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Getting Petters Ponzi scheme gains going global

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Efforts to recover funds lost in the biggest financial fraud case in Minnesota history are moving to international targets in at least 26 countries.

The Star Tribune reports that the bankruptcy estate of Tom Petters is set to initiate a global offensive to collect assets linked to Petters’ $3.65 billion Ponzi scheme, which was busted by federal authorities in 2008. The newspaper said that Petters’ court-appointed trustee Doug Kelley asserts that more than $100 million is at stake in the international arena.

The global effort could be expensive and time-consuming, as attorneys who specialize in asset recovery attempt to trace funds that were paid to investors more than five years ago. Kelley has retained law firms in Ireland, Germany, Switzerland, the Netherlands, Luxembourg, Bermuda, British Virgin Islands and the Cayman Islands. The law on clawbacks varies by country.

In April, TwinCitiesBusiness reported that Kelley had sought a judge’s permission to clawback claims in foreign countries, from Australia to the Bahamas to Belgium. Kelley is working to collect “false profits” that parties may have received to be turned over to victims and has filed hundreds of clawback lawsuits against a wide variety of U.S. defendants.

The estate has recovered about $110 million, net of professional fees, to eventually be distributed as pennies on the dollar to creditors of the Petters corporate estate and victims of the Ponzi scheme. Separately, about $300 million has been recovered in related bankruptcy and receivership cases, for a total of $410 million.

Petters is currently serving a 50-year sentence in federal prison. Last June, a U.S. bankruptcy judge ruled that clawback recovery activities in Petters’ corporate bankruptcy case could date back to 1995, much further than the six-year statute of limitations.

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