Bank of Montreal is sued over Tom Petters' Ponzi scheme

Thu Sep 18, 2014 7:11pm EDT
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By Jonathan Stempel

(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.

Thursday's lawsuit was filed with the U.S. district court in West Palm Beach, Florida, nearly six years after Petters' offices were raided by the FBI in September 2008.

Petters, now 57, was convicted in December 2009 on all 20 criminal counts he faced, including fraud and money laundering, and is serving a 50-year prison term.

Prosecutors accused him of using one of his companies to bilk investors who thought he was using their money to buy consumer electronics for resale to retailers such as Costco Wholesale Corp and BJ's Wholesale Club Inc [BJ.UL].   Continued...

The logo for the Bank of Montreal is seen at its branch Toronto, March 5, 2013. REUTERS/Mark Blinch