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Tom Petters and his Business Practices

Discuss about the Interaction at Epistemic Boundary of Bernard.

The case of Tom Petters has highlighted the chapters of ponzi scheme and fraudulent documents. The  present  case is evolved with the character of Tom Petters who was a businessman running certain investment groups and provokes the other companies to invest in his schemes and for that purpose, he used to submit certain fake documents. In his business life, he has made various federal crimes and the Court of United States  convicted him for the same (Wolinsky & Rubin, 2014).

Petters was running a wholesale brokerage business and alleged to be responsible for the bankruptcy of many businesses who relied on his schemes and invested money in it. He used to sell the bankrupt companies and supervised all the operations from the area of Minnetonka, Minnesota and Twin City, America. In the year 1998, he was concentrated on the online business and it has been mentioned in this case that he sell all the merchandised companies from that and the name of the site was RedTag Inc. he was the founder of the Amicus Trading, which was known as Petters Company in subsequent event. His fraudulent activities was came to the knowledge of the federal police after an allegation was made against his ponzi schemes and the truth came into the lights by way of police investigation and raid (Gibson, 2016).  

The main fact of the case related to Tom Petters that he was a businessperson and involved in certain fraud case to maintain his extravagant life style. It has been mentioned in this case that he used to sell the bankrupt companies and made a lot of money during the business (Fu et al., 2018). in the history of America, his case has become one of the significant cases regarding the ponzi scheme. He had breached the duty of a director, engaged himself in the fraud cases, and cheated the companies with an intention to make money. From the analysis of the case study, it has been cleared that the fraud cases were came into lights when one of his officials release the facts to the federal police. The case is the perfect example regarding the fraud cases and attracted various provisions on the fraud related matters. He has to face more dilemmas regarding the Sun Country Airlines who became insolvent by the fraudulent activities of the company headed by him (Jain, 2015).

Applicable Statutory Provisions for Fraud Cases

It has also been alleged against him that he is responsible for the massive brokerage failure in the provinces of America and the main reason behind all these activities is to expand the wings of his business on worldwide basis. He was alleged under the offences of wire fraud, mail fraud and several criminal conspiracy regarding the companies and assimilated with certain banks that are also alleged to engaged in the illegal transaction made in favour of the his company (Smith, 2013).  

It has been clear from the wide analysis of the case that the case of Tom Petters is attracting the provisions regarding the fraudulent activities.  The documents that have been submitted to the investors were false in nature and he, his staffs are also engaged to provide false information to the investors and in this process, he had gained a lot of money. The activity of Tom has attracted certain statutory provisions of United States.

The statutory provisions are followed the normal provisions of law and they are interpreted by the court of law. It has been mentioned that the scope of law regarding the law are being strictly construed by the court. The nature of the case of Tom is based on fraud case. It was regularised by the U.S. Code and certain penalties are also imposed by the provision to prohibit the illegal activity (Rose, 2016). There are number of provisions mentioned under the code that deal with the fraud provisions. As per section 1002 if a person or organisation possess any forged documents with an intention to defraud others and obtained money regarding the same, he will be liable for such activity and shall be penalised by imprisonment for up to five years. In case of fraudulent transaction made by the bank for the purpose of supporting the fraudulent performances, it will attract the provision of section 1005 of the Code. It has been mentioned in the case of Tom that First Regional Bank of Los Angeles was liable to commit illegal transaction regarding the same and proceedings shall have to commence against them according to the relevant provision. The penalty provision regarding the same has been mentioned under section 1324c of the Code (Ansah, Aikhuele & Yao, 2017). The relevant provision regarding the same has been applied if it is proved that a person done a thing falsely and satisfy all the requirements fall under the provision shall be considered as guilty and will be penalised for the same.

Challenges in Recovering Funds

In United States, there is an Act namely Securities Exchange Act that had been enacted in the year 1934 and it regulates certain fraud cases such as securities fraud, mail or wire fraud and tax evasion (McIntosh, 2016).

The activities of Tom Petters have also attracted the provisions regarding the Money Laundering Control Act 1986. According to this law, a person will be held liable if necessary documents are approved against him that specifies certain unlawful activities. 


The Federal Court had convicted Tom Petters for the violation of law regarding the fraud case and it has been held by the court that the illegal behaviour of Tom had attracted the provisions of the above noted U.S Code. The main allegations that was made against him related to the mail fraud, wire fraud, money laundering and certain provisions regarding the criminal conspiracy and the main cause behind the same has been held to gain massive amount of money to lead extravagant life style. He operated his business through certain ponzi scheme and the official staffs help him to regularise these offences. Certain measures have been taken by the court to recover some portion of the black money from the accused and give back the same to the victims (Levy, 2016). Court had taken the policy of remission to achieve the purpose and it has been observed that the court got huge success to recover some money by way of forfeiture.

However, the court has faced certain problems regarding the implementation of the process to the accused. There were certain complexities cropped up while dealing with the problem. It has been observed that the proceeding of bankruptcy occurred in this case is overlapped and the list of victims who were affected by the fraud scheme of Petters were huge. It is not that much easy to recover all the money and give them back to the victims. Prediction regarding the time of the scheme or the remission process had been made for the time of minimum one year (Saperstein, Sant & Ng, 2015). Therefore, it has been stated that both the remission and the restitution process have to be taken for the recovery of the money from the petters’ authority. 

