Tuesday, March 28, 2023 | Back issues
Courthouse News Service Courthouse News Service

Class Claims Accountants Missed|Petters’ Alleged $3 Billion Scam

MINNEAPOLIS (CN) - A federal class action accuses McGladrey & Pullen, accountants, of failing to properly audit Lancelot Investor Fund and Colossus Capital Fund, which loaned money to or invested in an alleged $3 billion Ponzi scheme run by Thomas Petters. Petters' scheme allegedly involved "completely fictitious" HDTVs that Petters claimed to have sold to Sam's and Costco.

Plaintiffs say McGladrey should have detected Petters' blatant fraud. They claim Petters prepared "phony purchase orders and invoices" for "persons who loaned money to the Petters Group, including numerous investment funds, which had in turn obtained money from private investors" such as the plaintiffs.

"In the federal investigation, FBI agents took the phony purchase orders and invoices directly to Sam's Club and Costco Wholesale to obtain confirmation of their legitimacy, and were immediately informed that they were completely bogus. The Petters conspirators knew this could happen and discussed it among themselves: '(I)f investors send auditors out to visit warehouses where the merchandise is located, ... the scheme would implode,'" the complaint states.

Plaintiffs demand more than $5 million. They are represented by Robert Weinstine with Winthrop & Weinstine.

Read the Top 8

Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.