Asset Freeze Against Feeder and Fraud Charges in $3.65 Billion Ponzi Scheme

Third largest Ponzi scheme in U.S. history. Defendant Petters sold promissory notes to feeder funds, falsely claiming that investor money would be used to finance large purchases of consumer electronics for re-sale to retailers (“purchase order inventory financing”). In fact, there were no inventory transactions, and enormous amounts of money were diverted to wrongful purposes, including Ponzi payments and personal use. Defendant Bell, who operated Lancelot Management which was a $2 billion feeder in the scheme, was sentenced to 72 months in prison. Petters, the mastermind, was sentenced to 50 years in prison and ordered to pay over $3.5 billion in restitution, so the SEC voluntarily dismissed this action as against him.