February 24, 2009 5:56 PM
Don't Forget About Petters. He's Making Minnesota Firms Millions
Posted by Zach Lowe
Ah, for the days of October 2008 when $2 billion constituted an (allegedly) huge Ponzi scheme. Then came Marc Drieir, and then Bernard Madoff, and now the world has moved on from the story of Tom Petters, a Minnesota-based corporate magnate whose parent company, the Petters Group, controlled Polaroid and Sun Country Airlines, among other companies.
Nearly a dozen Petters entities have filed for bankruptcy since October, when federal authorities charged Petters with money laundering, wire fraud, and mail fraud in connection with an alleged Ponzi scheme that may have cost investors north of $2 billion, according to this Bloomberg round-up and this New York Post story.
Now nearly 20 law firms, all with some Minnesota ties, are reaping the benefits of the civil and criminal cases linked to the Petters empire, according to court records and this nice wrap-up in the Minneapolis Star-Tribune. And now prosecutors have asked for a delay in paying those firms the millions they've billed, court records show.
On Monday, the receiver for Petters' estate (Douglas Kelley, name partner of Kelley & Wolter in Minneapolis) asked a federal judge to approve $1.6 million in payments to 17 law firms doing work on various Petters matters. Kelley's firm was on top of the list, with a request for $368,428, court records show. Lindquist & Vennum, the firm representing Petters' company in bankruptcy court (and the firm which negotiated the sale of Polaroid to a new buyer last month) billed $312,038 for work done in December and January. (The same group of firms submitted a prior bill in mid-December for $1 million, the Star-Tribune reports).
The case highlights the sheer amount of work there is for lawyers in (alleged) massive frauds. About a half-dozen of the firms billed less than $10,000, mostly for work representing ex-Petters employees in depositions or interviews with authorities; Husch Blackwell Sanders billed just $914 for the period in question, records show.
But a federal judge delayed the latest round of payments after prosecutors raised questions over the insurance policy Petters' estate was using to pay the firms, the Star-Tribune says.
Kelley told the judge he's "trying to keep the fees down," the paper reports. "Those fees in a major fraud investigation are not outrageous."
Kelley did not return a call from The Am Law Daily.Make a comment