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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22727 / June 14, 2013

United States v. James Fry, Criminal Case No. 11-141 (D. Minn.)

SEC v. James Fry, et al., Civil Case No. 11-3303 (D. Minn.)

Hedge Fund Manager James Fry, Previously Sued by the SEC for Fraud, Found Guilty of Securities Fraud, Wire Fraud, and Making False Statements to the SEC

The Securities and Exchange Commission announced that on June 12, 2013 a jury found Minneapolis-area hedge fund manager James Fry guilty of five counts of securities fraud, four counts of wire fraud, and three counts of making false statements to the SEC during investigative testimony. Sentencing on these charges will be held on a later date. The U.S. Attorney's Office for the District of Minnesota had filed criminal charges against Fry on July 19, 2011.

Fry is a defendant in a pending civil injunctive action filed by the SEC on November 9, 2011 in the United States District Court for the District of Minnesota. The charges leveled by the SEC stem from the same set of facts alleged by the U.S. Attorney's Office. The SEC's complaint alleged that Fry fraudulently funneled more than $600 million of investor money into a Ponzi scheme operated by Minnesota businessman Thomas Petters. During the period in which he invested with Petters, Fry and his hedge fund management company collected more than $42 million in fees. The SEC's complaint further alleged that Fry falsely assured investors and potential investors that the flow of their money would be safeguarded by collateral accounts and described a phony process for protecting their assets. When Petters was unable to make payments on investments held by the funds he managed, Fry concealed it from investors by secretly executing note extensions with Petters.

On February 14, 2012, the Hon. Richard H. Kyle, U.S. District Judge for the District of Minnesota, stayed the SEC's action against Fry pending the resolution of his criminal case.

 

http://www.sec.gov/litigation/litreleases/2013/lr22727.htm


Modified: 06/17/2013