Orono hedge fund manager James Fry pleaded not guilty Tuesday to charges he knew some of the inner workings of the $3.65 billion Ponzi scheme run through Petters Companies Inc. (PCI), but failed to warn investors.
U.S. Magistrate Judge Jeffrey Keyes then set bail for Fry at $100,000 and set a trial date for Feb. 6 before U.S. District Judge Richard Kyle. Among the conditions for bail was for Fry to surrender his passport to authorities, which he had already done.
Fry appeared in court with defense attorney Joe Friedberg in a blue, button-down business shirt and dark slacks. He was escorted into the courtroom by members of the U.S. Marshals Service.
Fry was indicted last week on five counts of securities fraud, four counts of wire fraud and three counts of making misleading statements to investigators with the Securities and Exchange Commission.
The indictment alleges that Fry and Frank Vennes Jr. invested large sums of money from clients in the PCI operation to purchase electronic goods that never existed. The government said the two money managers knew that the investment returns they received came from PCI, not big box retailers as stated.
Fry and Vennes, who received a combined $229 million in fees and commissions for their efforts, also allegedly changed terms of the investment notes they received from PCI without telling investors in an unsuccessful attempt to prevent the fraud from collapsing, according to charges.
PCI owner Tom Petters is serving a 50-year prison sentence for his role in directing the more-than-a-decade-long fraud.
David Phelps • 612-673-7269
