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Fourth Petters Defendant may help prosecution

Larry Reynolds, alleged to be Tom Petters' money-laundering connection in Las Vegas and California, seems to be on track for a plea bargain in what authorities have described as a $3 billion investment fraud scheme, the Star Tribune reported.

Two weeks ago, federal prosecutors charged Reynolds and Petters with money laundering and obstruction of justice, and mail and wire fraud. On Thursday, though, they recharged Reynolds in a "felony information" with a single count of money-laundering conspiracy.

Typically, this would mean a plea bargain will follow. Three other defendants in the alleged fraud scheme were charged that way before they all pleaded guilty and agreed to cooperate with the authorities.

The maximum statutory penalty for money-laundering conspiracy is 20 years in prison, but Reynolds might be able to get a cut in that time if he helps prosecuters.

Reynolds, 67, lives in Las Vegas and owned and operated Nationwide International Resources (NIR), a California corporation. His laywer, Fred Bruno, said he has no criminal history.

According to government documents, Reynolds assisted Petters convince investors that he was buying and selling large lots of electronic merchandise with their funding, when in reality there was no such merchandise.

Records show about $12 billion in investor funds were routed from 2002 until last month, through NIR accounts and redirected to Petters Co. Inc., a financing entity owned by Petters.