In a Florida bankruptcy court settlement claim, General Electric Company agreed to pay $49 million for allegations that the company was complicit in a $3.65 billion Ponzi scheme. The original amount being sought by the plaintiffs was $651 million.
The suit was filed in 2012 when Florida hedge funds Palm Beach Finance, LP and Palm Beach Finance II, LP accused General Electric of having knowledge about the 2009 Ponzi scheme involving Thomas Petters. Petters was convicted of multiple counts of fraud and obtaining billions of dollars from multiple victims of this large-scale fraud scheme. Petters received 50 years in federal prison for his actions.
Palm Beach Finance was one of the investors of Petters Company, Inc., and sought to recover from General Electric, alleging that GE was complicit in Petters’ scheme to defraud investors by having knowledge and doing nothing about it.
Palm Beach Finance's liquidating trustee, Barry Mukamal, filed the suit against GE on behalf of Palm Beach Finance.
After the suit was filed, three other companies with similar claims also filed suit against General Electric, but the cases were dismissed, and neither claimant received any settlement.
Before the Palm Beach Finance case could make it to trial, the hedge fund lost two witnesses. A key witness, who was going to testify to General Electric Company's involvement in the Ponzi scheme, died. An expert witness was unable to testify after he took a job with the U.S. State Department as chief economist.
As part of the settlement agreement, GE denied any wrongdoing.
The attorney for Palm Beach Finance credits the settlement with being “aggressive” and holding those responsible for the Ponzi scheme accountable.
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