Hedge Funds Snared In Alleged Fraud At Petters Group

[kickysnana]

NEW YORK -(Dow Jones)- Alleged fraud at Petters Group Worldwide has already led to the ouster of the private company's chief executive, but it's also causing pain for several hedge funds around the world.

Already, Swiss fund-of-hedge-funds manager Gottex Fund Management has cited exposure to Petters, Minnetonka, Minn., as one of the reasons it's closing its fund of funds that does asset-based direct lending to companies.

The alleged fraud at Petters, which was founded by Tom Petters, goes back to the 1990s and involves Petters Co. Inc., a subsidiary of Petters Group. The Federal Bureau of Investigation has been investigating allegations that Petters' managers produced fake documents and showed them to their investors stating they were reselling goods at a profit. Petters Group's Tom Petters, who denies the charges, resigned as chief executive Monday.

Hedge funds are involved in a few ways: Some may be investors in Petters, and others, like Gottex, have investments in hedge funds that lent money to the company through their asset-based lending funds. Petters, a holding company that owns brands such as Polaroid, Sun Country Airlines, Fingerhut and Mr. Coffee, was founded in 1988 and has about $2 billion in annual sales.

http://www.nasdaq.com/aspxcontent/newsStoryPrintVer.aspx?cpath=20081002%5cACQDJON200810021512DOWJONESDJONLINE000872.htm&&mypage=newsheadlines&title=Hedge+Funds+Snared+In+Alleged+Fraud+At+Petters+Group&symbol=&title=Hedge%20Funds%20Snared%20In%20Alleged%20Fraud%20At%20Petters%20Group

OCTOBER 3, 2008, 4:58 P.M. ET Petters Arrested on Charges of Mail Fraud, Money Laundering
By JUDITH BURNS
Petters Co. founder Thomas Petters was arrested Friday on charges of mail and wire fraud, money laundering, and obstructing justice, federal prosecutors in Minnesota announced.

Mr. Petters, 51 years old, resigned Monday as chairman and chief executive of the Minnetonka, Minn., firm bearing his name, a private holding company whose investments include Fingerhut, Polaroid, and Sun Country Airlines.

Mr. Petters is at the center of what the Federal Bureau of Investigation alleges may have been a broad-reaching scheme that defrauded hedge funds in and outside the U.S. Victims claim they lent money ...

http://online.wsj.com/article/SB122306728649903239.html?mod=googlenews_wsj

[Indenturedebtor]

1. Hah when I was selling advertising we hosted a big party with them at CES 2008

Arrogant bunch of good ol boys.