Friday, October 03, 2008

Petters Group investigated, adds drama to CE biz

It's not every day that you see allegations of outright fraud in the CE business. Thank Minnesota-based Petters Group for livening up our day on the CE beat.

According to reports published in the Minnesota Star Tribune, the government is investigating whether CEO Tom Petters and his associated companies raised funds from investors for the purchase and resale of consumer electronics that didn't exist, then used the money for other purposes.
Petters markets a number of CE devices under the Polaroid-brand license. In 2005, Petters bought the Polaroid brand from the holding company created in the wake of the original Polaroid’s bankruptcy.
According to an
affidavit unsealed in court, Petters is said to have created sham companies to show investors that money was being used to manufacture and sell goods through retailers such as Sam’s Club. An informant planted recording devices in Petters’ Minnesota headquarters. In those recordings, Petters was claimed to say he would have to flee the country if his activities were unearthed.

How exciting! Doubtless more details will follow. I don't think the CE biz has had a really big fraud scandal since the Crazy Eddie story in the 1980's, but maybe one of my readers with a better memory can enlighten us.

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