Karl Bremer has the scoop at his Ripple in Stillwater blog and reposted here:
Was post-election filing of plan to settle with investors politically motivated?
By Karl Bremer
The day after Election Day, politically connected convicted money-launderer and Tom Petters associate Frank Vennes Jr. filed a motion in U.S. District Court to approve a “work-out plan” to repay victims of the Petters Ponzi scheme through the liquidation of most of his assets. In return, Vennes and his investment business, Metro Gem, would receive a release from all liability related to financial losses from the Petters scam—a scam that Vennes claims he knew nothing about.
Vennes invested heavily in Petters’ Company notes on behalf of his Metro Gem investors from 1995 to 2008. When federal agents swooped down on Petters in September 2008, Metro Gem had more than $130 million in unpaid investments in Petters notes.
Vennes’ court filings list his total debts at $55.4 million.
Vennes, a heavy-hitting political contributor to Republicans Congresswoman Michele Bachmann, Governor Tim Pawlenty and former Senator Norm Coleman, as well as Democratic Senator Amy Klobuchar, was implicated but never charged in the multibillion-dollar Petters Ponzi scheme. His millions of dollars in assets, which included gold and silver coins and figurines, artwork, Harley Davidsons, and properties in Minnesota, North Dakota, Ohio and Florida, have been frozen and in receivership since the Petters scheme came crashing down over two years ago. Some properties already have been liquidated.
The Nov. 3 timing of Vennes’ first motion seeking relief in over two years is curious—especially given his close political and personal ties to Bachmann, who was engaged in an expensive re-election battle with Tarryl Clark until Nov. 2. Revisiting the story of Bachmann’s relationship with a convicted money launderer during the election would not have helped Vennes’ former beneficiary.
Pawlenty, who has been grooming himself for national political greatness after he leaves his part-time job as governor of Minnesota in January, also isn’t likely to be thrilled to see Vennes’ name back in the headlines.
Besides taking tens of thousands of dollars in campaign contributions from Vennes and his family, Bachmann, Pawlenty, Coleman, and former state GOP Chair Ron Ebensteiner all solicited a presidential pardon during the Bush administration for Vennes’ past federal crimes of money laundering, cocaine- and gun-running. That was after Vennes was released from Sandstone Federal Prison but before he became implicated in the Petters Ponzi. The issue raised questions about whether Vennes was engaged in a “pay-for-pardon” scheme.
Due to the negative publicity over her close relationship with Vennes after the Petters scandal broke, Bachmann first rescinded her pardon request and then gave to charity a portion of the campaign contributions she had received from Vennes that election year—despite the fact that Vennes is still presumed to be innocent. But even that proved to be problematic for the congresswoman. She first tried to donate the money to Minnesota Teen Challenge, where Vennes once sat on the board of directors with Mary Pawlenty, Tim Pawlenty's wife. But being a victim of Vennes’ involvement in the Petters Ponzi themselves, Minnesota Teen Challenge returned the money to Bachmann.
Coleman, Pawlenty and the state GOP did not return any of Vennes’ allegedly “dirty money.” None of the recipients of Vennes’ tens of thousands of dollars in political contributions have ever responded to inquiries about their relationships with the convicted money launderer.
Listed among Vennes’ secured creditors in his proposed work-out plan is Richard Scherber, executive director of Minnesota Teen Challenge. Documents filed with Vennes’ proposal show Scherber was owed $910,000 when the Petters scheme ended. Minus the returns he had received on his investments with Vennes, Scherber had an out-of-pocket loss of $423,759, according to court documents. Under Vennes’ proposed work-out plan, Scherber would receive only $173,741.
Also listed among Vennes’ secured creditors is locally owned First State Bank of Bayport, shown as a co-creditor on four individuals’ IRAs. Total out-of-pocket losses shown for those IRAs is $1.4 million. Under Vennes’ proposal, those IRAs would recover only $574,067 of their combined out-of-pocket losses.
“The work-out plan represents the best opportunity for Mr. Vennes’ creditors to receive meaningful financial recovery for their losses sustained as a result of the Petters fraud,” Vennes’ motion states.
Vennes notes that he is under “no compulsion” to enter into any agreements with creditors. Since he has not been charged with any crime, he is not facing a forfeiture or restitution order and says he could just as easily have filed for bankruptcy, leaving his creditors with little or nothing.
Vennes is the subject of a $2.7 billion “clawback” lawsuit in the bankruptcy proceedings of Petters’ estate. However, Vennes proclaims his innocence in the Petters Ponzi and has filed claims against Petters.
“Metro Gem, Inc., and I were victims of the Petters fraud,” Vennes states in court documents filed with his work-out proposal motion. “I was not a co-conspirator of Thomas J. Petters or anyone else in that fraud.”
