In a move that could limit financial recoveries in the Tom Petters Ponzi scheme, the Minnesota Senate on Thursday approved legislation to protect nonprofit organizations from legal attempts to recover or "claw back" donations that stem from illegal activities.
Sen. Benjamin Kruse, R-Brooklyn Park, said the bill attempts to "strike a balance" between the victims on both sides of a crime like the $3.65 billion fraud operated under the watch of Petters, who now is in prison for his crimes. The bill could relieve strapped nonprofits from having to repay an estimated $200 million in clawback payments.
But the legislation could have notable impact on collection efforts in the Petters bankruptcy case, where trustee Doug Kelley is attempting to recover so-called false profits and other proceeds from investors and those who received donations from Petters.
Kelley, who has filed clawback lawsuits against several nonprofits, said he may lose the ability to collect more than $200 million because the new legislation establishes a two-year statute of limitations on fraudulent financial transfers.
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I'm not sure what effect this bill will have on non-profits and ministries such as Minnesota Teen Challenge that received fraudulent transfers from Frank Vennes entities. When I find out, I'll update this developing story.