MINNEAPOLIS (AP) — The bankruptcy trustee recovering money for victims of the $3.65 billion Ponzi scheme operated by now-imprisoned Minnesota businessman Tom Petters filed a lawsuit Wednesday that accuses a bank of aiding the fraud by ignoring "astronomical" deposits.
The lawsuit filed in federal bankruptcy court accuses M&I Bank of turning a blind eye to $35 billion that flowed in and out of the main bank account used by Petters Company Inc. to launder money for the fraud between 2003 and 2008, when the scheme collapsed.
The bank, based in Milwaukee at the time, was acquired last year by Toronto-based BMO Financial Group and combined with BMO-owned Harris Bank of Chicago to form BMO Harris Bank.
Court-appointed trustee Doug Kelley filed the lawsuit against Chicago-based BMO Harris Bank seeking unspecified damages in excess of $50,000.
The suit calls the deposits into the Petters Company account "astronomical." Kelley alleges that M&I was never given "a valid business reason for such a staggering amount," even though the bank was "well aware of the frenzied activity" in the company's account.
BMO Harris Bank spokesman Jim Kappel said the bank will fight the suit.
"We believe the claims in the suit are completely without merit and we intend to vigorously defend ourselves in this matter," he said.
Petters was convicted in 2009 of fraud, money laundering and conspiracy, and is serving a 50-year prison sentence. He has maintained his innocence, but the U.S. Supreme Court in May declined to review his case.
BMO Harris also faces a lawsuit in Florida filed earlier by a trustee for bankrupt Palm Beach hedge funds that lost more than $1 billion in the Petters scheme.
Information from: Star Tribune, http://www.startribune.com