Bank of Montreal is sued over Tom Petters' Ponzi scheme

Thu Sep 18, 2014 6:58pm EDT
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* Lawsuit by bankruptcy trustee for Petters creditors

* BMO unit said to know of Petters' fraud, do nothing

* Lawsuit seeks $23.6 billion based on account transfers

By Jonathan Stempel

Sept 18 (Reuters) - Bank of Montreal was sued on Thursday by a trustee liquidating two Florida funds that claimed to have lost money in a Ponzi scheme operated by Minnesota businessman Thomas Petters.

The lawsuit seeks to recoup $23.6 billion, more than six times the estimated $3.65 billion size of Petters' fraud, based on sums transferred by Petters over five years to an account at Marshall & Ilsley Bank, which Bank of Montreal now owns.

"There is no merit to these claims and we will defend ourselves vigorously," Carey Allen, a spokeswoman for Bank of Montreal's BMO Harris Bank unit, said in an emailed statement.

The case was brought by Barry Mukamal, a trustee liquidating two funds known as Palm Beach Finance.

These funds filed for bankruptcy protection in November 2009, just over a year after Petters' fraud was uncovered and his businesses were put into receivership.   Continued...