Tuesday, October 29, 2013

Clawbacked Fidelis Foundation Has Apparently Moved From Plymouth to Shoreview

According to Charitystat.com the Fidelis Foundation has apparently moved from Plymouth in Hennepin County to Shorview in Ramsey County.  Charitystat.com also has an awesome chart showing the precipitous decline in revenue at Fidelis following the raid on Tom Petters & Frank Vennes' businesses and homes in 2008.

I looked  up Fidelis on the Minnesota Secretary of State website (the MN Attorney General's website still has the Plymouth address). Here's a screenshot from the SoS site:



People sometimes ask me "whatever happened to Vennes attorney & lobbyist Craig Howse? Howse who used to describe his publicity-shy client this way: “The folks that are behind this don’t like drawing a lot of attention to themselves". Of course, we now know why Frank Vennes wanted to hide in the shadows.

Much of Frank's phony generosity (which his defence attorney Jim Volling touted at the Vennes sentence hearing) flowed through the Fidelis Foundation which has the double-dubious distinction of being mentioned in the superseding indictment of Tom Petters and the letter supporting a pardon for Frank Vennes penned by failed presidential candidate Michele Bachmann who was the recipient of boatloads of campaign contributions from Vennes, his family and associates including Craig Howse. Howse's law firm also received a mention in his client's indictment. The office for Fidelis used to be right next door to Howse's firm in Plymouth.

Michele Bachmann lauded the Fidelis Foundation in her pardon request for Frank Vennes Jr.:
Bachmann wrote:

“As a U.S. Representative, I am confident of Mr. Vennes’ successful rehabilitation and that a pardon will be good for the neediest of society. Mr. Vennes is seeking a pardon so that he may be further used to help others. As I know from personal experience, Mr. Vennes has used his business position and success to fund hundreds of nonprofit organizations dedicated to helping the neediest in our society. The Fidelis Foundation, backed by Mr. Vennes, has directed over $10.7 million in total gifts in the last three years, and the Fidelis Foundation has ranked #6, #9 and #7 as the largest grant-making foundation in Minnesota over the past three years.”

The Fidelis Foundation is a Plymouth, Minn.-based nonprofit organization “organized to assist Christians in discerning, clarifying and implementing God’s call and direction in their life,” according to the group’s tax filings. Its chairman is G. Craig Howse, Vennes’ lawyer, and the organization leases office space from Howse for $1,300 a month.

Howse has donated $5,000 to Bachmann’s campaign committee since 2007.

A list of wire communications are presented as evidence in the Petters Ponzi case (see superseding indictment of Tom Petters (PDF)). Among them this mention of a wire transfer of $4,060,000 from the Fidelis Foundation to "PCI's account". PCI is Petters Company Incorporated.



The latest #990 for 2012  still lists Vennes lawyer & lobbyist Craig Howse as chairman.

Here's some old Vennes Info posts about Mr. Howse:

Palm Beach Finance Trustee Settlement With Vennes Attorney Craig Howse

Vennes Lawyer/Lobbyist Craig Howse Continues to Trouble the Waters of Deer Lake

Vennes Lobbyist in 2007: “The folks that are behind this don’t like drawing a lot of attention to themselves"

The late Karl Bremer's Ripple in Stillwater blog has a great deal about the Fidelis Foundation.

Monday, October 28, 2013

National Media Continues to "Report" Local News Stories Without Attribution

Mariah Blake  now working for Mother Jones "reports" on the Bachmann clawback today, something the Strib reported a little over a week ago and I reported back in June.

Here's a repeat of a Dump Bachmann post from Halloween, 2011:

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Steve Buttry a 40-year veteran in the news biz has this to say on his blog about plagiarism:
Attribution is the difference between research and plagiarism. Given the scandals in journalism over the past decade, the typical excuse blaming plagiarism on sloppiness simply doesn’t wash. Plagiarism can ruin a career.
You'd think jet-setting, East Coast reporters would have learned a lesson about plundering homegrown media in flyover country for content after Matt Taibbi got caught ripping off G.R. Anderson's City Pages profiles of Michele Bachmann.

