Sunday, April 10, 2011

Minnesota: Land of 10,000 Ponzi Schemes?

For years, Minnesota styled itself as the Land of 10,000 Lakes. Not surprisingly, there were numerous humorous variations, such as Land of 10,000 Potholes or 10,000 Mosquitoes. But there really are a multitidue of lakes, and the slogan still signifies the abundance of water in this state.

Do we also have an abundance of financial crime? Eric Wieffering, an astute financial columnist for the Star Tribune, wrote a piece last month exploring the notion that Minnesota has become the Land of 10,000 Ponzi Schemes.

The names that came up, as Wieffering briefly summarized a dozen or so high-profile cases, started of course with Tom Petters and Denny Hecker, both of whom are now serving lengthy prison terms. But the list also includes Trevor Cook, Charles E. Hays, Kalin Dao and many others.

Is there really more fraud in Minnesota than elsewhere in the country, or does it just seem that way? Hank Shea, who led the U.S. attorney’s financial crime unit for many years, thinks not. In his view, the level of fraud in Minnesota doesn’t differ markedly from mo0st other places.

In fact, Wieffering concludes, our relatively clean image is what led out-of-state interests to set up companies called St, Paul Venture Fund, Minnesota Venture Capital, Inc., and Real Estate of Minnesota, Inc. Those companies are now facing civil charges brought by federal securities regulators. But the companies have to do with Minnesota in name only.

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