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Even as the Doors Were Being Busted Down, Tom Petters Was Sure Everything Would Be Fine

Posted on by Caleb Newquist

PettersSmile.jpgThe trial of Cocker Spaniel/Ponzi boy Tom Petters is moving along as more and more witnesses are giving testimony that pretty much solidifies Petters’ statement that his business was “one big fucking fraud”.
Testimony on Tuesday (there were no proceedings yesterday due to the holiday) included that of James Wehmhoff, an accountant for Petters Company Inc. (“PCI”).
Wehmhoff said that Petters and Robert White — Petters’ CFO — were taking money out of a subsidiary for personal use. In addition, he also testified that Petters was panicking about an audit and was desperate to stonewall them:

In an email Petters sent to Wehmhoff and other insiders, Petters allegedly wrote, “We need to send the auditors something every day no matter what and keep them from coming to Minnesota. We must pacify them.”

Yet when the Feds were raiding his businesses last September Petters thought everything was hunky-dory, allegedly telling one investor, ‘everything would be fine’. This despite Petters’ fear of getting clipped and, you know, having to explain just where the hell $3.5 billion went.
We’ll keep you updated until they find this guy guilty.
Accountant Testifies Petters Panicked Over Audit [KSTP]
Accountant: Petters execs misused investor cash [Minneapolis Star-Tribune]
Earlier: Ernst & Young and McGladrey & Pullen Both Have a Petters Problem

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The Latest Homebuyer Tax Credit Scam: Now with HUD!

That the First-time Homebuyers Credit is riddled with fraud is old news. Like all refundable credits, where the government writes you a check if the credit exceeds the tax shown on your return, it’s a magnet for grifters. What’s new is cross-agency efforts enable First-Time Homebuyer Credit fraud, with video.

James O’Keefe, notorious for donning pimpwear and taping ACORN officials happily facilitating tax fraud and child prostitution, and then for getting arrested in Louisiana, took his act to Detroit and Chicago offices of the U.S. Department of Housing and Urban Development posing as a tax credit scammer. One conversation went like this:

The law says that the tax credit maxes out at $8,000 for an $80,000 home. On the tape, O’Keefe asked a staffer, “What if I bought a place for $50,000, but the seller and I agreed to write down $80,000 as the purchase price?”

“Flip it any way you want,” the staffer replied.

What if the place is worth much less — like only $6,000?

“Yup, you can do that.”

This version of the Homebuyer Credit scam can get around the checks the IRS has in place to prevent fraud. The primary IRS anti-fraud check for the homebuyer credit is a requirement that a copy of an HUD-1 form or settlement statement be attached to the 1040 claiming the credit. If the buyer and seller collude to dummy up a HUD-1 form, the “buyer” is reasonably likely to get the credit as long as there isn’t some other item on the return that flags it – such as an address that’s different from the one for the “home” on the settlement statement.

The scammers wouldn’t be out of the woods by any means. The IRS might well catch up with the scammers. But then again, they might not, or if they did, the money could be long gone. For someone living in in a Detroit neighborhood where houses sell for as little as $1,000, splitting $8,000 with a scammer might be one of the less-risky opportunities at hand.

Tony Little, Gazelle™ and Ponytail Enthusiast, Duped by Former Accountant (Allegedly!)

Mark Schreiber, a former controller of fitness guru Tony Little’s business empire, has been accused of embezzling nearly $600k by forging Little’s signature. Apparently Schreiber was involved in some “online horse wagering” which must not have gone too well since he ended up…stealing money (allegedly).

According to T. Little’s lawyer, Latour “L.T.” Lafferty, the $600k is pocket change to his client but he’ll be damned if they aren’t going to pursue every means necessary to get every cent back:

“We’re certainly going to pursue any legal avenues to recover every cent that was taken from Mr. Little,” said his attorney, Latour “L.T.” Lafferty. “It doesn’t impact the financial well-being of Mr. Little. But certainly it’s a significant blow and a serious breach of Mr. Schreiber’s place as controller of his business operations.”

Since TL is a man of health and fitness and not of numbers, it’s not surprising that he’s found himself in this conundrum but he did have his suspicions:

Little realized something was amiss last year, according to court records, when he moved to fire Schreiber as a controller overseeing his Pinellas Park companies’ finances. He was dissatisfied with Schreiber, records show. He set up a July 27, 2010, meeting.

But before they could meet, Schreiber sent an e-mail: “I quit.”

After Little’s new accountant had been poking around for awhile, it was pretty obvious things weren’t kosher. They called in a forensic expert who discovered that 152 checks were drawn over 11 months to the sum of $583,379.

Right now the “degenerate gambler” motive seems to be the most plausible scenario, although it’s entirely possible that Mr Schreiber was sick with jealousy over the sexual tension between Little and his infomercial leading lady, Darla Haun. We’ve presented some footage that will likely be introduced into evidence during Schreiber’s trial: