The U.S. bankruptcy trustee for Petters Group Worldwide LLC, seeking to recoup more than $3.2 billion for creditors, sued two investment firms that it says were founded by Florida financier Steve Stevanovich.
Seventeen funds affiliated with the financier’s Westford Investment Management LLC and Epsilon Investment Management LLC were named as defendants in the complaint filed today by trustee Douglas Kelley. Stevanovich also was named as a defendant in the lawsuit in U.S. Bankruptcy Court in Minneapolis.
Petters Group principal Thomas Petters was convicted by a federal jury in St. Paul, Minnesota, of leading a $3.5 billion Ponzi scheme and sentenced in April to 50 years in prison. Kelley has filed more than 200 so-called clawback lawsuits since Sept. 1 against those who he says improperly received payouts.
“Stevanovich received millions in false profits through his active and direct involvement in the Petters Ponzi scheme,” according to the complaint filed today.
The financier, who resides in Delray Beach, Florida according to the complaint, couldn’t immediately be reached for comment. No working phone number for Stevanovich or his businesses could be located on the Internet.
Stevanovich maintains a residence in Montreux, Switzerland, according to the complaint. In 2007, he pledged to donate $7 million to a University of Chicago research center, now named the Stevanovich Center for Financial Mathematics.
$3.2 Billion Transferred
The trustee seeks to recover $3.2 billion in transfers made to the Stevanovich entities from April 2001 to October 2008, when Petters Group filed for bankruptcy.
At least 344 transactions took place, involving $2.47 billion in principal, as well as re-invested profit of at least $408 million.
In the complaint, Kelley alleges the defendants knew or should have known the investments were fraudulent. Petters’s businesses issued promissory notes to Stevanovich’s Westford and Epsilon funds that accrued interest at an annualized rate of 48 percent.
Kelley today also sued General Electric Capital Corp., seeking the return of $185 million. He also filed suits against M&I Marshall and Isley Bank and a hedge fund operated by Thane Ritchie.
The trustee also sued former Petters Group Chief Executive Officer Mary Jeffries and Camille Chee-Awai, who was chief operating officer of Petters Co.
The case is Kelley v. Westford Special Situations Master Fund LP, 10-04396, and the main bankruptcy case is In Re Petters Co., 08-45257, U.S. Bankruptcy Court, District of Minnesota (Minneapolis).