Good Intentions, Bad Outcomes: How Follo ...

Unfortunately, the 90-day extension did not help, and the promissory notes remained delinquent after the extension ran out. Again, Harold was aware of the delinquency and did not disclose this information to any investors. Following the direction of his boss, Harold assisted in developing a plan that would present a false representation to investors.

According to Harold’s plea agreement, he conspired with Bell and individuals at Petters Company to make approximately 86 fraudulent “round trip” banking transactions that gave investors and potential investors the false impression that Petters was paying its promissory notes.

These round trip transactions consisted of Lancelot wiring money from one of their accounts into a Petters Company controlled bank account. Then, the money was wired back to the Lancelot controlled bank account. The transactions were designed to make it seem as though Petters Company was paying on the Lancelot promissory notes. In essence, Lancelot was giving Petters cash, and Petters was using the Lancelot cash to pay Lancelot. Round tripping gives the appearance of a legitimate transaction when, in fact, the transaction is a sham.