Lawsuit Against GE Capital Over Petters Ponzi Scheme Heads to Trial
A case spawned by the nearly $4 billion Tom Petters Ponzi scheme is gearing up for a bankruptcy court trial in West Palm Beach.
June 20, 2017 at 11:00 PM
2 minute read
A case spawned by the nearly $4 billion Tom Petters Ponzi scheme is gearing up for a bankruptcy court trial in West Palm Beach.
Judge Paul Hyman Jr. of the U.S. Bankruptcy Court for the Southern District of Florida denied motions for summary judgment from both sides last week in Barry Mukamal's lawsuit against General Electric Capital Corp. Mukamal, a trustee for the Palm Beach Finance Liquidating Trusts, has alleged that GE Capital knew about the scheme and kept it quiet in order to recover its own funds. The dispute is over $651 million Mukamal alleges the scheme cost the trusts.
“The Petters Ponzi Scheme included defrauding lenders by misrepresenting that [Petters' companies] were engaged in real transactions, selling real inventory to real customers, providing real collateral to lenders, and paying lenders from the proceeds of real transactions rather than from money sourced from other defrauded lenders,” Hyman wrote. The victims were “basically all investing in fake deals.” Petters is now serving a 50-year sentence for orchestrating the scheme.
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