Court Reverses $564 Million Jury Verdict Against BMO In Tom Petters Case

United States Court of Appeals Overturns Jury Decision

The Eighth Circuit found there was insufficient evidence of wrongdoing by BMO in connection with the Ponzi scheme orchestrated by Tom Petters

The Eighth Circuit Court of Appeals reversed a $564 million jury verdict against BMO Harris Bank, dismissing claims of fraud and negligence related to the massive Ponzi scheme orchestrated by Minnesota businessman Tom Petters

The unanimous decision issued by a three-judge panel found insufficient evidence of wrongdoing by BMO in connection with the scheme, which bilked investors out of more than $3 billion. The complaint filed by the court-appointed receiver in the Petters bankruptcy alleged that BMO knowingly participated in the fraud by providing banking services to Petters and his companies.

The alleged services included financing fraudulent loans to Petters's sham companies, helping to process payments from his shell companies, and allowing Petters to loot millions from his investment funds. However, the Eighth Circuit found that the evidence presented at trial did not support these allegations.

The panel noted that BMO had no knowledge of Petters's fraudulent activities and was not involved in the day-to-day operations of the scheme. The court also found that BMO's banking services were not essential to the success of the fraud and that the bank did not profit from the scheme.

The decision is a significant victory for BMO and other banks that have faced lawsuits related to the Petters scheme. The ruling could make it more difficult for plaintiffs to bring successful fraud claims against banks in similar cases.

The Petters case is one of the largest Ponzi schemes ever perpetrated. Petters was convicted of orchestrating the scheme and sentenced to a 50-year prison term in 2010.