered in New Jersey in October 2002. According to this website and this website Joanne DisPascali is an employee of JP MorganChase National Association (the private banking arm of JPM) in their Iselin, NJ office. In 1998, DiPascali registered Dorothy-Jo Fishing Team LLC but the registration was allowed to lapse in 2005. Oh by the way, Dorothy-Jo Sportsfishing via Frank was a Madoff customer….
Peter Madoff in Hot Water:
In other news Peter Madoff, Bernies brother, is the subject of a federal criminal investigation. This news came to light in documents related to a civil lawsuit over losses by the Lautenberg foundation, which is
the charitable foundation of U.S. Senator Frank Lautenberg. Interestingly, the lawsuit claims that Peter either “recklessly ignored” or “consciously disregarded” the red flags from his brother’s Ponzi scheme. I guess its a bad idea to steal from a Senator. During depositions related to the case led by a lawyer for the foundation Ron Riccio, Peter invoked the fifth-amendments right against self-incrimination over 250 times. in the case. In frustration Mr. Riccio asked the judge to place Peter in contempt by even pleading the fifth in response to such questions as “Did you ever talk to him [Bernard] in your entire life?” Perhaps Peter’s next line of defense will likely go something to the effect of, “Am I my brothers keeper?”
