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Continued: Yet another trial tied to Petters scam goes to jury

  • Article by: DAVID PHELPS , Star Tribune
  • Last update: February 10, 2014 - 9:29 PM

The SEC lawsuit, filed in 2011, alleges that Quan misrepresented to investors the safeguards that were in place to minimize risk, including the use of a lockbox account for receipt of funds from retailers, outside audits, due diligence reviews and insurance for short-term notes.

The lawsuit also alleges that Quan failed to inform investors when Petters began missing payments on short-term notes in late 2007 and into 2008. Eventually, Quan renegotiated his funds’ short-term notes into long-term loans, the suit says.

“When the Petters empire collapsed, there were no protections,” SEC attorney Kerstetter said.

But Quan was a victim who “bankrupted his own company,” believing the notes he received from Petters were legitimate, said Bruce Coolidge, another of Quan’s attorneys.

“Marlon’s hedge fund was not a fraud,” Coolidge said, noting that Quan also invested money from his wife, his sister and his employees’ retirement fund with Petters. “These are the actions of a victim, not a perpetrator.”

 

David Phelps • 612-673-7269

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