In his capacity as the court-appointed bankruptcy trustee for matters arising out of the Tom Petters Ponzi scheme, Douglas Kelley of Kelley Wolter & Scott, P.A. was instrumental in helping secure the largest jury verdict in Minnesota history against BMO Financial Group, who must pay $563.7 million plus interest.
Kelley sought to recover monies lost in the Petters Ponzi scheme for the benefit of victims and creditors of the fraud. Represented by lead counsel Michael Collyard of Robins Kaplan LLP and Joseph Anthony of Anthony Ostlund Louwagie Dressen & Boylan P.A. Kelley sued M&I Bank, which was acquired by BMO Harris Bank, a subsidiary of BMO Financial Holdings.
The lawsuit alleged that BMO aided and abetted breaches of fiduciary duty by Petters and others who used M&I checking accounts to launder billions of dollars from 2002 to 2008. Following a four-week trial, during which Kelley testified, the jury awarded $484.2 million in compensatory damages and $79.5 million in punitive damages against BMO.
“We are very pleased with this verdict. We are eager to get these funds to those creditors and investors who were victims of Tom Petters’ fraud,” said Kelley.
At trial, evidence was presented showing the bank repeatedly ignored money-laundering alarms triggered by Petters’ misconduct and failed to report alarms to federal regulators. In a statement to the Star Tribune, Kelley stated that had this activity been properly and timely reported to federal authorities at the time, Petters’ illegal activities would have been stopped.
Kelley is also seeking prejudgment interest relating back to 2012, when he filed suit. With prejudgment interest, BMO’s total liability may reach nearly $1 billion.
In 2008, Kelley was appointed as bankruptcy trustee of the assets of Petters and other defendants involved in the nation’s largest and most complex Ponzi scheme. As trustee, and to protect the interests of innocent employees and creditors, he took control of Petters’ and other defendants’ assets and property and placed several of business entities owned by Petters and others into bankruptcy, including Sun Country Airlines and Polaroid Corporation. He undertook numerous other activities, including managing real estate, liquidating property, paying employees, initiating claw-back litigation and entering into settlement agreements.
As of November 2022, Kelley, who serves as both a court-appointed receiver and bankruptcy trustee in Petters-related matters, the United States and related bankruptcy trustees have already distributed $738 million to victims and creditors.