Posted May 31, 2012 06:01 pm CDT
A well-known Minnesota law firm has agreed to pay a $13.5 million legal fees clawback to the bankruptcy estate of a longtime client convicted of operating a $3.65 billion Ponzi scheme.
Bankruptcy trustee Doug Kelley acknowledged there was no evidence that Fredrikson & Byron knew anything was wrong concerning former client Tom Petters but stated “there were a number of red flags that should have alerted F&B to the possibility that the business allegedly conducted by Petters was fraudulent,’ the Star Tribune reports.
The firm noted that the settlement will be covered by malpractice insurance, and said it shows that “our representation of Mr. Petters and his companies was, in every respect, honest, ethical and consistent with our professional duties and responsibility.”
Both sides said they settled to avoid the expense of protracted litigation.
ABAJournal.com: “Hedge Fund Suit Accuses Minneapolis Law Firm of Aiding Criminal Enterprise”
The Blotter (City Pages): “Tom Petters, convicted Ponzi schemer, teaches fellow inmates business classes”