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Home / Insurance / Canada’s BMO books $834 million in fee for loss of US Ponzi lawsuits

Canada’s BMO books $834 million in fee for loss of US Ponzi lawsuits



(Reuters) — A U.S. jury on Tuesday found a local unit of Canada’s Bank of Montreal liable for more than $550 million in damages over a Ponzi scheme run by a Minnesota businessman that led the bank to book a fee of C$1.12 billion ($834.2 million) .

Thomas Petters was found guilty in 2009 of orchestrating a $3.65 billion Ponzi scheme and sentenced to 50 years in prison.

The lawsuit in Minnesota sought to recover nearly $2 billion based on sums that Mr. Petters transferred from an account at Marshall & Ilsley Bank, which BMO bought in 2011

The sums became unavailable for repayment to creditors when the fraud was uncovered in 2008, a trustee said in the lawsuit.

The jury ruled that the BMO unit “aided and abetted”

; Mr. Petters in breach of his fiduciary duty to his company, Petters Company Inc., and caused damage to it.

“BMO knew that Petters’ fraudulent conduct constituted a breach of fiduciary duty to PCI and materially assisted or encouraged Petters to commit the breach,” the ruling read.

The jury did not find that the BMO entity directly aided the fraud.

The entity said it would contest the jury’s verdict and award.

“We are disappointed by the jury’s verdict, which is not supported by the evidence or the law,” a spokesperson for the unit said in a statement.

BMO said the C$1.12 billion provision includes an after-tax charge of C$830 million that will be booked in the fourth quarter.


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