It seems that every state in the union has its front-and-center local news story. In Illinois, its an ex-governor that’s awaiting trial on corruption charges. In Minnesota, we have a couple on center stage; Denny Hecker a car dealership mogul and Tom Petters, a high profile businessman. In Tom Petters case, his trial just entered the courtroom this week, and its already positioned for some theatrics, and unusual insights around how a Ponzi scheme is kept silenced and is maintained. A story in the Pioneer Press titled “Petters lenders tell of early suspicions” holds some interesting insights. Here is part of the story.
Jack Morrone, who in 2000 was an auditor with GE Capital, testified that Petters Co. had borrowed $45 million from the lender and used the money to buy consumer electroncs or other goods. He said the goods then were sold to Costco and other major retailers. But Petters Co. was late repaying the money, and GE Capital wanted to know why.
Petters blamed Costco, saying the warehouse chain was late payng him for the goods.
At one point in the fall of 2000, CE Capital representatives decided to contact Costco directly. But after a Costco executive reviewed the purchase orders sent to him from GE Capital, he told the lender the purchase orders didn’t come from the retail giant.
Soon after, Paul Feehan, a regional manager at GE Capital called Tom Petters for an explanation.
“(Petters) was very irate, yelling and screaming, lots of curse words,” Feehan testified Thursday. Petters was upset that GE Capital had contacted Costco directly and let Feehan know it.
“It was just a scathing button kicking he gave me,” Feehandsaid. “He was very adamant that I stay the hell away from Costco.
In a later call, Feehan said, Petters told him “you guys are too much aggravation. I just want to end our relationship.”
As I noted in the book Without Warning regarding an Icebox Silent Problem, “Through manipulation, intimidation, or a lack of transparency, the problem is placed in hush mode. Anyone who challenges that directive might be dishonored and even threatened with their life. These problems aren’t being resolved,. They’re simply being micromanaged inside an icebox where anyone threatening to leak them are frozen out.
Bottom Line: Ponzi schemes are an intricate network of finely tuned and disciplined checks and balances. The holders of the scheme understand the consequences of being caught, and will do anything to keep it in the icebox.
Tags: Bullying, Icebox Silent Problem, Petters Co, ponzi scheme
