Tom Petters, the infamous Minnesota businessman who was the mastermind behind the largest financial fraud in state history, is in the news again after a surprise ruling by the Minnesota Supreme Court on an unrelated case. In February 2015, the Court ruled that simply associating with a business venture that ends up being a fraudulent enterprise does not necessarily mean that profits must be returned. The recovery of more than $1 billion from lenders who profited from business ventures with Petters could be in jeopardy following this ruling.
Steve Mertz, a FaegreBD partner with 25 years of experience in the areas of bankruptcy, business reorganization and commercial finance, expressed a degree of pessimism in a Star Tribune interview for Doug Kelley’s efforts to recover funds lost when he was a bankruptcy trustee for the Petters corporate entity.
“Doug Kelley had a relatively clear path to recover what he calls false profits. With the Minnesota decision, that path is no longer clear,” said Mertz.