A local nonprofit and a Minnesota college have reportedly been asked to return donations that came from entities controlled by former Wayzata businessman Tom Petters.
According to a Star Tribune report, Doug Kelley, the receiver and trustee in Petters' bankruptcy case, is seeking more than $2.3 million from Minnesota Teen Challenge-a nonprofit counseling and assistance program that operates throughout the state-and $2 million from the College of St. Benedict in St. Joseph.
The clawback lawsuits-filed late last week and early this week, respectively-come right around the time when the Minnesota Legislature approved a bill that would prohibit clawback actions involving charities and religious organizations. The bill now goes to Governor Mark Dayton, who has until midnight Tuesday to act on it.
Contributions and donations given to Minnesota Teen Challenge came from Petters' personal and corporate estates, according to the Star Tribune. Kelley reportedly asserts that they were actually proceeds from Petters' $3.65 billion Ponzi scheme and should be returned to reimburse investors and creditors who lost money when the fraud scheme collapsed in 2008.
The College of St. Benedict, meanwhile, received a series of donations from a Petters-run foundation between 2003 and 2006, according to the Minneapolis newspaper.
Officials for Minnesota Teen Challenge reportedly declined to comment on the litigation, but the College of St. Benedict issued a statement to the Star Tribune, saying that it "accepted and spent the donations in good faith from 2003 to 2006 to further its mission."
The college added: "We are gratified that a bill recently passed by the 2012 Minnesota Legislature and awaiting the governor's signature recognizes the position of nonprofits in such situations. We expect the legislation will resolve the matter outside of this litigation."
The law under consideration would reportedly exempt organizations from returning tainted donations after the expiration of a two-year statute of limitations. Because the legislation would be retroactive, Kelley estimates that it could prohibit him from collecting between $200 million and $450 million in claims involving Minnesota nonprofits, according to the Star Tribune.
Kelley has filed more than 200 lawsuits against former Petters employees, associates, banks, and others who received payments from Petters.
To read more in the Star Tribune about the most recent clawback lawsuits, and the legislation under consideration, click here.