Fingerhut Investor Petters Arrested in Fraud Case

Tom Petters, former CEO of Petters Group Worldwide, a minority owner in the Fingerhut catalog company, was arrested Friday on federal mail and wire fraud charges in Minnesota, according to published reports.

Petters resigned last week as head of Petters Group Worldwide. The investment firm’s Minnetonka headquarters had been raided the week before, according to the Minneapolis Star Tribune.

Petters was accused in a criminal complaint of defrauding investors by claiming to sell electronic goods to retailers like Sam’s Club and BJ’s Wholesale Club, the Wall Street Journal reported. Purported victims claimed they lent his firm, Petters Co., to finance purchase of the merchandise, according the Journal.

These deals were “pure fiction,” according to an affidavit filed in the case, the Journal continued.

More than 20 individuals and groups may have lost more than $100 million by investing in Petters Co., according to an FBI agent’s affidavit, the Journal reported.

The charges also include money laundering and obstruction of justice, the Journal stated.

Petters was held without bail pending a hearing on Tuesday., and his passport was seized. Federal prosecutors described him as “a serious risk” to flee, the Star Tribune reported.

Two other men were also charged: Michael Catain and Larry Reynolds, the papers stated.

Pettters’ attorneys told reporters he had not been indicted or arraigned, and that he would fight for release.

The Petters Group purchased Fingerhut with Ted Deikel in 2002, and in 2005 acquired Polaroid, the Star-Tribune reported.