Bruce Prevost, David Harrold, Palm Beach Capital Management Busted in Connection with Ponzi Scheme
October 19, 2010 - Bruce Prevost and David Harrold allegedly filtered over $1 billion from their hedge fund firms Palm Beach Capital Management LP and Palm Beach Capital Management LLC to the Thomas Petters investment scam. The Securities and Exchange Commission ("SEC") filed a complaint that alleges from approximately 2004 through June 2008, Prevost and Harrold invested all of their clients' money in the Petters scam while taking over $58 million in fees for themselves.
Petters' firm, Petters Company, Inc., allegedly told investors that it used their money to purchase large quantities of consumer electronics and resold them to large retailers like Walmart and Costco. The SEC claims that Petters Company did not purchase any actual electronics and merely operated as a massive Ponzi scheme. The complaint alleges that Prevost and Harrold invested all of their clients money in the Petters scheme, while falsely claiming their money was collateralized by other accounts.
The SEC further alleges that Prevost and Harrold told their investors that the retailers' payments for the electronics went directly into accounts that would pay off promissory notes held by the Palm Beach Capital investors. In reality, the SEC claims that return payments to investors came from Petters' company, which was ostensibly other investors' money.

