Monday, September 29, 2008

A local icon in trouble? 

Tom Petters is a St. Cloud guy, owns a holding company that includes Sun Country, Polaroid, and the remainder of Fingerhut (at one time St. Cloud's largest private employer before Petters bought it.) He appears to be in some trouble.
Late Friday afternoon the federal government revealed what FBI, IRS and other federal agents were looking for Wednesday when they raided the Petters Group headquarters and Tom Petters' home.

They were seeking evidence of a scheme to lure investors into funding a company based on tens of millions of dollars in purchases and sales that never occurred.
MPR has a copy of the warrant, and includes these details:
The primary method of effectuating the fraud scheme involves PETTERS, his employees, and his associates creating fictitious documents and then providing these documents to potential investors as evidence that PCI is buying and selling substantial goods and merchandise which PCI will then resell. In many instances funds from investors are sent directly to the purported supplier of the merchandise, NIR or ENCHANTED {companies controlled by Petters --kb}. In turn, NIR or ENCHANTED direct the funds to PCI (less a commission) without any merchandise. PETTERS and other persons then fraudulently pledge the non-existent goods and merchandise as security for the investments.
Sun Country says it will continue to operate as usual.

Petters is well known in the area as a philanthropist who recently gave $8.3 million to a fundraising campaign recently completed at the College of St. Benedict (and $3 million some years ago.) CSB has an auditorium named after him and a center for global education. He has always dressed as a successful guy who came up from humble roots here. I gauge local community reaction here as varying degrees of shocked. They have a cooperating witness in the case who was involved in the scheme, who appears to have worn a recording device in meetings with Petters, so it looks bad. But many here will hope this turns out not to be true.

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