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Chances are, you've heard of Bernie Madoff but not Tom Petters.
In the fall of 2008, Tom Petters of Minneapolis was busted for running the first billion-dollar Ponzi fraud in history—in the end, prosecutors said, a $3.65 billion scam. Just six weeks later, news of Madoff's Ponzi fraud broke in New York. This one strained credulity. Madoff's scam amounted to $65 billion. Madoff's story eclipsed Petters' in the media, even though Madoff pleaded guilty without much fuss while Petters insisted on going to trial. (He was convicted in December 2009.) In a way, Petters' relative obscurity was a tremendous break for a ring of professionals in Minnesota. They were able to get their paws around Petters' wealth with little public scrutiny.
In New York, Madoff's companies are represented by a lawyer, naturally enough. Another lawyer was appointed by a judge as "receiver" to manage Maddoff's assets. Still another lawyer was appointed by another judge as "trustee" to protect those assets. Ultimately, the courts will drain Madoff's assets to give some of his victims and creditors at least some of their money back.
Nothing unusual about that. It's how bankruptcies are supposed to work. What a different story it is with the Petters case. A single lawyer serves as the court-appointed receiver and trustee at once—even though he seemingly had a glaring conflict of interest because he had represented Petters' companies. And that's just the opening chapter in this story . . .