Now, The New Republic's Mariah Blake thinks she can Google-up a whole bunch of articles by local reporters and cobble together a flawed, confusing, unfocused article. No wonder Scott Lemieux conflates Petters and Vennes at the Lawyers Guns & Money blog:

Mariah Blake’s article about Tom Petters is fascinating stuff. Petters used a Ponzi scheme funded largely by hedge funds, investors known to Petters and his associates through Christian groups, and the purchase of failing legitimate businesses to finance the classic lifestyle of the conservative wealthy-and-tasteless (high stakes slot machines! Yacht cruises with prostitutes, interns selected as potential sex partners, and cocktails involving Red Bull and citrus vodka!) All throughout this, he sought to get a pardon for his past crimes with the help of political backers ranging from Fritz Mondale to Michele Bachmann.

Longtime readers of this blog know that Bachmann wrote a letter supporting a pardon for Vennes, not Petters.

The TNR cover claims the article tells the "untold story" of the Tom Petters Ponzi scheme - what horse crap!. That story was told by every major news outlet in the state, the news wires and national business news outlets. I covered the trial of Tom Petters for the City Pages and kept a blog titled Petters Info. I even won an SPJ award for my nightly video reports of the trial (sadly, swept away by Bradlee Dean's You Tube take-down with only one remaining). Beth Hawkins wrote a long article for Minnesota Monthly in 2009 titled "Trust Me" and covered the trial for Bloomberg. There were many articles about Petters in the Strib, PiPress and on radio and TV. The trial and conviction of Tom Petters was one of the top Minnesota news stories of 2009 and the last decade. Untold? Really?

Less covered, but covered nonetheless is the saga of Michele Bachmann's top donor of 2006 and convicted felon Frank Vennes. The first article mentioning Frank Vennes appeared in the Star Tribune written by Jon Tevlin. Compare these two passages, one from Tevlin's article and the other from TNR:

The ending of Jon Tevlin's October 4, 2008 Strib story on Vennes:

"From a basement vault, agents took boxes and buckets of silver and gold coins, trays of jewelry, five stacks of $100 bills, boxes of gem stones, silver plates and Rolex watches. Agents also seized diamond rings and numerous paintings, including dozens with religious themes, such as the raising of Lazarus from the dead."


The ending of the TNR article:

"When FBI agents raided his home back in 2008, they cracked open a basement vault. Amid the buckets of gold coins and stacks of hundred dollar bills, they found a trove of religious paintings, including one of Lazarus rising from the dead."


Geez, ending an article with the image of Lazarus rising from the dead - that deserves an encore. Shameless!

Shortly after the 2008 FBI raid that discovered Frank's treasure trove, investigative reporter Karl Bremer wrote one article after another on Frank Vennes. Karl's excellent muckraking articles appeared on Minnesota Independent, Dump Bachmann and the Ripple in Stillwater blog. I've added additional information about Frank Vennes here and at my Vennes Info blog. I have the only courtroom sketches of Frank Vennes and his cohorts.

Appropriating the research of Minnesota reporters, Mariah Blake makes mistakes as well. Blake and TNR describe the Petters Ponzi scheme as a "$36 Billion Ponzi swindle". $36 billion is the amount that passed through Petters, but the total amount actually lost is now described as $3.8 billion.

For comparison, there's a Think Progress article today using the much smaller $17 billion figure for Madoff's Ponzi scheme.

There is a big chapter in our book The Madness of Michele Bachmann about Frank Vennes, so don't bother reading The New Republic's boring, error-riddled article. Our book's official publication date is December 12th.

