Updated: 10/07/2009 4:03 PM KSTP.com | Print |  Email
By: Becky Nahm

Alleged Petters Co-Conspirator Pleads Guilty

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A hedge fund manager accused of conspiring with Tom Petters in an alleged Ponzi scheme pleaded guilty to one count of wire fraud Wednesday.

Gregory Malcom Bell, 44, of Highland Park, Ill., entered his plea in U.S. District Court in St. Paul.

As part of his plea agreement, Bell admitted to taking part in a scheme to defraud people investing in Petters Company Inc. or PCI.

According to the agreement, Bell's hedge fund Lancelot Investment Management had all of its money invested in PCI promissory notes.

Bell admitted he created fake banking transactions to make it look like PCI was paying off its notes, even though PCI had fallen behind.

He made 86 phony transactions between February and September 2008. During that time, Lancelot raised more than $200 million from 43 new investors based on the false information on PCI investments.

Each transaction was allegedly preceded by a phone call between Lancelot and Petters personnel.

Bell faces a maximum sentence of 20 years in prison. His sentencing date has not yet been set.

Petters is in jail, awaiting trial on a 20-count indictment.