UPDATE 1-Feeder fund assets frozen in Petters Ponzi case

* SEC accuses Gregory Bell, Lancelot Mgmt of fraud

* Judge orders Bell to repatriate overseas assets

* Lawsuit also accuses Thomas Petters of securities fraud (Adds details, background)

WASHINGTON, July 10 (Reuters) - A federal judge froze the assets of a hedge fund manager accused of acting as a $2 billion feeder fund for a multibillion-dollar Ponzi scheme operated by Minnesota businessman Thomas Petters, federal regulators said on Friday.

The Securities and Exchange Commission said it obtained the court order in a lawsuit accusing Gregory Bell and his Lancelot Management LLC of fraud.

The lawsuit also accused Petters of fraud for a Ponzi scheme involving the sale of notes related to consumer electronics. When Petters' scheme began to unravel, the SEC said, Bell participated in a series of sham transactions to conceal that Petters owed more than $130 million in investor payments on the notes.

Bell and Lancelot Management have never been registered with the SEC or any other regulatory agency, the SEC said in a statement. Bell could not be immediately reached for comment.

"Bell lied to investors to induce them to hand over their money, and then hung them out to dry while millions of dollars in fees continued to flow into his own pockets," said Merri Jo Gillette, head of the SEC's regional office in Chicago.

Judge Ann Montgomery in federal district court in Minneapolis issued an order freezing all assets of Bell, his wife, and Lancelot Management, and requiring them to repatriate all overseas assets.

Petters, who was initially charged by the U.S. Justice Department last October, is in custody and awaiting trial.

Petters Group Worldwide, which has investments in Fingerhut, Polaroid Corp and Sun Country Airlines, filed for Chapter 11 bankruptcy protection last year.

The SEC's securities lawsuit against Petters accuses him of running a Ponzi scheme from 1995 through last September. In the scheme, Petters allegedly promised investors that proceeds from the notes they were sold would finance the purchase of consumer electronics by vendors, who then re-sold the merchandise to big retailers such as Wal-Mart Stores Inc (WMT.N) and Costco Wholesale Corp (COST.O).

Instead, the SEC said Petters' business "was a complete sham" and cheated investors of their money. (Reporting by Julie Vorman, editing by Gerald E. McCormick)