As Steve Buttry says on his blog:

Perhaps you got away with plagiarism or fabrication in college. Perhaps you got caught plagiarizing for a term paper and the university’s punishment wasn’t too bad. If that’s the case, you need to change your thinking if you want to succeed in the news business. Newspapers can use plagiarism-detection software to screen reporters’ stories before they run. The Internet gives readers and interest groups powerful tools that will help them detect or even accidentally stumble across your cheating. A reader who has set up a Google news alert in an area that interests her could receive e-mail messages calling attention to your story and the story you stole from. If that reader e-mails those stories to your editor, your career will be over before the day ends and you’ll be an item in Romenesko or Regret the Error..

For reporters like Mariah Blake and Matt Taibbi, Steve Buttry has another blog post with a lesson on how to use other writers' work while giving them the attribution they deserve.

POSTSCRIPT: TNR left their fingerprints at the scene of the crime... They stole a photo without credit that appears on Karl Bremer's Ripple in Stillwater blog and nowhere else. I was at the courthouse when Karl took that photo. It captures Vennes in full flight from reporters with Karl in pursuit. Karl ran after Vennes for several blocks snapping pictures of the fleeing felon. That's the sort of effort real reporters put into getting a story.

Karl sued and settled with the New Republic for an undisclosed sum.

Saturday, October 26, 2013

Harrold & Prevost Sentencing Hearing Postponed

UPDATE:  Sentencing hearings:
Bruce Prevost - November 8, 2013, at 11:00 AM
David Harrold November 8, 2013, at 1:30 PM,

Some of you may be wondering what happened  to the Prevost & Harrold sentencing that was supposed to happen Friday. I don't know. I've heard the hearing has been postponed to November sometime.

For those of you who missed the hearing for Tom Petters, former business associate of Frank Vennes watch the video at Fox 9 with the awesome Tom Lyden reporting.

Here's the sketches from the hearing used in that report (click to make them bigger):








Friday, October 18, 2013

Vennes Sentenced to 180 Months in Prison

Frank Vennes was sentenced to 180 months in prison today. From the USDJ press release:
MINNEAPOLIS—Earlier today in federal court in St. Paul, Frank Elroy Vennes, Jr. was sentenced to 180 months in prison in connection with fraudulently raising money from individuals and through hedge funds for investment in Petters Company, Inc. (“PCI”). Vennes was a long-time associate of Thomas J. Petters, the Minnseota businessman who was convicted in 2009 of orchestrating a $3.65 billion Ponzi scheme. United States District Court Judge Richard H. Kyle sentenced Vennes, age 56, of Stuart, Florida, on one count of securities fraud and one count of money laundering. On July 11, 2011, Vennes was charged in a second superseding indictment, and on February 1, 2013, he pleaded guilty to those charges.

From 1995 through September of 2008, Vennes, individually and through his company, Metro Gem, obtained money from others for investment in PCI notes. He also assisted in the formation of hedge funds, known as the Arrowhead Funds, to help raise additional funds for that same purpose. Beginning in 2001 and proceeding through September 24, 2008, he aided and abetted individuals associated with the Arrowhead Funds in making fraudulent misrepresentations to investors regarding investments in PCI.

PCI was owned and operated by Tom Petters, who operated the Ponzi scheme by representing that money invested in PCI promissory notes would finance the purchase of electronics and other consumer merchandise. Purportedly, PCI would resell that merchandise for a profit to certain “big box” retailers, including Sam’s Club and Costco. In truth, however, no merchandise was bought or resold. Instead, Petters diverted hundreds of millions of dollars for his own benefit and the benefit of his co-conspirators. Petters’ Ponzi scheme unraveled in 2008, when federal agents executed search warrants at his business office and other locations. Beginning in 2000, Vennes worked to form hedge funds to solicit investors in PCI, including Arrowhead Capital Partners II, L.P. and Arrowhead Capital Finance, Ltd., collectively known as the Arrowhead Funds, and Palm Beach Finance Partners, L.P. and Palm Beach Finance II, Ltd., collectively known as the Palm Beach Funds. Because he had a federal criminal record, having been previously convicted on federal narcotics, firearms, and money laundering charges, he had difficulty obtaining funding on his own. As a result, he worked through the Arrowhead Funds and the Palm Beach Funds when trying to solicit money from banks and institutional investors.

