Court Approves 3 Petters Clawback Settlements
A U.S. bankruptcy judge on Wednesday approved settlements for three clawback lawsuits that stem from Tom Petters’ $3.65 billion Ponzi scheme, according to court documents filed in U.S. District Court in Minnesota.
Under the terms of three separate settlement agreements, defendants General Electric Capital Corporation, law firm Fredrikson & Byron, PA, and the John T. Petters Foundation will collectively pay nearly $34 million to settle the suits, which were filed by bankruptcy trustee Doug Kelley.
The payments include $19 million from Fairfield, Connecticut-based GE, which was a key lender to Petters and his business interests; $13.5 million from Minneapolis-based Fredrikson, which represented Petters and his companies for roughly 15 years as outside legal counsel; and $1.25 million from the John T. Petters Foundation in Edina, which received donations from Petters and his associates. The settlement agreements were reached last month.
According to court documents filed at the time, Fredrikson did not admit to any wrongdoing and Kelley did not uncover evidence suggesting that any Fredrikson employee had “actual knowledge” of Petters’ fraud, but he believes that there were “a number of red flags that should have alerted Fredrikson & Byron to the possibility that the business allegedly conducted by Petters was fraudulent.”
Fredrikson employs about 500 people and had 230 licensed Minnesota attorneys as of April 30, making it one of the state’s three-largest law firms. The firm said last month that the settlement is funded by its insurance company and “has no impact on the financial standing of the firm.”
Meanwhile, GE also previously denied “any and all liability” and said that it extended credit to Petters and received repayment “in good faith,” according to court documents.
Kelley has filed more than 200 clawback suits in an attempt to recover so-called “false profits” from investors and others who benefitted from Petters’ fraud scheme.
Petters was convicted in 2009 of 20 counts of fraud, conspiracy, and money laundering, and he received a 50-year prison sentence in 2010. Petters’ attorney in April petitioned the U.S. Supreme Court to review his conviction, but the court denied that request last month.