Teen Challenge board suckered into Petter's scam!

Comment: One of the first responsibilities of a board is to act in a fiduciary capacity. This board foolishly risked their non-profit's funds for 24% interest on a 90 day loan. Rule # 1: "If it's too good to be true ... it's true good to be true!" Boy they walked right into that didn't they!

Rich returns give way to panic and fear


One small Twin Cities nonprofit say it earned as much as 24 percent on 90-day loans that Petters Co. Inc. said were used to buy and resell electronics goods.

Then last week, federal authorities raided Petters' company, his home and several other locations. In court documents, the government describes a scheme that may have bilked investors out of as much as $2 billion. On Tuesday, the government charged one of the people identified as a participant in the scheme.

Two of the investors named in court papers, the Fidelis Foundation and Minnesota Teen Challenge, say they first noticed signs of trouble late last year, when Petters Co. asked to extend their loans to as long as six months. Now they are worried that they may not get any of their money back, a potentially devastating blow for the organizations.

Fidelis Foundation of Minneapolis holds $27.6 million in Petters Co. notes that may ultimately be worthless. Among them are five notes for $5.7 million to Teen Challenge, a nonprofit program that Petters personally supported.

"We are overwhelmed, shocked and saddened," said Joe Smith, president of Fidelis.

Fidelis is a public charity that also serves as an investment agent for other public charities and nonprofits, including Teen Challenge.

Minnesota Teen Challenge


  1. 24% in 90 days? That's amazing! By the way, remember yesterday when I asked if you were going to buy Wachovia shares today? Well, you could have had returns of 80% if you had...........By the way, I very rarely talk about individual stocks. One of the reasons being that it can lead to jealousy, resentment, envy, and major frustration. It can also sound gauche and preening if you want to rub it in that you scored well. That is a major, major turnoff......But with that said, these can be interesting times if you play it right. I'd hate to be the guy who had Wachovia stocks last year at $45 and all of a sudden have them worth a buck fifty, but if you are willing to be aggressive, you can come out ahead sometimes in some of these wild deals........By the way, I have no clue what Wachovia will do in the next few days.......Anyway, back to the post. Usually, but not always, 24% in 90 days is too good to be true.

  2. You asked about Wachovia shares.

    I have a very conservative investing strategy that would preclude an investment like that.

    I know of a guy who bought WaMu shares when they were close to $ 2. His hope was that WaMu would be a merger target and that he would reap a financial gain when the stock went up. But WaMu failed and as I understand it, the stock is worthless.

    For me, I buy EFTs. The DIA is my favorite. It trades at 1/100 of of the Dow Jones Industrial average. At my age, I need to be very conservative.

    You may want to check out prosper.com. I have some invested there.

  3. There's nothing wrong with being conservative. It's usually the best way to go, in my opinion.

    I've heard of this Prosper place, but I thought it was a scam like Amway or the "please wire your bank account to me in Nigeria and I'll double your money" (I still can't believe people have been that ignorant) routine. Are you saying it's for real?

  4. Yet another case of those who should know better being taken...I wonder what the statistics are; is it more, or less, likely for ministries to fall into this?

    One thing that comes to mind for me is that many may be setting the stage for being taken with some of the gimmicks even EFCA members use to get money. You know; "we have a wealthy donor who will match all contributions" and that kind of manipulation. It's no surprise that when you do this, you set the stage for people being willing to believe anything.

  5. 2 Things:

    1.) Yes prosper.com is for real and it is really cool. Without going into my own personal details, I can say I have invested more than $ 1,000 in Prosper. The lender chooses his / her own risk tolerance. For me I: a.) diversify. My loans are in $ 50 chunks; b.) am conservative ... I invest in AA an A loans.

    If you are interested in trying prosper, email me at jrpeet [at] gmail [dot] com and I will send you a referral. There is a referral bonus of $ 25 if you sign up, and fund a loan. Plus I get $ 25 too. If you sign up, you can look around all you want (on the site) without making any commitment to borrow or to loan.

    2.) Matching gifts. I don't like what I sometimes here at Christian fundraisers. It goes like this ... so and so (very rich guy) has committed $ thousands if so many people match that amount. So why not just give. What makes that rich guy so important that he gives "conditionally". Oh well my rant for the day.

  6. To Bert,

    About ministries that fall for a scam reported in this post. I haven't heard of many of them.

    I serve on a small Christian non-profit. We are very conservative. We have monies saved for a future maternity home and it is invested in a FDIC insured bank.


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