From 1999 through September 2008, all paperwork and communication between PCI and the Arrowhead Funds and Palm Beach Funds went through Vennes or one of his employees. At the same time, Vennes received “commissions” from Petters for brokering deals involving both Funds. His commissions were based on the amount of money he raised for Petters and PCI. Between 2001 and 2008, Vennes received more than $100 million in commissions.

During that same time period, Vennes knew that those acting on his behalf were making material misrepresentations and omissions to investors in the Arrowhead and Palm Beach Funds and did nothing to correct the situation. Investors were told, for example, that whenever a retailer purchased consumer electronics or other goods from PCI, those products were paid for by the retailer with funds directly deposited into a bank account under the control of a management company. Thus, investors were falsely assured that all PCI transactions were, in fact, taking place, and all money was secure. However, Vennes, among others, was well aware that no payments were ever received from retailers and, instead, came from PCI alone. Furthermore, investors were never informed of Vennes’ criminal record or his involvement in the Arrowhead and Palm Beach Funds’ transactions. And, finally, they were kept unaware that in late 2007 and early 2008, the PCI notes held by the Arrowhead and Palm Beach Funds were delinquent and were approaching default.

On October 11, 2013, Vennes’s co-defendant in this case, James Nathan Fry, age 60, of Orono, Minnesota, was sentenced to 210 months in prison on five counts of securities fraud, four counts of wire fraud, and three counts of making a false statement to the U.S. Securities and Exchange Commission during its investigation of investments in PCI by hedge funds under the management of Fry’s company, Arrowhead Capital Management. Fry was convicted on June 12, 2013.

On October 25, 2013, sentencing is scheduled for the investment managers of the Palm Beach Funds, who have pleaded guilty to committing fraud in connection to this scheme by making material misrepresentations to investors in their hedge funds concerning investments in PCI. David William Harrold, age 54, of Del Ray Beach, Florida, and Bruce Francis Prevost, age 53, of Palm Beach Gardens, Florida, await sentencing, each on four counts of securities fraud.
A final quick sketch of Mr. Vennes:





Tuesday, October 8, 2013

Will Vennes Sentencing be Delayed by Government Shutdown?

U.S. Courts website:
Following a government shutdown on October 1, 2013, the federal Judiciary will remain open for business for approximately 10 business days. On or around October 15, 2013, the Judiciary will reassess its situation and provide further guidance. All proceedings and deadlines remain in effect as scheduled, unless otherwise advised. Case Management/Electronic Case Files (CM/ECF) will remain in operation for the electronic filing of documents with courts.
If the government shutdown delays the day (October 18) when Frank Vennes receives his sentence,  he can thank his ol' pal Rep. Michele Bachmann who is reported to have said she was "very excited" about the shutdown.

UPDATE: The courts will apparently stay open:
THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA WILL CONTINUE NORMAL OPERATIONS. ALL CASES, INCLUDING CIVIL AND CRIMINAL JURY TRIALS, WILL BE PROCESSED AND ARGUED AND JUDGMENTS WILL BE ISSUED AND ENFORCED ACCORDING TO USUAL SCHEDULES AND PRIORITIES. THE CLERK'S OFFICE WILL BE FULLY OPERATIONAL AND CM/ECF WILL CONTINUE TO BE FULLY FUNCTIONAL.

Bachjmann Pardon signature

Tuesday, October 1, 2013

Frank Vennes to be Sentenced October 18, 2013

From the docket:

Frank Elroy Vennes, Jr: Sentencing set for 10/18/2013 09:30 AM

Frank's partners in crime will sentenced later.

David William Harrold: Sentencing set for 10/25/2013 at 1:30 PM 

Bruce Francis Prevost: Sentencing set for 10/25/2013 at 11:00 AM 

There will be a sentencing hearing for  James Nathan Fry October 9th.