A Bermuda investment management company is being sued by a class-action lawsuit over money lost in relation to an alleged $3 billion Ponzi scheme.

Bermuda-incorporated Blue Point Management Ltd. is one of the defendants in a case brought by shareholders of ArrowHead, an entity managed by Blue Point.

The plaintiffs accuse Blue Point, its principal James Fry, and ArrowHead of handing over money to Minnesota businessman Tom Petters, who faces charges of running an elaborate Ponzi scheme involving the allegedly fictitious trading of electronic goods.

The complaint, filed in the United States District Court of Minnesota, alleges that Mr. Fry took $24 million in fees, while he "literally handed over hundreds of millions of dollars to Petters with no investigation or supervision whatsoever". The plaintiffs' investments are now "entirely worthless", the complaint adds.

Also sued is Metro II LLC, a subsidiary of ArrowHead, and PricewaterhouseCoopers, auditors.

Mr. Fry, through his companies, promised "advantageous rates of return through investments in short-term secured notes", though in practice he just handed it over to Petters, according to the complaint.

"For the years 2003-2006, Blue Point and Fry earned approximately $13 million in management fees and over $11 million in incentive fees," the complaint states.

Plaintiffs are the Tradex Global Master Fund and ABL Segregated Portfolio, on behalf of themselves and others similarly situated.

After a federal investigation last fall, Petters was accused of orchestrating a massive Ponzi scheme involving $3 billion in investments involving the "completely fictitious" sale of high-end electronics.

Mr. Fry managed the ArrowHead fund and the Bermuda-based Blue Point Capital Management. PricewaterhouseCoopers, ArrowHead's auditor, failed to detect anything awry, the class claims, adding that "any reasonable and minimal investigation ... would have uncovered this thinly veiled fraud."

Blue Point was incorporated in Bermuda in April 1999.