BMO ordered to pay $563M in Tom Petters fraud
The judgment is believed to be the largest financial penalty ever handed out by a jury in a
"Today's a good day. This is a fantastic outcome," said
Kelley has been trying to recover about
"This money will go to the creditors of the estate and will greatly enhance their recoveries," Kelley said.
BMO said late Tuesday that it will appeal the verdict and penalty. "We are confident we have strong grounds for an appeal," the company said.
When prejudgment interest is added, stretching back to when the case was filed in 2012, BMO could be liable for about
The jury found BMO liable for actions by
Petters is serving a 50-year prison sentence for an elaborate Ponzi scheme that defrauded hundreds of people.
Evidence in the monthlong trial showed that the Petters account repeatedly triggered the bank's internal alarm for money laundering activity over 39 months, but that bankers did not notify regulators.
"If they had reported this to the Feds, I believe the FBI would have investigated and shut Petters' Ponzi scheme down immediately," Kelley said. "If the bank had blown the whistle, they may have stopped this dead in its tracks."
The FBI raided Petters'
In the scheme, Petters convinced investors that he was financing the purchase of consumer electronics that he would then resell to retailers. But he used money from new investors to repay old ones.
The case involving BMO was complicated by the size of the fraud and difficulty of dealing with digital documents and evidence dating back to the mid-1990s. In 2019, a bankruptcy judge sanctioned BMO for destroying e-mails and other data related to M&I's interactions with Petters.
In the trial that began last month before U.S. District Judge
The jury found that BMO was not liable on three of the four counts. But it found the bank liable for "aiding and abetting breach of fiduciary duty."
Kelley said he thought that count would be "most defensible" on appeal.
"When they came back with that verdict, we felt very, very good," he said. "Of course, there are many, many decisions that are made in the course of a trial that the other side can point to, but we feel this a solid verdict."
After being appointed as receiver in the Petters bankruptcy, Kelley placed several of Petters' largest business entities in bankruptcy, including
In
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