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Petters Arrested

Minnetonka, Minn. — Tom Petters, founder and CEO of the Petters Group Worldwide, was arrested on Oct. 3.

He has yet to be indicted or arraigned and is due for a bail hearing on Tuesday, according to published reports.

Tom Petters and his holding company, The Petters Group Worldwide, is under investigation by the federal government for a far-reaching scheme designed to defraud investors.

According to reports published in the Minnesota Star Tribune, the government is investigating whether 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.

Tom Petters resigned from the company on Sept. 29.

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.

“Polaroid is an independent operating company. We are working closely with our retail partners, and we continue to build and ship product,” said Cheryl Mau, Polaroid marketing VP. Polaroid intends to exhibit at International CES next year and introduce new products, Mau added.

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 allegedly said he would have to flee the country if his activities were unearthed.

On Sept. 24, federal investigators searched Petters’ headquarters and the home of its CEO. Already, Robert Dean White, a former Petters employee, has been charged in federal court with mail fraud and illegal monetary transactions.

The company has been sued by Minneapolis hedge fund, alleging it was defrauded $60 million. Several other hedge funds have reportedly invested in Petters as well.