A Florida bankruptcy judge has dismissed a $1 billion lawsuit against Marshall and Ilsley Bank, but left open the possibility of a new claim by investors who were bilked in a Ponzi scheme orchestrated by a former M&I customer, according to a report in the Milwaukee Journal Sentinel.
The original suit claimed that M&I, which was Wisconsin’s largest bank before being acquired by BMO Harris, aided and abetted fraud, conspiracy, and the fraudulent transfer claims as part of a Ponzi scheme run by Thomas Petters, a Minnesota native now serving a 50-year federal prison sentence. Petters was convicted in 2009.
The suit was filed by investors who lost fortunes in the scheme, claiming the bank had ignored signs of the scheme to keep it afloat.
M&I has denied wrongdoing, charging that investors are looking for a deep-pocketed scapegoat.
In a 37-page order dismissing the suit, Paul G. Hyman, chief bankruptcy judge for the Southern District of Florida, did so without prejudice, which gives plaintiffs an opportunity to file another version. He indicated the new version should be streamlined and more precise.
