Clawbacked Fidelis Foundation Has Apparently Moved From Plymouth to Shoreview

According to Charitystat.com the Fidelis Foundation has apparently moved from Plymouth in Hennepin County to Shorview in Ramsey County.  Charitystat.com also has an awesome chart showing the precipitous decline in revenue at Fidelis following the raid on Tom Petters & Frank Vennes' businesses and homes in 2008.

I looked  up Fidelis on the Minnesota Secretary of State website (the MN Attorney General's website still has the Plymouth address). Here's a screenshot from the SoS site:

People sometimes ask me "whatever happened to Vennes attorney & lobbyist Craig Howse? Howse who used to describe his publicity-shy client this way: “The folks that are behind this don’t like drawing a lot of attention to themselves". Of course, we now know why Frank Vennes wanted to hide in the shadows.

Much of Frank's phony generosity (which his defence attorney Jim Volling touted at the Vennes sentence hearing) flowed through the Fidelis Foundation which has the double-dubious distinction of being mentioned in the superseding indictment of Tom Petters and the letter supporting a pardon for Frank Vennes penned by failed presidential candidate Michele Bachmann who was the recipient of boatloads of campaign contributions from Vennes, his family and associates including Craig Howse. Howse's law firm also received a mention in his client's indictment. The office for Fidelis used to be right next door to Howse's firm in Plymouth.

Michele Bachmann lauded the Fidelis Foundation in her pardon request for Frank Vennes Jr.:

Bachmann wrote:

“As a U.S. Representative, I am confident of Mr. Vennes’ successful rehabilitation and that a pardon will be good for the neediest of society. Mr. Vennes is seeking a pardon so that he may be further used to help others. As I know from personal experience, Mr. Vennes has used his business position and success to fund hundreds of nonprofit organizations dedicated to helping the neediest in our society. The Fidelis Foundation, backed by Mr. Vennes, has directed over $10.7 million in total gifts in the last three years, and the Fidelis Foundation has ranked #6, #9 and #7 as the largest grant-making foundation in Minnesota over the past three years.”

The Fidelis Foundation is a Plymouth, Minn.-based nonprofit organization “organized to assist Christians in discerning, clarifying and implementing God’s call and direction in their life,” according to the group’s tax filings. Its chairman is G. Craig Howse, Vennes’ lawyer, and the organization leases office space from Howse for $1,300 a month.

Howse has donated $5,000 to Bachmann’s campaign committee since 2007.

A list of wire communications are presented as evidence in the Petters Ponzi case (see superseding indictment of Tom Petters (PDF)). Among them this mention of a wire transfer of $4,060,000 from the Fidelis Foundation to "PCI's account". PCI is Petters Company Incorporated.



The latest #990 for 2012  still lists Vennes lawyer & lobbyist Craig Howse as chairman.

Here's some old Vennes Info posts about Mr. Howse:

Palm Beach Finance Trustee Settlement With Vennes Attorney Craig Howse

Vennes Lawyer/Lobbyist Craig Howse Continues to Trouble the Waters of Deer Lake

Vennes Lobbyist in 2007: “The folks that are behind this don’t like drawing a lot of attention to themselves"

The late Karl Bremer's Ripple in Stillwater blog has a great deal about the Fidelis Foundation.

Agreement Between PCI Trustee and Palm Beach Trustee Over Michele Bachmann Clawback

The Palm Beach Trustee May 20, 2013 amended motion explains:

On May 18, 2012, the Liquidating Trustee filed with this Court his Motion For Approval of Settlement with Michelle Bachmann, Bachmann for Congress and Bachmann Minnesota Victory Committee and Payment of Contingency Fee [ECF No. 1242] (the “Original 9019 Motion”). Shortly after the Original 9019 Motion was filed, the PCI Trustee (as defined herein) asserted claims against the Bachmann Parties (as defined herein) for the return of the transfers covered by the settlement. The parties have since engaged in further discussions and negotiations which have resulted in a modification of the previously agreed to settlement to include a settlement with, and release by, the PCI Trustee, as set forth below.

The $14,000.00 settlement will be divided between PCI trustee ($8,600.00) and the Palm Beach Trustee ($5,400.00).

Also the Fidelis Foundation has to cough up $425,000.00 to the trustees.

Minnesota Teen Challenge is Changing its Name

MNTC.org:

We’re Changing our Name!

For almost 30 years, our program has been restoring hope to teens and adults struggling with drug and alcohol addiction. This year, we are in the process of officially changing our name to Mn Adult & Teen Challenge to more accurately communicate who we serve...

MNTC claims (audio) it uses God to cure addiction.

A little history from a previous post about MNTC and Frank Vennes:

Minnesota Teen Challenge filed a motion to dismiss the $5,790,606.51 Palm Beach Finance clawback May 10th using  the recently passed statute limiting clawbacks of fraudulent transfers to 2 years instead of 6 years. The retroactive part of the  bill is intended by its sponsors to rescue non-profits from having to cough up the stolen money they received specifically from the Petters Ponzi scheme - Listen:



House_Audio_1384 by spongiforce

Defenders of HF 1384 claim the non-profits rescued by this new statute are unwitting victims of Tom Petters. The analogy they use is Petters, with no criminal record (it was expunged) is like a bank robber dropping his loot into a church's poor box - how were they to know?

When it comes to Minnesota Teen Challenge and other non-profits who received fraudulent transfers of money from Frank Vennes, there's three big problems with that analogy;

1) Frank Vennes was not an anonymous donor to MNTC.

2) He was a board member.

3) It cannot be said that MNTC was unaware that Frank Vennes was a fraudster - he was a convicted money launderer. It is highly unlikely that the MNTC board did not know that Frank Vennes had served time for that crime since he gave one or more lectures (audio here) about it, including one at something called the "God and Money Dinner" with Darrel Amiot who also served on the MNTC board.

This is what Minnesota Teen Challenge Director Rich Scherber said about accepting Vennes funds (2011?) - Note that it only mentions Petters, not Vennes (download PDF here):

Dear Friends of Teen Challenge,

If you have been following the news lately, you may have heard that Petters Companies is under investigation. Those who have walked with Teen Challenge over the years have seen the generosity Tom Petters has shown towards our ministry. Needless to say, we are stunned and saddened by the news we have recently heard. We have been contacted by many of you who are concerned for us and are praying; we are so thankful for your prayers and support.

In an affidavit, Teen Challenge is mentioned as being one of many victims. Our board felt it important to share with you the ministry’s involvement with Petters Companies, and how this situation has affected us.

About seven years ago, one of our major donors recommended that we consider building a strong reserve fund for Teen Challenge – a nest egg –for use in case of emergency or for program expansion. The donor suggested that we work with the Harvest Fund, and later the Fidelis Foundation, organizations that work with many other Christian ministries, and consider investing some of his large charitable gifts in the Petters Companies, a once strong, respected corporate entity in Minnesota.

From the very beginning of our investments, our board of directors adamantly insisted that no other general donor funds ever be transferred into those notes. For seven years this investment bore a healthy return and helped us expand our programming and outreach. In the past year, we have been using the interest on these funds to help underwrite the costs of our statewide programs.

Strong Christian stewardship is one of our embraced values. It is important for you to know that our board is very prudent and careful with all contributions that come into the ministry. We recognize that many of your contributions come at great sacrifice. This situation has caught hundreds of other investors and ministries by surprise and we are in the process of assessing its impact on the ministry.

As always, your prayers and support of our Christian mission are much appreciated.

Sincerely,

Rich Scherber

Executive Director

I contacted MN Teen Challenge. The spokesperson had no comment on the motion to dismiss.

Below is the MNTC letter (click on the letter to make it larger:

This is from a MNTC newsletter:

Palm Beach Finance Trustee Files Motion to Settle With Minnesota Teen Challenge

The motion can be downloaded at this link (PDF).

Some highlights:

Altogether, as set forth in the complaints filed in the Litigation, the Petters Trustee, Petters Receiver and Liquidating Trustee assert that MTC received in the aggregate, approximately $8,247,319.51 in transfers from the Petters Receivership Defendants, the Vennes Parties and PCI. In particular: 

a) During the period beginning on or about April 1998 and ending on or about December 2007, one or more of the Receivership Defendants made transfers totaling $ 1,979,883.00to MTC; 

b) During the period beginning on or about August 2000 and ending on or about September 2005, PCI made transfers totaling $476,830.00 to MTC; 

c) During the period from February 4, 1998 through May 14, 2003, the Vennes Parties made transfers, including transfers made through the Fidelis Foundation, to or for the benefit of MTC in the amount of approximately $2,817,000; and 

d) During the period beginning on or about June 2004 and ending on or about July 2008, the Vennes Parties made transfers totaling $5,790,606.51 to MTC of which (i) approximately $2,689,606.51 of these transfers are asserted by MTC to be unrelated to donations made by the Vennes Parties and (ii) approximately $ 1,451,000.00 of these transfers were made by Mr, Vennes to MTC to refurbish and repair the Hope Commons Building located in Minneapolis, Minnesota, which is partially occupied by Teen Challenge under a tenant-friendly twenty-five year lease.

The settlement terms:

Cash consideration: upon approval of the Settlement, MTC shall pay or cause to be paid $2,051,000.00 ("Settlement Payment" ) in settlement of the Litigation. The Settlement Payment is comprised of two components, $600,000.00 of the Settlement Payment is directed at settling all claims the Petters Receiver and the Petters Trustee have against MTC directly based on transfers to or for the benefit of MTC made by entities for which Mr. Kelley serves as receiver or trustee (the "Direct Claim Amount" ). The remaining $1,451,000,00 is directed at settling all claims the Petters Trustee and the Liquidating Trustee have against MTC resulting from transfers MTC received from either of the Vennes Parties, either directly or through the Fidelis Foundation ("Indirect Claim Amount" ).

...and...

Allocation of the Settlement Payment with respect to the Indirect Claim Amount: The Petters Trustee, on behalf of PCI, will receive 50% ($725,500,00) of the Indirect Claim Amount on account of his settlement of his claims that predate November 30, 2003. In general, these claims are premised on the theory that MTC was a ) 550(a)(2) subsequent transferee of transfers made initially by PCI to one or both of the Vennes Parties. The remaining 50% ($725,500.00) of the Indirect Claim Amount is allocated 50% to the Petters Trustee on behalf of PCI ($362,750.00) and 50% to the Liquidating Trustee ($362,750.00) ("Palm Beach Settlement Payment" ) according to the Allocation Agreement.

MNTC also has to drop its motion to dismiss.

The settlement motion explains that there would be problems in going ahead with the clawback, including the cost of litigation and discovery and the recently passed Minnesota Uniform Fraudulent Transfer Act (MUFTA). And then there is the complication of the trial in October:

Moreover, a significant focus of the litigation will be the Vennes Parties themselves. To that end, the pending criminal case against Mr. Vennes is currently scheduled for trial in the fall of 2012. The possibility exists that discovery from the Vennes Parties may be delayed until the conclusion of that proceeding.

Will we learn more about the business relationship between Frank Vennes and Minnesota Teen Challenge at the trial? Stay tuned.
 

Minnesota Teen Challenge Files Motion to Dismiss PBF Clawback

UPDATE: The lawyers for Barry E. Mukamal,the Liquidating Trustee filed a response to MNTC's motion to dismiss (6/4/12). We will have more about this later.

----------

Minnesota Teen Challenge filed a motion to dismiss the $5,790,606.51 Palm Beach Finance clawback May 10th using  the recently passed statute limiting clawbacks of fraudulent transfers to 2 years instead of 6 years. The retroactive part of the  bill is intended by its sponsors to rescue non-profits from having to cough up the stolen money they received specifically from the Petters Ponzi scheme - Listen:


House_Audio_1384 by spongiforce

Defenders of HF 1384 claim the non-profits rescued by this new statute are unwitting victims of Tom Petters. The analogy they use is Petters, with no criminal record (it was expunged) is like a bank robber dropping his loot into a church's poor box - how were they to know?

When it comes to Minnesota Teen Challenge and other non-profits who received fraudulent transfers of money from Frank Vennes, there's three big problems with that analogy;

1) Frank Vennes was not an anonymous donor to MNTC.

2) He was a board member.

3) It cannot be said that MNTC was unaware that Frank Vennes was a fraudster - he was a convicted money launderer. It is highly unlikely that the MNTC board did not know that Frank Vennes had served time for that crime since he gave one or more lectures (audio here) about it, including one at something called the "God and Money Dinner" with Darrel Amiot who also served on the MNTC board.

This is what Minnesota Teen Challenge Director Rich Scherber said about accepting Vennes funds (2011?) - Note that it only mentions Petters, not Vennes (download PDF here):

Dear Friends of Teen Challenge,

If you have been following the news lately, you may have heard that Petters Companies is under investigation. Those who have walked with Teen Challenge over the years have seen the generosity Tom Petters has shown towards our ministry. Needless to say, we are stunned and saddened by the news we have recently heard. We have been contacted by many of you who are concerned for us and are praying; we are so thankful for your prayers and support.

In an affidavit, Teen Challenge is mentioned as being one of many victims. Our board felt it important to share with you the ministry’s involvement with Petters Companies, and how this situation has affected us.

About seven years ago, one of our major donors recommended that we consider building a strong reserve fund for Teen Challenge – a nest egg –for use in case of emergency or for program expansion. The donor suggested that we work with the Harvest Fund, and later the Fidelis Foundation, organizations that work with many other Christian ministries, and consider investing some of his large charitable gifts in the Petters Companies, a once strong, respected corporate entity in Minnesota.

From the very beginning of our investments, our board of directors adamantly insisted that no other general donor funds ever be transferred into those notes. For seven years this investment bore a healthy return and helped us expand our programming and outreach. In the past year, we have been using the interest on these funds to help underwrite the costs of our statewide programs.

