Judgment of BMO's $564M Ponzi scheme verdict overturned by an appeals court
In a significant ruling, a federal appeals court has overturned a $564 million jury verdict against BMO Harris Bank, which was originally held liable for aiding and abetting a massive Ponzi scheme orchestrated by Tom Petters.
Back in 2009, Petters was convicted and sentenced to 50 years in prison for conspiracy, wire, and mail fraud. The Ponzi scheme, estimated to be worth $3.7 billion, involved numerous victims and left a trail of financial destruction.
BMO Harris Bank, however, has now found some relief. The bank plans to reverse a C$1.19 billion provision related to the case, following the court's decision. The bank is "very pleased" with the court's ruling, according to a statement.
The court's decision hinges on the idea that the debtor's misconduct is imputed to the trustee because they act as the debtor's representative. In this case, the trustee for Petters Company, Inc., was unable to recover money for creditors due to the firm's involvement in the Ponzi scheme.
This ruling is not without precedent. A similar decision was made in a case involving Bernie Madoff. The recovery will be treated as an adjusting item, with an expected after-tax recovery of C$875 million to be recorded in the fourth quarter.
It is important to note that this ruling does not imply that BMO aided the scheme to a greater extent than Petters Co., the entity that orchestrated the scheme. The bank's actions, or lack thereof, did not rise to a level that would make them more culpable than the primary culprit.
The bankruptcy law does not provide a vehicle for Petters Co. or its trustee to proceed unbound by PCI's own wrongdoing. Despite numerous attempts, the bankruptcy trustee did not return requests for comment by Crain's or Reuters.
The Petters scheme involved laundering money through accounts at Marshall & Ilsley Bank, which BMO acquired in 2011. The details of the overturned verdict are not extensively available in current search results, making it difficult to provide a comprehensive account of the specifics of the overturn.
For those seeking detailed, up-to-date legal specifics surrounding the overturning of the BMO $564 million verdict, it is recommended to consult specialized legal databases or recent court rulings on the matter.
BMO Harris Bank's plan to reverse a C$1.19 billion provision is linked to the court's decision that overturned a $564 million jury verdict against them. The bank is involved in finance and business, and the recovery will be treated as an adjusting item in their business accounts, with an expected after-tax recovery of C$875 million to be recorded in the fourth quarter.
