The last criminal defendant tied to the $3.65 billion Ponzi scheme of Wayzata businessman turned felon Tom Petters was convicted Wednesday on federal charges that he misled investors in a business transaction that ultimately lost more than $100 million.

James Fry, a Twin Cities hedge fund manager, was found guilty on all 12 counts by a jury of eight women and four men who deliberated 13 ½ hours over three days. The jurors told U.S. District Judge Richard Kyle that their decision was unanimous.

Fry’s conviction likely closes the book on the Petters saga, the largest criminal fraud in Minnesota history.

Wearing a dark gray suit with a white shirt and striped tie, Fry, 59, sat motionless as the jury’s determination of guilty was repeated by Kyle for each of the counts.

Joe Friedberg, a member of Fry’s defense team, said his client was “stunned” by the outcome.

“We tried as hard as we could. Now we go on to sentencing,” Friedberg said outside the courtroom after the verdicts were announced. “We’ll make a decision later about an appeal.”

Assistant U.S. Attorney Tim Rank called the verdict “a just conclusion” for a “very complex case.”

Fry is the 13th and last Petters-related person to acknowledge guilt or be convicted in the nearly five-year legal odyssey that dominated headlines as a fraud of grand proportions. The scheme was exposed by a Petters insider, Deanna Coleman, who went to the government in 2008 and spilled her insides about a 10-year operation that fooled investors into thinking they were buying and reselling consumer electronic goods when Petters and his cronies instead were using funds provided by new investors to pay off obligations to old investors.

After the verdict, the judge denied a motion by the government to immediately detain Fry as a flight risk. “He has had a clean record to date,’’ Kyle said. Sentencing will occur in two to three months.

Breaking down the verdicts

There was no testimony or evidence in Fry’s trial that he knew the Petters operation was an illusion. Rather, Fry, head of Arrowhead Capital Management, was convicted on charges that he withheld vital information from his investors that might have made their investments with Petters look decidedly less attractive and that he lied to the Securities and Exchange Commission (SEC) about that after the Ponzi scheme had collapsed.

Specifically, in nine securities and wire fraud counts, Fry was found guilty for not informing his investors that his only contact with Petters was through Frank Vennes Jr., a convicted felon sent to jail in the 1980s on money laundering and other crimes.

Several institutional investors testified that knowledge of Vennes’ criminal background would have been a red flag that would have dissuaded them from investing with Fry even though the returns on those investments were a healthy 10 percent to 12 percent.

Fry was also found guilty of telling investors that payments to his hedge funds on investment profits came directly from the big-box retailers that were buying consumer goods from Petters when the purported investment returns came from a bank account controlled by the Petters operation.

Also, Fry was convicted of not telling investors when payments allegedly coming from retailers deviated from the customary 90-day payment schedule to a pattern considerably later than that. Indeed, several notes needed to have extensions approved by Fry in order to avoid default.

The former dentist turned hedge fund manager also was found guilty of telling the SEC that he did not know his Arrowhead funds were not being paid by retailers and that he approved marketing materials containing false information.

Driven by greed or a victim?

The government argued in its closing on Monday that Fry was motivated by greed to keep the Petters relationship going, noting the luxury home, cars and corporate jet that Fry acquired while collecting $30.2 million in commissions and fees over the years when he sent investor funds to Petters.

But Friedberg argued that Fry was a victim of Petters’ fraud just as much as his investors were and had Vennes told him the investment was phony, then Fry could have made his investors whole and gotten out of the Petters relationship before it collapsed.

The government’s presentation against Fry was at times tedious, as jurors learned about offshore banking regulations. At times it was fascinating, as former Arrowhead employees such as Michelle Palm offered insider accounts of the final months before the Petters Ponzi scheme collapsed.

Testimony by Vennes proved dramatic as Fry’s lawyers attempted to demonstrate that the longtime Petters associate became aware that the Petters transactions were fraudulent but did not tell Fry.

Juror Tyler Igou of Richfield said the jury tried to be as thorough as possible.

“We took a lot of time and put a lot of thought into each count individually,” Igou said. 612-673-4642