Fraud Verdict Against Hedge Fund Manager for Acting as Feeder in Massive Ponzi Scheme

Case tried to jury verdict against Connecticut-based fund manager and his firms for investing hundreds of millions of assets with Tom Petters in a massive Ponzi scheme, while pocketing tens of millions of dollars in fees. 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. Defendants herein, in turn, falsely assured their investors that various safeguards such as “lock box accounts” would protect their money, which ultimately was largely lost. The Judge entered permanent injunctions and a financial sanction of over $80 million, as well as prejudgment interest.