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….
Arthur Nadel Finally Fesses Up To being “Mini-Madoff” : Mike Tyson and the Moody’s
Arthur Nadel a Florida hedge fund manager who, to refresh memories, pulled a Sam Israel and disappeared a little over a year ago just as he was due to pay investors $50 million. Here is a link to our previous post on Mr. Nadel. He later surrendered to authorities in January 2009. Nadel has finally admitted to perpetrating the $162 million fraud.
U.S. District Judge Richard Lazzara in Tampa had previously ordered Nadel’s two companies, Venice Jet Center LLC and Tradewind LLC, into receivership. These were two aviation businesses that were allegedly involved in some questionable proposed deals with Newnan-Coweta County Airport in Georgia.
This is a perfect example of a hedge fund manager being involved in outside business activities. This a topic that should be covered during the operational due diligence process. If this had been uncovered by investors performing operational due diligence on Nadel some logical questions, which might have received answers which likely would have raised red flags could have included:
- Why are you involved in these aviation businesses?
- How much time do you devote to these aviation businesses?
- Where does the money come from to support these businesses?
Tampa lawyer Burton Wiand (pictured left), who was appointed by the judge as receiver for Nadel’s funds, said in a court filing tha
t the businesses were bought with fraudulently obtained money. Nadel ran three different funds the Victory IRA Fund Ltd., Scoop Real Estate LP and Victory Fund Ltd. from about 2002 until his January 2009 arrest.
Here is a video from CNBC about Nadel’s jail time:
Nadel, is 77 years old and according to the The New York Daily News reportedly got a kick out of being called, “a mini-Madoff.”
Nadel said he is now filled with “regret and sorrow… more and more every day” for the grief he caused his family and former investors, the New York Daily News reported.
“I will carry this burden with me every day for the rest of my life,” Nadel said in Manhattan Federal Court as he pleaded guilty to securities, mail and wire fraud.
His plea agreement with prosecutors requires Nadel to forfeit $162 million in gains as well as several properties and other valuable assets. He will receive a sentence of between 151 months and 293 months in prison, the judge said. This works out to a month in jail for every $552,000 to $1.07 million he stole. With only $162 million stolen I doubt Nadel ever made that much in a month – maybe that’s why he decided to steal it.
Here’s another video about the mini-Madoff sentencing:
The Wall St. Journal is reporting that Nadel also said he acted as a trader for three other funds run by Neil V. Moody and his son, Christopher D. Moody, during the period, also committing fraud in those. Why weren’t the Moody’s trading for their own fund? Who was responsible for oversight of Nadel’s trading activity?
Apparently, the U.S. Securities and Exchange Commission had similar questions when they brought civil fraud charges against the Moodys in federal court in
Florida in January. Here is a link to the SEC press release and the affidavit in the case. The Moodys have agreed to be barred from associating with any investment adviser for five years as part of a consent agreement with the SEC. They didn’t admit or deny wrongdoing as part of that agreement. “Neil adamantly denies any knowledge that this was a Ponzi scheme,” said James Felman, a lawyer for Neil Moody. Montieth M. Illingworth, a spokesman for both Moodys, and the apparently a Mike Tyson scholar, declined further comment.
No criminal charges have been filed against the Moodys….
The Madoff’s Name Game and Madoff Operations Arrest – A Ponzi By Any Other Name?
The Madoff name is not something many people want to be affiliated with these days. Apparently this is even true of
people who married into the now infamous moniker. Such is the case of Stephanie Savene Madoff, the wife of Bernard’s son Mark Madoff. Stephanie is attempted to change her and her young childrens last name to Morgan from Madoff. Stephanie Morgan? Nice ring to it.
According to court paper filed in Manhattan Supreme Court Ms. Madoff is seeking to change her name to avoid the, “embarrassment, harassment and endangerment associated with the name.”
Here is a link to the court filing. As a result, the filing says, she was “notified of certain death and other threats made against the Madoff family … Though the threats were deemed unfounded, your petitioner fears for her safety and the safety of her children.” The New York Post is reporting that upon filing the papers, Stephanie was notified of certain death and other threats made against the Madoff family. Mark Madoff gave consent in court papers to he name change.
Don’t worry I’m sure the Madoff trustee Irving Picard will still be able keep track of the name change.
In other Madoff news, the FBI has arrested Daniel Bonventre. Mr. Bonventre, who is 63, is the ex-director of operations for Bernard Madoff Investment Securities LLC. Prosecutors said that, with Bonventre’s knowledge, hundreds of millions of dollars were siphoned out of accounts belonging to Madoff’s clients and used to support other aspects of his business. In some cases, Madoff’s company used client money as collateral to obtain loans. Prosecutors also accused him of failing to report hundreds of thousands of dollars in income to the IRS.
