UPDATE 1-U.S. SEC charges 2 more in Petters Ponzi scheme

Thu Oct 14, 2010 5:50pm EDT

Related Topics

* Ponzi scheme involved Tom Petters - SEC

* Hedge fund managers steered over $1 bln to Petters

SAN FRANCISCO Oct 14 (Reuters) - Two Florida-based hedge fund managers funneled more than a billion dollars into a Ponzi scheme run by Minnesota businessman Tom Petters, the U.S. Securities and Exchange Commission announced on Thursday.

Bruce Prevost and David Harrold invested more than $1 billion in assets with Petters, while pocketing more than $58 million in fees, the SEC said in a lawsuit filed in U.S. District Court, District of Minnesota.

Petters was sentenced to 50 years in prison earlier this year for running a $3.65 billion Ponzi scheme, one of the largest ever uncovered.

Prevost and Harrold allegedly assured investors their assets would be protected. But when Petters was unable to make payments, Prevost and Harrold concealed the truth, the SEC said.

The transactions allegedly began as early as 2004 and lasted until June 2008.

An attorney for Prevost declined to comment and Harrold's lawyer was not immediately available for comment. (Reporting by Dan Levine; editing by Andre Grenon) (dan.levine@thomsonreuters.com +1-415-348-4726)

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