Tuesday, September 20, 2011

Pre-Trial Hearing for Frank Vennes & Jim Fry

There was a hearing today for pre-trial motions for the Vennes trial scheduled for February of next year.

Karl Bremer was there and there will be a report soon at Ripple in Stillwater.

Vennes showed a lack of respect for the court, chewing gum and chuckling during the proceedings.

Among the motions considered today by Judge Keyes was a motion by defendant Jim Fry and his attorney Joe Friedberg asking the court to strike allegations from the superseding indictment that Fry concealed Vennes’s role in Arrowhead’s investors. The Government responded with this argument that mentions for the first time the campaign by Vennes to obtain an "expungement" of his record from the President of the United States:

In October of 2000, Fry represented to KPMG that “Vennes’ case is before the Executive Committee of the White House for expungement and complete discharge.” In December of 2000, Fry represented to both KPMG and the Bermuda Commercial Bank that “in the event that Mr. Vennes’ expungement has not been achieved to KPMG’s satisfaction prior to 31st December, 2000, that Arrowhead will cease from dealing with MetroGem.” KPMG agreed to stay on based on this representation. Vennes’s convictions were not “expunged,” and so Fry represented to KPMG in March 2001 that “ACF [Arrowhead Capital Finance, Ltd.] now deals direct with Petters and the previous arrangements involving MetroGem and Frank Vennes no longer apply.” This, of course, was false and designed to conceal Vennes’s involvement in the PCI transactions: while Fry had altered the transactions so that funds flowed directly from PCI to

Arrowhead, Vennes remained contractually in place controlling the deals and the communications between Arrowhead and PCI.
The government will also present additional evidence that Fry knew that disclosure of Vennes’s role and criminal convictions was material to investors. Indeed, an Arrowhead internal meeting agenda from early 2003, contains, under the heading “Goals,” the following items:

1. Eliminate any legal/operational process that puts Metro Gem in the trail of money flow (big investors will do background checks on all parties, thus stopping money flow if felony convictions are discovered)

2. Keep Metro Gem in the mix to obtain fee income on the amount invested

Here a couple of sketches I did in court today: