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Investors sue BMO over Petters’ Ponzi scheme

February 2, 2015 GMT

MILWAUKEE (AP) — BMO Financial Group is facing four federal lawsuits filed by investor groups that claim a bank it acquired in 2011 was complicit in a $3.7 billion Ponzi scheme by a Minnesota man.

The lawsuits stem from Marshall & Ilsley Corp.’s dealings with Tom Petters, who is serving a 50-year federal prison sentence in Leavenworth, Kansas, for masterminding the Ponzi scheme. BMO denied any wrongdoing by M&I, the bank it acquired, now known as BMO Harris.

One of the lawsuits, which seeks $24 billion, claimed Petters did not act alone.

“M&I was complicit in the scheme, serving as a critical linchpin ‘legitimizing’ Petters’ plot and facilitating it. M&I had actual knowledge of Petters’ fraud and provided substantial assistance, helping it flourish,” the lawsuit alleges.

The suit alleges that in the aftermath of Petters’ 2008 arrest and subsequent conviction, M&I destroyed evidence, such as emails and reports.


“M&I had a duty to retain these documents, triggered by the anticipated litigation,” the complaint states.

BMO Harris, in court filings, said M&I employees were unaware of the scheme.

“There is no merit to the claims in these lawsuits and we are vigorously defending ourselves in these matters,” BMO spokesman Jim Kappel said in an email to the Journal Sentinel ( ).

Petters, 57, was convicted in 2009 of 20 counts of fraud, conspiracy and money laundering for offering investors high returns on loans to finance purchases of electronics and other goods for sale to retailers such as Costco and Sam’s Club. The merchandise did not exist.


Information from: Milwaukee Journal Sentinel,