It has been observed from the facts of the case that Thomas Petters was a business person in the continent of United States who had engaged himself to defraud the other businesses and submitted false documents with an intention to grab the money. He also engaged with brokerage business where he sold the bankrupted companies on online basis. Based on the evidence of the Federal police, he was convicted and imprisoned for a term of fifty years. The punishment of Thomas Petters made a history regarding the fraud case and sufficient enactments are become necessary to regulate the fraud provision strictly. The number of cases pending against him was huge and the provision of the Money Laundering Act has been taken against him. It has been clarified from his statement that he had started online business an d within a decade he had earned a sum of $4 billion bought many companies for the expansion of his business. In 2005, he had purchased Polaroid brand and renewed that same with modern technology (Nagel & Wieman, 2015).

Conclusion


In the year 2008, Federal Bureau of Investigation made raid in the office and the residence of Thomas and recovered certain documents related to the business. It has been  observed by the Federal police that the allegation regarding the ponzi schemes held truth in case of him and it has been evidenced that Petters, through affidavit, confessed his guilt regarding the fraud cases. It has also confessed that he had not file the tax returns properly and taken many steps to evade that same. It has also been held that he and his team defrauded all the investors and committed fraud against them by falsifying the tape recorders.

The vice chairperson of his company helped him to make false account in several banks and this was used as a trick to start a ponzi scheme. it has also been come into the light that he had taken huge loan from many banks by submitting the false evidence and documents and it has been observed that the quantity of the amount regarding the same is massive (Henderson, 2015). The Court held that it is not possible for them to return all the money to the victims all at once. An airlines company had to face insolvency that was depended on the loan of the company of Petters and faced huge loss as the company owned all the voting shares with an intention to lower the pass for the passengers.

The allegation was first made against the company by one of his co-conspirator Deanna Coleman that for5 the last ten years, she was engaged in the ponzi scheme of Thomas Petters and Petters used all the fabricated documents for obtaining a million of cash from various sources and in this way, he had made huge cash. It has also been alleged that Petters showed that monies are being invested in the electrical purposes but the real matter is different from this.

Evidences that have been proved against him stated that he had submitted the false documents and all the transactions that are made by him for the expenditure regarding the electrical goods were false. He himself confessed the facts and it has also been stated that all the bank documents along with the accounts that have been opened in his name were intended to dupe the investors. He used to sell all the bankrupted companies and gained money regarding the same. it has also been alleged that he did all the things with the intention to gain ill motives (Andrews, 2016).

Considering the gravity of his illegal activities, the Federal Court of Minnesota held him liable for the offences of mail fraud, wire fraud and criminal conspiracy and sentenced him for the terms of fifty years.

Conclusion

Therefore, from the above written facts, it has been observed that the illegal activities of Thomas Petters and his co-workers had made a huge breach regarding the business related duties and the scope of the activities had made a massive sign in the history of United States on ponzi scheme. Ponzi scheme is a scheme that is intended to defraud other to gain certain ulterior motive. It has been observed by the evidences and the statements of the witnesses that the company was engaged in the falsification process and obtained money from the others. Various provisions of the Fraud Act and Security Exchange Act have been attracted in this case. The activity of the company has rocked the history of America.

Reference

Andrews, T. S. (2016). A STATUTORY AND PRECEDENTIAL APPROACH TO CORPORATE SCIENTER IN SECTION 10 (b) OF THE SECURITIES EXCHANGE ACT. Va. L. & Bus. Rev., 11, 1-149.

Ansah, R. H., Aikhuele, D. O., & Yao, L. (2017). Unethical admissions: Academic integrity in question. Science and engineering ethics, 23(4), 1237-1239.

Coffee Jr, J. C., Sale, H., & Henderson, M. T. (2015). Securities regulation: Cases and materials.

Euchner, J. A., & Cordery, R. A. (2014). U.S. Patent No. 8,826,004. Washington, DC: U.S. Patent and Trademark Office.

Fu, P., Zhu, A., Ni, H., Zhao, X., & Li, X. (2018). Threshold behaviors of social dynamics and financial outcomes of Ponzi scheme diffusion in complex networks. Physica A: Statistical Mechanics and its Applications, 490, 632-642.

Gibson, D. R. (2016). Ignorance at Risk: Interaction at the Epistemic Boundary of Bernard Madoff’s Ponzi Scheme. Qualitative Sociology, 39(3), 221-246.

Jain, A. (2015). Easy Money: The greatest Ponzi scheme ever and how it is set to destroy the global financial system. Abhigyan, 33(2), 79-80.

Levy, S. M. (2016). Federal Money Laundering Regulation: Banking, Corporate, & Securities Compliance. Wolters Kluwer Law & Business.

McIntosh, D. (2016). The Costs of Anti-Money Laundering Enforcements to Noncompliant Banks. Journal of Finance, 4(1), 01-14.

Nagel, P., & Wieman, C. (2015). Money laundering. Am. Crim. L. Rev., 52, 1357.

Rose, C. (2016, April). Fraudulent Evidence at the International Court of Justice. In Proceedings of the ASIL Annual Meeting (Vol. 110, pp. 329-332). Cambridge University Press.

Saperstein, L., Sant, G., & Ng, M. (2015). The Failure of Anti-Money Laundering Regulation: Where Is the Cost-Benefit Analysis. Notre Dame L. Rev. Online, 91, 1.

Smith, G. S. (2013). Using jump lists to identify fraudulent documents. Digital Investigation, 9(3), 193-199.

Wolinsky, H., & Rubin, R. (2014). ‘Kicking the can’: science, Congress and a Ponzi scheme. EMBO reports, 15(1), 21-24.

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