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Another Guilty Plea in $200 Million Minnesota Ponzi Scheme

Another of the principals in a failed $200 million currency arbitrage Ponzi Scheme pled guilty Tuesday in a Minneapolis federal court.  Christopher Pettengill, 54, pled guilty to charges of securities fraud, wire fraud, and money laundering as part of his role in the failed scheme.  The alleged mastermind of the scheme, Trevor Cook, was sentenced in August to 25 years in prison and ordered to pay restitution of $155 million to the identified victims.

While Pettengill faces a maximum of twenty years under the charges, prosecutors are asking for a sentence of 15 - 19 years based on federal sentencing guidelines.  Pettengill's lawyers argue that the appropriate range is 12-15 years; sentencing has not yet been scheduled.  The ultimate length of the sentence may be reduced, as authorities have indicated that Pettengill has been cooperating since January.  Other associates of the firm have denied wrongdoing.

Beginning in 2006, Pettengill and his associates pitched a currency arbitrage strategy in which investors were promised steady annual returns ranging from 10.5 to 12 percent with virtually no risk.  Originally called Universal Brokerage Services, the entities involved were renamed to various funds with the word "Oxford" in their names after a trademark infringement lawsuit from UBS Bank.  In his plea agreement,Pettengill admitted that investors were provided with fictitious account statements that bore no relation to the actual fund performance.  

Unbeknownst to investors, Pettengill and associates had invested some portion of the asset pool with Crown Forex SA in Switzerland.  Yet, when Crown Forex began having financial problems, Pettengill and associates worked to keep the news quiet.  The Oxford entities eventually collapsed during the height of the financial crisis in late 2009.  Cook and radio host Patrick Kiley were charged in November 2009.


See the SEC Litigation Release here and the SEC Complaint here.