The head of several Chicago-area hedge funds whose investors lost millions of dollars in "sham" business transactions with Wayzata businessman Tom Petters was charged Thursday with mail fraud in a manner that indicates a plea agreement may be coming soon.

Gregory Bell, who has been held without bail since his arrest in July, was charged by "information" rather than indictment, a manner that generally signals a guilty plea. His attorney declined to comment.

Six other defendants identified as participants in the alleged $3.65 billion Ponzi scheme have already pleaded guilty to various charges, including conspiracy, money laundering, mail fraud and income tax violations.

Petters is scheduled to go on trial late next month, accused of masterminding the alleged operation.

According to the charge against Bell, he helped engineer 86 sham "round-trip" financial transactions between his hedge funds and Petters Co. Inc. (PCI) to create the appearance that PCI was repaying debts it had with Bell's Lancelot group of funds. The notes purportedly financed the purchase of consumer electronics goods for resale to big-box retailers such as Wal-Mart. But no goods were being bought and sold. The 86 transactions totaled $1.4 billion, according to the government.

The government said Lancelot conducted the bogus transactions between February and September 2008 after PCI had fallen behind on a series of earlier notes because Bell wanted to conceal the delinquencies from investors and potential investors. The government said Bell continued to add new investors to his funds even after the round-tripping had commenced, raising between $200 million and $400 million from 43 people.

When finally questioned about the status of the notes by one of his investors, Bell directed his staff to create a false spreadsheet to characterize the PCI notes as either fully or partially repaid, according to the government.

Lancelot accountant Harold Katz, who created the phony spreadsheet, pleaded guilty to one count of conspiracy to commit wire fraud earlier this month.

Bell could face as much as 20 years in prison if he pleads guilty to the charge and would also face forfeiture of any assets he obtained as a result of the alleged criminal activity, which could be considerable.

During a detention hearing in July, government attorneys argued that Bell had stashed $15 million in a Swiss bank account controlled by an obscure offshore trust.

David Phelps • 612-673-7269