Defendant charged after investigation by Commerce Fraud Bureau busts investment fraud

Thursday, November 20, 2014

An Edina man has been charged by the Hennepin County Attorney’s Office with swindling 13 Minnesotans out of more than $430,000, following an investigation by the Minnesota Department of Commerce Fraud Bureau.

Jeffrey Alan Petersen, 56, was charged on Tuesday with 12 counts of securities fraud, six counts of theft by swindle over $35,000 and four counts of theft by swindle over $5,000. He swindled his victims after the Commerce Department had revoked his securities and insurance licenses.

“There is no place for investment fraud in Minnesota,” said Commerce Commissioner Mike Rothman. “Our investigators work hard every day to stop fraud against Minnesotans. We will not tolerate these crimes that can all too often lead to financial ruin.”

“We were pleased to work with the Commerce Department in bringing substantial criminal charges against Mr. Petersen,” Hennepin County Attorney Mike Freeman said. “The fact that he already lost his licenses once is strong evidence that he knew what he was doing was illegal and the fraud hurt hard-working Minnesotans. If we convict him of the charges, we will seek a prison sentence.”

Petersen used advertisements he placed on Craigslist to obtain investors, promising them that he would trade their money in stock options and make them profits. Petersen said he had developed a strategy where he only did low-risk trades and that he had a long history of successful options trading, according to the criminal complaint. In fact, the records showed Petersen had no history of trading success and investigators were unable to identify any client for whom Defendant made money.

He also failed to tell his investors that his securities and insurance licenses had been revoked and that he was subject to two Commerce Department cease and desist orders prohibiting him from engaging in unlicensed investment activity, the complaint states.

In September 2013, an agent for the Commerce Department’s Fraud Bureau answered one of Petersen’s Craigslist ads. On October 2, 2013 the undercover agent went to Petersen’s house, where Petersen made more of his claims and showed him a spreadsheet of successful trades. Agents from the Commerce Fraud Bureau subsequently executed a search warrant at Petersen’s home and he was ultimately arrested and booked in the Hennepin County Jail.  Several weeks later, not knowing his potential victim was an undercover agent, Petersen contacted him to see if he still wanted to invest. Peterson and the agent communicated over the next few weeks and on November 15, 2013, Petersen accepted a check for $25,000 from the undercover agent. Peterson was arrested again, according to the criminal complaint.

Petersen used the money he obtained from his victims to make payments on his mortgage and pay his credit card bills, the complaint states.

Report Fraud

If you suspect insurance fraud, contact the Minnesota Department of Commerce. Minnesotans can report insurance fraud anonymously by calling the Commerce Fraud Bureau at 1-888-FRAUDMN (1-888-372-8366).

 

Commerce is here to help

The Minnesota Department of Commerce urges all consumers to use our license lookup tool to make sure the company or individual you are, or will be, working with is licensed in Minnesota. Do not purchase insurance products or securities from any agents, brokers, or companies that are not licensed in our state. 

If you have questions or if you believe you have been a victim of a scam or fraud call our Consumer Services Center at 651-539-1600 or toll-free at 1-800-657-3602 (in Greater Minnesota).