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Continued: An associate of Tom Petters posts bail for his own release

  • Article by: DAN BROWNING , Star Tribune
  • Last update: October 30, 2008 - 9:40 PM

A man who pleaded guilty to helping Tom Petters launder billions of dollars from a massive investment fraud scheme through a California bank was ordered released Thursday on $2.5 million bail.

Larry Reynolds, a 67-year-old California resident with a second home in Las Vegas, appeared Thursday morning for a bail hearing before U.S. Magistrate Judge Susan Nelson.

The 9:15 a.m. hearing was not on the public calendar, nor was it posted on Nelson's schedule outside her ninth-floor courtroom in Minneapolis.

Assistant U.S. Attorney Timothy Rank was walking toward the courtroom with Reynolds' attorney, Fred Bruno, when they recognized a reporter and froze in their tracks.

Rank called Nelson's chambers on his cell phone and asked for a private meeting. He and Bruno turned around and entered the chambers area by going in through another judge's entrance.

Meanwhile, Reynolds waited impatiently in Nelson's courtroom. At one point, he asked a U.S. marshal when the hearing was supposed to take place. "9:15," the marshal replied. "Maybe somebody didn't get the memo."

About 10 minutes later, Rank, Bruno and Nelson entered the courtroom and approved Reynolds' release.

Neither Nelson nor the U.S. attorney's office responded to messages seeking comment about why the hearing wasn't on the public docket.

Chief U.S. District Judge Michael Davis said it's possible the attorneys wanted to keep the case quiet -- he can't speak for them -- but after looking into the matter, he said, Nelson did nothing improper.

"What happened was that the [judge's] calendar clerk was approached to see if she could get this matter on immediately," Davis said. He said Nelson agreed to squeeze it into her calendar at the last minute, so it did not get put on the public kiosks as it should have.

"We are an open, public facility and courthouse, and our hearings should be kiosked so the public knows about that," Davis said. "We are making arrangements to make sure that this sort of thing won't happen again."

Bruno called the matter "a tempest in a teapot." He explained that a judge in California had set the $2.5 million bail Oct. 3, but Bruno suggested that it be waived temporarily so Reynolds could be brought to Minnesota to speak with authorities.

Reynolds pleaded guilty

Since then, Reynolds has pleaded guilty and he has remained in custody while he talked with government officials about the location of his assets, Bruno said. He said it took longer than usual to negotiate the terms of Reynolds' release.

"It was only yesterday that we shook on the terms of his release, so we did an expedient thing, which was to have a judge sign an expedited release order," Bruno said.

The only thing that took place in the judge's chambers, Bruno said, was a discussion about how to handle the paperwork for his bond.

As a condition of his release, both Reynolds and his wife surrendered their passports and put up the deed on their home to secure a $2.5 million appearance bond. Nelson told Reynolds he would be supervised by pretrial services in California.

Reynolds will be subject to home detention and electronic monitoring, and must pay for a portion of the costs. The share will be determined by pretrial services, Nelson said.

Petters, who has remained in federal custody without bail since his Oct. 3 arrest, returns to court today in an effort to be freed pending resolution of the case.

Petters, one of the Twin Cities' best-known entrepreneurs with holdings in Polaroid and Sun Country Airlines, faces charges of mail and wire fraud, money laundering and obstruction of justice. Authorities say he has bilked investors out of more than $3 billion since 1995.

Dan Browning • 612-673-4493

  • about this series

  • The Star Tribune's coverage of the federal fraud case against entrepreneur Tom Petters and the struggles of Petters-owned Sun Country Airlines.
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