Ponzi schemes collapse eventually. The funds the fraudster stole often can’t be recovered and the business or fund goes bankrupt,...
Thomas J. Petters orchestrated a $3.65 billion Ponzi scheme—one of the largest in U.S. history—between 1995 and 2008. Operating out of Minnesota, Petters used his legitimate business empire as a facade for his fraudulent activities.
Silver Law Group is a national securities and investment fraud law firm that helps Ponzi scheme victims recover losses through several legal avenues. Our well-respected attorneys work on a contingency fee basis, meaning you pay no fees unless we successfully recover money for you.
Thomas Joseph Petters is a former American businessman who orchestrated one of the largest Ponzi schemes in U.S. history. Before his legal downfall, Petters was the chairman and CEO of Petters Group Worldwide (PGW) a conglomerate that acquired several iconic but struggling brands. He acquired the famous camera brand Polaroid in 2005, owned a controlling interest in the Minnesota-based airline Sun Country Airlines, and purchased the brand name and customer list of the prominent catalog retailer Fingerhut.
Tom used Petters Company, Inc. (PCI) to perpetrate his Ponzi scheme. While PGW operated real businesses, many were unprofitable and were sustained by the illicit funds channeled from PCI. Between the mid-1990s and September 2008, Petters, as the owner and CEO of PCI, solicited billions of dollars from investors in exchange for short-term promissory notes. Investors believed their money was being used to purchase bulk consumer electronics from wholesalers for resale to big box retailers like Costco and Walmart.
To make the deals look legitimate, Petters and his associates forged roughly 10,000 documents, including fake purchase orders, bank statements, and wired fund records. No merchandise was ever bought or sold. Petters used funds from new investors to pay “returns” of 15% to 20% to earlier investors. As the scheme began to collapse in 2008, Petters and his associates engaged in round-trip payments—moving money between accounts on the same day—to create the illusion that PCI was repaying its debts.
Petters used the money to acquire and support real companies, including to fund the purchases of Polaroid and Sun Country Airlines. Hundreds of millions funded an extravagant lifestyle that included luxury homes, yachts, and a private jet. Significant portions went back to investors as phantom profits to prevent them from withdrawing their principal.
The scheme unraveled in September 2008 when a high-ranking employee, Deanna Coleman, confessed to federal authorities and wore a wire to record Petters admitting to the fraud. Petters was convicted on 20 counts of fraud and money laundering in 2009 and is currently serving a 50-year prison sentence.
A court-appointed receiver, Douglas Kelley, oversaw the liquidation of Petters’ assets, eventually distributing over $722 million to victims. Investors typically received only a fraction of their losses, with some estimates ranging from 17 to 25 cents on the dollar.
Often, the person who ran the Ponzi scheme has no money left. The Ponzi scheme attorneys at Silver Law Group regularly investigate and file claims against third-party professionals who may have materially assisted the fraud.
For schemes with many victims, our firm often leads or participates in class action litigation to group claims together, making the legal process more efficient and reducing individual costs. If you have questions about recovering your funds lost to a Ponzi scheme, contact Silver Law Group today to request your case consultation.
