Appeals Court Affirms Co-Defendant Sentence in Petters Ponzi Scheme

Larry Reynolds, charged by authorities for his role in the multi-billion dollar Ponzi scheme orchestrated by Minnesota businessman Tom Petters, has lost his bid to appeal his sentence.  Reynolds was sentenced to 130 months for his role in the $3.7 billion scheme, which consisted of allowing Petters to wire funds through Reynolds' business - a total of $12 billion over six years - in return for a percentage of the laundered funds.  While Reynolds appealed this sentence, the Eighth Circuit Court of Appeals on Friday, June 24, 2011 affirmed Reynolds' sentence, agreeing that "Reynolds' involvement in Petters's scheme warranted severe punishment."

Reynolds, 68, owned Nationwide International Resources, a wholesaler that sold shoes and clothing to retail outlets.  Petters scheme involved the purported purchase of consumer electronics at wholesale prices and subsequent sale to large retailers at a substantial markup.  Petters enlisted the help of individuals including Reynolds to create the appearance that large sums of money were being paid to vendors for these purported goods.  Instead, Petters was doing nothing more than running an elaborate Ponzi scheme, and individuals such as Reynolds received compensation for their assistance.  From 2002 until September 2008, Reynolds received $9.9 million for his role in the scheme.  

Petters was sentenced to 50 years in prison in April 2010, following a jury trial in which the Minnesota businessman was convicted by a jury of numerous counts including wire fraud and money laundering. The sentence, which was the longest financial-related sentence in Minnesota history, would later be eclipsed by the 150-year sentence handed down to Bernard Madoff.  

The Department of Justice has established a webpage devoted to the criminal prosecutions against Petters and his associates here.