Tom Petters’ Latest Attempt To Remove A Judge Is Denied

Tom Petters’ latest bid to revisit his 50-year prison sentence involved removing a judge that he says had a conflict of interest; that same, judge, however, has denied Petters’ motion.

Since receiving his 50-year prison sentence in 2010, former Minnesota businessman Tom Petters has made several attempts to reduce the time he spends in jail—and his latest motion to have the judge removed from his case was swiftly denied.

Petters, who was sentenced for orchestrating a $3.65 billion fraud scheme, had his initial appeals rejected by multiple courts, and the U.S. Supreme Court declined to hear his case.

Petters then began arguing that his sentence should be revisited because his former attorney, Jon Hopeman, never told him about a pretrial offer from prosecutors to cap his punishment at 30 years in exchange for a guilty plea. Petters made a tearful plea for a shorter sentence and admitted guilt last fall, but U.S. District Judge Richard Kyle denied Petters' request in a court order that was at times scathing.

Next, Petters joined forces with what he calls a “jailhouse lawyer,” filing motions in federal court to have Kyle removed from his case, and to alter Kyle's order that denied Petters’ attempt to reduce his sentence. (Petters also asked to be released on bail.)

Petters argued that, because Kyle's son is a shareholder at Minneapolis law firm Fredrikson & Byron, Kyle had a conflict of interest and should be removed from the case. Petters detailed in legal documents how Fredrikson & Byron previously represented Petters and his companies, and how bankruptcy trustee Doug Kelley went after the firm in a so-called “clawback” lawsuit.

While Kelley didn't uncover evidence suggesting that Fredrikson had “actual knowledge” of Petters’ fraud, the trustee suggested that there were “a number of red flags” that should have alerted Fredrikson to the possibility of fraud. Fredrikson, without admitting to any wrongdoing, settled the clawback suit for $13.5 million.

Petters' filing stated that a judge should disqualify himself if he has a close relationship to a party that could be “substantially affected by the outcome of the proceeding,” and Petters argued that Kyle's son, in his role at Fredrikson, was affected by the outcome of the clawback settlement. Petters also argued that the indictment used to convict him was flawed because it was not signed by the necessary parties.

Kyle ruled against those arguments in February, saying that Petters’ argument about Kyle’s son is “frivolous and does not merit extended discussion.” He went on to say that “there is no suggestion that my son, who practices in the area of criminal defense, is involved in [Petters’] current post-conviction proceedings, was involved in his defense at trial, or provided legal advice to him or his companies.”

Petters followed up with another filing on Monday, citing a rule that allows a district court “to rectify its own mistakes immediately following the entry of judgment.” He said that Kyle’s son’s role at Fredrikson associated him to the clawback settlement, and Kyle should therefore remove himself from the case.

But just one day later, Kyle rejected Petters’ motion in a one-page order.

David Valentini, a Minneapolis criminal defense attorney who was not involved in the Petters case, told the Star Tribune that Petters “had a lot of good lawyers” representing him earlier in the case and that it was probably “a no-brainer” for Kyle to reject the most recent filings.