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Tuesday, May 21, 2024 | Back issues
Courthouse News Service Courthouse News Service

Petters Convicted of Ponzi Scam;|Ripples of Fraud Spread Worldwide

(CN) - A federal jury on Wednesday found Thomas Petters guilty of all 20 counts stemming from his $3.65 billion Ponzi scheme. And in a separate complaint in Denver, a dozen businesses say they lost $230 million because The Royal Bank of Scotland and two other banks acted as "cheerleaders" for Petters.

The federal jury in St. Paul convicted Petters of all 20 counts against him, including wire fraud, mail fraud, conspiracy and money laundering. The jury delivered its verdict after a 17-day trial and 5 days of deliberations.

Meanwhile in Denver Federal Court, a dozen plaintiffs under the umbrella of Delaware-based Agile Sky Alliance say they lost $230 million in Lancelot Investors Fund, which claimed to specialize in closeout sales with large discount retailers, such as Costco.

If Royal Bank of Scotland, Citizens Financial Group dba Charter One Bank, and Swiss Financial Services had "even scratched the surface of the diligence" that they claimed to have performed, they would have seen that Lancelot had no inventory and had not sold any goods to Costco, according to the complaint.

Lancelot was supposed to be in the business of buying and reselling consumer electronics. But Agile claims the lending banks turned a blind eye to the "funny money" because they were "concerned only with their own fees, which increased as long as Lancelot grew."

Agile says the banks lured investors by claiming to perform rigorous audits and oversight. It claims the banks assured victims of the trustworthiness of the company's principal, Gregory Bell, who pleaded guilty in October to fraud.

Petters' Ponzi scheme was based upon fictitious mass sales of consume electronics. He allegedly brokered the fictitious sales in the Denver case.

Agile claims the banks concealed Petters' fraudulent behavior and ignored $1.2 billion in "roundtrip" transactions.

Agile says through "roundtrip" transactions, Bell delivered investors' money to Petters, who returned the money on the same day, "packaged as the repayment of one of the outstanding debts owed to Lancelot."

Royal Bank of Scotland received the world's biggest bailout last year; the United Kingdom will take an 84 percent stake in the bank.

The bank's board of directors has threatened to resign this week if the British treasury blocks bonuses that the board approves.

In Denver, Agile seeks punitive damages, alleging securities fraud and negligence. The companies are represented by Steven Feder of Denver and Steven Thomas with Thomas, Alexander & Forrester of Venice, Calif.

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