The bankruptcy trustee for Petters Group Worldwide LLC, seeking to recoup $1.2 million for creditors, sued the Houston-based investment firm Ark Royal Capital LLC.
Ark Royal allegedly invested at least $35 million in the Minnetonka, Minnesota-based company in the months before it was searched by federal agents in September 2008. Principal Thomas Petters was arrested nine days later.
While Petters Group was insolvent, it improperly repaid Ark Royal the $1.2 million, according to a complaint filed yesterday by Chapter 11 Trustee Douglas Kelley in U.S. Bankruptcy Court in Minneapolis.
“The transfer occurred just six days prior to the raid and execution of multiple search warrants by federal authorities,” according to Kelley’s complaint.
Thomas Petters was convicted by a federal court jury in St. Paul, Minnesota, of leading a $3.5 billion fraud scheme. Prosecutors said he conned investors to underwrite fake consumer goods purchase orders and then used the money to support his lavish lifestyle. He was sentenced in April to 50 years in prison.
At its peak, Petters Group owned Sun Country Airlines Inc. and Polaroid Corp. until the government raid.
Ark Royal is accused by Kelley of receiving preferential and potentially fraudulent transfers from Petters Group. Calls to Ark Royal seeking comment after regular business hours yesterday weren’t immediately returned.
The bankruptcy case is In Re Petters Co., 08-45257, and the adversary proceeding is Kelley v. Ark Royal Capital LLC, 10-04325, U.S. Bankruptcy Court, District of Minnesota (Minneapolis).