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Lancelot investment fund sues and is sued over Petters case
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An Illinois-based investment fund and its management firm have filed a federal racketeering lawsuit in Minneapolis against Tom Petters, his companies and business associates, alleging that the fund lost "in excess of $1 billion" in a fraud scheme headed by Petters.
Lancelot Investors Fund and Lancelot Investment Management are seeking more than $1 billion in damages in the suit, which was made public Wednesday.
Meanwhile, investors and a Royal Bank of Scotland Group unit filed their own suits against Lancelot Investment Management and its hedge funds for lending the money to Petters' company.
The lawsuits, filed in an Illinois state court in Chicago on Monday and Tuesday, accuse Lancelot of failing to validate the purchase orders and the existence of inventory Petters Co. Inc. had used as collateral for the loans.
"It turns out that the security supposedly held by the Lancelot funds is fictitious or fraudulent," the plaintiffs said in their suits.
Petters is accused by prosecutors of masterminding more than $3 billion in fraud at his Minnetonka-based company, Petters Co. Inc.
One of the Illinois suits also names Lancelot principal Gregory Bell as a defendant. Bell told Lancelot investors in a Sept. 30 e-mail that the loans to Petters constituted "nearly all" of the Northbrook, Ill.-based firm's assets.
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