Bruce Prevost and David Harrold agreed to plead guilty to 4 counts of securities fraud each.
The indictment says Vennes recruited Harrold and Prevost in 2002 to raise money for Petters and PCI. PCI was the Ponzi part of the Petters empire. Vennes told Harrold and Prevost that he had negotiated and arranged financing for PCI for 8 years. Vennes described himself as Petters' "financier". Vennes also said Petters requested Vennes act on his behalf in doing the financial wheeling and dealing. Vennes told Harrold and Prevost that he knew Petters' business "intimately" and that Vennes had done due diligence on PCI. Vennes apparently set himself up as the gateway between the Palm Beach hedge fund and PCI.
From 2002 to 2008, in nearly 2,100 transactions the Palm Beach hedge fund invested $8 billion in PCI notes. By September 24, 2008, $1 billion of the hedge fund's investor's money was invested with PCI.
Vennes handled the transactions and made a nifty $60 million in fees.
The indictment says the three con artists conspired to lie to the investors - "swapping" PCI's fraudulent notes to hide the fact that Petters was unable to pay. Vennes did all the documentation on the note swaps. After as they were swapping the notes, they were taking investors' money... $75 million from more than 30 investors.
Vennes is charged with money laundering - a charge having to do with a $98, 814.12 check to the law firm of Howse & Thompson.
Will Frank Vennes also plead guilty?
Stay tuned...
(Click sketches to make them larger)
Cross-posted at Dump Bachmann.
