Gregory Bell Pleads Guilty for his Involvement in Petters Company Inc. Scam

October 9, 2009 – Gregory Bell, a former Chicago hedge fund manager and owner of Lancelot Investment Management, LLC, pled guilty to one count of wire fraud yesterday in the United States District Court for the District of Minnesota. Wire fraud carries a maximum of 20 years imprisonment and a fine of $250,000. Bell’s sentencing will be decided at a later date.

Bell is just one of several defendants in a pending civil action filed by the SEC against Thomas J. Petters, a Minnesota businessman charged with operating a multi-billion dollar Ponzi scheme from 1995 to 2008. Bell started Lancelot in 2001 and from 2002 to 2008 raised over $2.62 billion from hundreds of investors, who sold security interests in hedge funds they managed to Lancelot. According to the SEC’s complaint, Bell exchanged almost all of the investor funds for notes from Petters Company Inc. and fraudulently assured that their investments were in safe hands.

Apparently, Petters induced investors to buy consumer electronics, which never really existed, for resale to large retail stores. Eventually Petters’ scheme began to crumble and was unable to cover its obligations to investors. According to the SEC, Bell helped cover up more than $130 million owed to Lancelot investors. Also, Bell and Lancelot management allegedly filtered out at least $40 million in fees from the hedge fund.

When the SEC filed their lawsuit on July 8, 2009, the assets of Bell, his wife, and Lancelot Investment Management, LLC were all frozen. Bell was also placed in custody by federal authorities and it was discovered that he had deposited $15 million in a Swiss bank account.

The SEC’s civil action has been stayed pending the outcome of Bell’s sentencing and the U.S. Attorney’s criminal suit against Petters, which begins on October 26, 2009.

Sources: SEC, StarTribune.com

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If you are a Lancelot Investment Management LLC or Petters Company Inc. Investor/Victim or the victim of some other type of investment fraud, the Law Offices of Keith L. Miller, and its affiliates, is prepared to review your situation and potential claim(s) without charge, and will consider representing you on a contingent fee basis, which means that you will not have to pay out of pocket for your legal representation. The firm will take a fee only if we are successful in recovering your assets.

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