News Commentary: Thomas Petters fraud case.

    In Minnesota, Thomas Petters recently has been one of the financial movers and shakers. He bought Sun Country airlines at a low cost. He had the reputation of someone able to turn around otherwise floundering companies.  He may well have been successful doing so, and the reason for his success may be an extensive fraud conspiracy.  According to news accounts, Mr. Petters and other associates have been involved in a scheme of pretending to sell merchandise in order to obtain money from investors.  The fraud allegations are not really all that surprising. Anyone who visited a Petters Warehouse direct store and noted the junk being sold had to wonder how Mr. Petters made all that money. The answer now seems more clear, by fraud and deception.  It is really amazing that through all the businesses purchased that no one really spotted the potential fraud.  Perhaps, as with most cons and deceptions that the investors got too wrapped up in what they could get back and ignore any potential warning signs.

     The documented evidenceso far paints a pretty clear picture of what appears to be a Ponzischeme.  A lot of money was made and the reach of this alleged fraud does go global.  Many, many people were sucked in.  The hardest thing is to see charities like Minnesota Teen Challenge get hooked into the scheme.  It would be bad enough that Mr. Petters appears to have donated ill-gained money, but in turn he managed to get those charaties to invest with the promise of more.  So not only are businessses like Sun Country Airlines, Polariod and others at risk but many Charaties including Teen Challenge find themselves at risk.

    This whole sad story really paints the picture of when things look too good to be true they usually fit that statement.  And usually most fraudulant schemes do eventually come to the surface. It is times like these that it is good to re-examine prioties.  Everywhere in this world there are people who are looking to build themselves up, some by taking shortcuts to making lots of money.  Others look for power.  Sometimes both come at same time.  Corruption and shortcuts are traps out there that can easily suck others in. 

    The fact is that we may think what we do is in isolation. But, what we do does have impact on other people.  Any short cut taken will hurt many when exposed.  Our selfishness and actions taken as shortcuts to meet our own needs when exposed collapse and usually with many  consequences.  This is seen in the Thomas Petters story, this is seen in many other untold stories that impact many. 

So the question is where do you turn when things collapse? Where do you turn when things in your life get shaken or even exposed.  In Christianity, the answer is Jesus.  In Jesus there is peace.  This peace doesn’t change the difficulties, doesn’t fix all the causes of suffering either by our own or others suffering, but it gives a hope and a foundation.  The hope is that ultimatley there is something better.  Hope that the selfishness of others will result in ultimate justice.  And a foundation of something unshakeable, and that being the love and grace of God, who cared enough to provide an answer to selfishness. The answer is in Jesus Christ and allowing him to pay for our sins.  In surrendering our lives to Jesus Christ and serving the Kingdom of God versus our own Kingdom, there is recognition that everything in this life is but temporary.


One Response


    Late in the last century 1987 to be exact. Back when newspapers still employed investigative journalists who actually uncovered white collar schemes before someone was indicted. There was a Los Angeles Times reporter who uncovered a 100 million dollar Ponzi scheme. It was later declared to be the largest Ponzi Scheme of 20th Century. The scheme was spearheaded by a 20 year old con-man named Barry Minklow and a few of teen age and 20 something friends. Minklow formed a company cleaning company named ZZZ-Best when he was just sixteen. Minklow found that it was easier to obtain funds by promising people huge returns in exchange for their loaning him money than to actually clean carpets. He hired reputable accountants and lawyers to boost his image. Some may recall a made for television movie that was later made entitled “Billionaire Boys Club” which was based upon the ZZZ-Best/ Barry Minklow story.

    Before the LA times investigative reporter uncovered Minklow’s scheme he, and several of his pals, had swindled investors out of 100 Million dollars. Minklow was sentence to 25 years in prison, found God while in prison, and got out in 7 ½ years. He is now a Pastor in San Diago and recognized as an expert on fraud, and speaks on the subject to university students and the business community in an effort to prevent fraud. Who also consults on fraud.

    One of Minklow’s co-conspirator’s was quoted as saying that:

    “We were as hedonistic and abusive as a person could ever be,” Morze said. “There were millions of dollars floating around, I spent millions–cars, women, gambling, clothes.”

    With regard to the Ringleader, Barry Minklow’s defense to the charges, this co-conspirator stated that:

    “The way Barry chose to defend himself was to blame everyone else. I wasn’t the slightest bit surprised or even hurt when he was lying about me,” said Morze. “He’s always been able to lie his way out of anything. When the lies about me weren’t going to be sufficient, he changed his story. I believe he’s a sociopath and I believe he will continue to lie.”

    This sounds very much like Tom Petters and company. The only difference is that Tom got away with his confidence scheme for a lot longer because local investigative journalist or anyone else ever questioned his meteoric rise or his Byzantine Business Empire. It appears that the billions of dollars Petters managed to con people out of in his Ponzi scheme allowed Mr. Petters to do, what Mr. Minklow could not do, which was to buy favor in the local media and the community by giving part of his loot to politicians, charities, churches and colleges. He also was able to finance himself into the company of the Twin Cities social elite. Living the life of a Lake Minnetonka Multi-Millionaire. One can only wonder who was his outside accounting firm and how could he bilk all these Hedge Funds and Institutional Investors without having Financial Statements. The next round of lawsuits will definitely be directed toward 3rd parties such as accounting firms, law firms and others.

    Apparently no one on the receiving end of Mr. Petters tainted money thought to question the source of the funds, for fear they might offend their benefactor and be cut off. I mean REALLY look at the millions that he reportedly gave away to politicians, charities, churches and colleges. Not to mention the 500 million he reportedly lost in Vegas. Surely one of his cronies who accompanied Petters on his gambling junkets must have known Tom didn’t have that kind of money to lose. Even Charles Barkley and Michael Jordan haven’t lost that much in Vegas. How many 51 year old Minnesota businessmen have donated over 25 million dollars to three separate colleges? How many 51 year old Minnesota businessmen have gambled away 500 million in Vegas?

    Barry the “wunderkind” Minklow is 41 years old now ten years younger than Tom Petters. For more on Barry Minklow please read the following the link I have provided below and compare his scam to Petters. I thimk the similarities are scarey.

    I look forward to your thoughtful responses and to how the Petters scandal plays out.

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