Hedge Fund Manager James Fry Gets 17 Years in Connection With Ponzi Scheme.
Fry’s investors lost $120 million when the $3.65 billion Ponzi scheme engineered by Petters and associates collapsed in September 2008. Before that, however, he collected $40 million in fees and commissions from the transactions he conducted with the Petters operation.”
Fry’s company, Arrowhead Capital Management was one of the hedge funds that Thomas Petters used to perpetuate the third-largest hedge fund fraud case in U.S. history. Petters used these funds to finance his big box and other acquisitions. He then fabricated retail orders from those acquisitions and used them as collateral to borrow more money through the funds.
“He could have told investors the truth, but he didn’t because he was worried people would pull their money out,” Assistant U.S. Attorney Tim Rank said before the sentencing yesterday. “So he chose to lie.”
Thomas Petters was convicted of fraud and imprisoned at the United States Penitentiary, Leavenworth. He was the former CEO and chairman of Petters Group Worldwide. He resigned his position as CEO on September 29, 2008, amid mounting criminal investigations. He later was convicted for turning Petters Group Worldwide into a $3.65 billion Ponzi scheme and received a 50 year federal sentence.