Two More Florida Ponzi Scheme Operators Join the Billionaire Hall of Shame

Florida and Ponzi schemes, never a week goes by without news of another Florida fraudster being caught in another massive fraud. This week is no exception.

The Securities and Exchange Commission announced charges against two Florida hedge fund managers with funneling more than a billion dollars of investor money into a Ponzi scheme run by Thomas Petters of Minnesota. The government says Bruce Prevost and David Harold raised over $1 billion by lying to investors. The SEC's complaint says the two told clients their money was being used to finance the purchase inventories of consumer electronics.

None of the funds ever were invested as promised. Petters raised billions of dollars from feeder funds such as those run by Prevost and Harold and simply used the money for his own purposes.

Some might claim that Prevost and harold were victims themselves. The problem, however, is that the two repeatedly told investors that they would personally monitor transactions and pay the monies directly to the electronics vendors. They didn't and never intended to do so, says the SEC's complaint. Instead they forwarded the money directly to Petters and pocketed $58,000,000 for their efforts.

When the scheme began to unravel, the two began to simply exchange new investments for old. They also sent statements to their clients reporting "steady profits." The actions of Prevost, Harold and Petters have all the signs of a classic Ponzi scheme.

What is interesting about this scheme is the pedigree of Petters and how the scheme lasted so many years before it collapsed.

Petters will now always be known for his crimes against investors. (Petters will be spending the next 50 years - if he lives that long - in the Leavenworth Penitentary.) Prior to his indictment, he was well known for his purchase of Polaroid, Fingerhut and Sun Country Airlines - business that he apparently ran as well as his Ponzi scheme.

The fraud may have begun as early as 1995. Including the $1 billion raised by Prevost and Harold, the scheme is believed to have defrauded investors out of $3.65 billion. Not quite Madoff territory but enough to gain the three admittance to the Billionaire Hall of Shame.

Prior to joining the ranks of the incarcerated, Petters was awarded a Corporate Leader of the Year in 2001 and a Distinguished Humanitarian Award. He also donated millions of dollars to Florida colleges and universities. Millions of dollars of other people's money.


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Brian Mahany is an asset and fraud recovery lawyer and an advisory board member of the International Association for Asset Recovery. He welcomes comments and referrals - contact him through his website, http://www.mahanertl.com