Daily Briefing

CEO of Polaroid owner charged in federal probe

Tom Petters was arrested. Tom Petters was arrested.
October 4, 2008
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The founder of the company that owns Polaroid Corp. was arrested on charges of mail fraud, wire fraud, and money laundering. Tom Petters, 51, who stepped down this week as chief executive of Petters Group Worldwide amid a federal investigation, was scheduled to appear in federal court in Minneapolis, US Attorney Frank Magill's spokesman, David Anderson, said. The investigation centers on claims that officials at one of Petters's units allegedly used fake documents to entice at least 20 hedge funds, including Interlachen Harriet Investments, to invest in phony deals, the FBI said in court papers. Petters, who founded the company, had been running a fraudulent investment operation since the mid-1990s, siphoning off money for business ventures and to support an extravagant lifestyle, according to an affidavit by FBI agent Timothy Bisswurm. This week, federal officials charged Robert Dean White, a former Petters executive, with fraud and money laundering. Polaroid, based in Waltham, declared bankruptcy in October 2001, and was sold for $237.7 million in August 2002 to a group led by One Equity Partners, a Chicago investment firm. In 2005, Petters bought the former Fortune 500 company for $426 million. (Globe staff and wire reports)

Treasury hires State Street to run securities program
The US Treasury hired State Street Bank and Trust Co. and Barclays Bank PLC to manage its mortgage-backed securities purchase program that was disclosed last month. The firms got two-year contracts that can be extended for up to three years. They will receive fees of 3 basis points for the first $5 billion in assets under management, 2 basis points on the next $5 billion, and then 1 basis point above $10 billion. (Bloomberg)

GM to close Ohio SUV plant before Christmas
General Motors Corp. said it will shut down its SUV assembly plant in Moraine, Ohio, on Dec. 23 as the company shifts focus to smaller vehicles. GM spokesman Chris Lee said employees were informed of the closing date. Some 1,100 workers are affected. GM this year disclosed plans to close the Moraine plant and three others by the summer of 2010, then accelerated shutdown plans as part of companywide cost-cutting moves. (AP)

AIG plans to sell some assets to pay off debt
Insurer American International Group said it plans to sell a number of business units to pay off its massive government loan. The plans, expected by Wall Street, drove up AIG's shares 3.8 percent to $3.85. But it now leaves investors wondering how much AIG will be able to raise from the sales. On the brink of failure last month, AIG was bailed out when the government offered it an $85 billion loan during the ongoing credit crisis. In return for the loan, the government received warrants to purchase up to 79.9 percent of AIG. (AP)

Apple stock wobbles false report of Jobs illness
A false Internet report that Apple Inc.'s Steve Jobs had suffered a heart attack briefly slammed his company's stock and raised fresh questions about the delicate relationship between traditional and new media. The posting on - a citizen journalist site owned by Time Warner Inc.'s CNN - is the most recent incident in which a faulty online report created brief, but wrenching, confusion among investors. Apple quickly denied the report about its chief executive, but not before its stock dropped more than 2 percent, hitting a 17-month low of $94.65. It later recovered, climbing as much as 4 percent, before closing at $97.07, down 3 percent. (Reuters)

Dutch government buys all domestic Fortis operations
The Dutch government said it will buy all operations of Fortis NV in the Netherlands for $23.2 billion as the troubled bank teetered on the edge of insolvency. The government had participated in a three-way bailout plan for Fortis made public last Sunday that also involved the governments of Belgium and Luxembourg, where Fortis also has operations. Dutch Finance Minister Wouter Bos said the move to full nationalization of Fortis's Dutch businesses was needed to prevent "the danger of infection" as Fortis appeared to be on the brink of failing this week. (AP)

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