Strong Christian stewardship is one of our embraced values. It is important for you to know that our board is very prudent and careful with all contributions that come into the ministry. We recognize that many of your contributions come at great sacrifice. This situation has caught hundreds of other investors and ministries by surprise and we are in the process of assessing its impact on the ministry.

As always, your prayers and support of our Christian mission are much appreciated.

Sincerely,

Rich Scherber

Executive Director

I contacted MN Teen Challenge. The spokesperson had no comment on the motion to dismiss.

Below is the MNTC letter (click on the letter to make it larger:

Breaking: Clawbacks in Palm Beach Finance Bankruptcy Snare Bachmann Campaign Also Vennes Family & Associates

Cross-posted from Dump Bachmann:

Breaking News: An "adversary" case was filed November 29th against Michele Bachmann, Bachmann for Congress, and Bachmann Minnesota Victory Committee. The court action [not confirmed] is most likely in relation to contributions from Frank Vennes, family and associates. Other recent, related clawback cases have been filed against Vennes family members and associates of Frank Vennes. Some of the parties mentioned in the complaints contributed heavily to political candidates including Michele Bachmann [see Karl Bremer's three-part series on the effort to win a pardon for Frank Vennes including a timeline of donations and events relating to the Vennes request for a pardon Parts One, Two & Three].

This action is a part of the effort to clawback assets by the bankruptcy trustee for Palm Beach Finance Partners one of the feeder funds for the Petters Ponzi scheme. The two Palm Beach funds managers David W. Harrold, Bruce F. Prevost, associates of Frank Vennes were indicted April 20, 2011 along with Vennes for fraud. Harrold and Prevost pled guilty April 21st.

Other clawback actions include business associates of Vennes including Darrel Amiot who is mentioned in a lecture by Frank Vennes [listen to an Amiot sermon here] Another case was filed against Larry Greely, an associate of Amiot.

Another action goes after the Fidlelis Foundation. Vennes sat on the board of Fidelis Foundation has its office next to the law office of Howse and Thompson.

Another complaint was filed against CitySites Urban Media, Inc., North Dakota Teen Challenge, Inc., Minnesota Teen Challenge, Inc., KidsFirst Scholarship Fund of Minnesota, Desiring God Ministries, Prison Fellowship, Trinity Christian School, Crown Financial Ministries, Inc., Great Commission Foundation, Inc., New Life Family Services, Northwestern College, Masterworks of Minneapolis, Inc., Metro Hope Ministries, Inc., Smithtown Gospel Tabernacle, Inc., T-Net International, Wheaton College, Billy Graham Center, Seg-Way Ministries, International Ministerial Fellowship, Williston Assembly of God.

Some of these institutions have close connections to Frank Vennes. Vennes served on the boards of Minnesota Teen Challenge and Northwestern College. Some of these institutions, like the Desiring God ministry (whose Pastor John Piper wrote about an anti-homosexual-tornado) and Minnesota Teen Challenge were involved in the strange saga of Hope Commons.

Another complaint was filed the 23rd against Grace Consulting of Southeast, Inc. run by Frank Vennes brother and Bachmann donor Gregory Vennes who was sued by investors in 2008 for alleged seven counts of fraud and misrepresentation (the suit was settled).

Complaints were also filed against family members Norma Vennes, Colby Vennes and Denley Vennes seeking funds that are alleged to have been fraudulently transferred from Metro Gem, one of several feeder funds for the Petters Ponzi scheme managed by Frank Vennes.

This is a developing story - stay tuned for updates.

UPDATE 1: Karl Bremer has more at Ripple in Stillwater:

The long arm of the Tom Petters Ponzi scheme clawback has reached out for Congresswoman Michele Bachmann in an effort to recover $27,600 in contributions to her congressional campaign from Petters associate and Bachmann friend, convicted money launderer Frank Vennes Jr.

The move came in an "adversary case" complaint filed in U.S. Bankruptcy Court proceedings in the Southern District of Florida for the Palm Beach Funds. These were Palm Beach, FL- and offshore-based hedge funds allegedly used by Vennes to steer billions of dollars into the Petters Ponzi.

Barry E. Mukamal, liquidating trustee for the bankrupt Palm Beach Funds, filed the action November 29 against Michele Bachmann, Bachmann for Congress, and Bachmann Minnesota Victory Committee. It identifies seven contributions to Bachmann’s congressional campaigns made between December 2005 and June 2008 that it seeks to recover for the Palm Beach Fund creditors. Based on Federal Election Commission records, those contributions were made by Frank Vennes Jr. and his wife, Kimberly.

Read the whole thing.

This report is a joint investigation by Ken Avidor and Karl Bremer. For more information on Bachmann and Vennes go to the Ripple in Stillwater blog and the Vennes Info blog. Read about Bachmann's relationship to Frank Vennes in the new book "The Madness of Michele Bachmann".