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United States v. Petters

United States District Court, D. Minnesota

June 8, 2015

United States of America, Plaintiff,
v.
Thomas Joseph Petters; Petters Company, Inc., a/k/a PCI; Petters Group Worldwide, LLC; Deanna Coleman, a/k/a Deanna Munson; Robert White; James Wehmhoff; Larry Reynolds, and/or dba Nationwide International Resources, aka NIR; Michael Catain and/or dba Enchanted Family Buying Company; Frank E. Vennes, Jr., and/or dba Metro Gem Finance, Metro Gem, Inc., Grace Offerings of Florida, LLC, Metro Property Financing, LLC, 38 E. Robinson, LLC, 55 E. Pine, LLC, Orlando Rental Pool, LLC, 100 Pine Street Property, LLC, Orange Street Tower, LLC, Cornerstone Rental Pool, LLC, 2 South Orange Avenue, LLC, Hope Commons, LLC, Metro Gold, Inc., Defendants, Douglas A. Kelley, Receiver, Gary Hansen, Liquidating Trustee.

Ranelle A. Leier, Esq., and Gary M. Hansen, Esq., Oppenheimer Wolff & Donnelly LLP, Minneapolis, MN, on behalf of Liquidating Trustee Gary Hansen.

Assistant United States Attorneys Gregory G. Brooker and James S. Alexander, Minneapolis, MN, on behalf of the United States of America.

James L. Volling, Esq., Faegre Baker Daniels LLP, Minneapolis, MN, on behalf of Faegre Baker Daniels LLP.

Timothy D. Kelly, Esq., Dykema Gossett, PLLC, Minneapolis, MN, on behalf of Kimberly Vennes.

MEMORANDUM OPINION AND ORDER

ANN D. MONTGOMERY, District Judge.

I. INTRODUCTION

On May 20, 2015, the undersigned United States District Judge heard oral argument on the Motion of Liquidating Trustee Gary Hansen ("Trustee Hansen" or "Hansen") to Compel Funds from Defendant Frank E. Vennes, Jr. ("Frank Vennes") and his attorneys James Volling ("Volling") and Faegre Baker Daniels LLP ("Faegre") and Kimberly Vennes and for an Accounting [Docket No. 2724]. Trustee Hansen requests an order compelling: (1) the transfer to him of all Vennes-related funds being held in trust by Faegre, including $335, 333 currently held in a trust account in the name of Frank Vennes' wife Kimberly Vennes; (2) a full accounting of such funds; and (3) a complete disclosure of all assets held jointly or solely by Kimberly Vennes.

Plaintiff United States of America (the "Government") filed a Response [Docket No. 2731] in support of the Motion. Kimberly Vennes filed a Declaration [Docket No. 2734][1] opposing the Motion. She states that the funds are proceeds from gold coins and a diamond ring that belonged to her. Volling filed a Declaration [Docket No. 2735] stating that he regards Faegre as an interpleader of the funds held in trust and stands ready to transfer them to any party the Court orders. For the reasons set forth below, Trustee Hansen's Motion is granted.

II. BACKGROUND

This Motion arises from the recent disclosure that in 2008 over $335, 000 in personal property was delivered by Frank Vennes to his attorneys at Faegre as a retainer for representation of Kimberly Vennes. This property was not disclosed to Hansen when he served as Receiver over Frank Vennes and his entities (the "Vennes Entities") from 2008-2011, nor was it disclosed from 2011 to present, during which time Trustee Hansen has served as Liquidating Trustee under an Asset Distribution Plan that distributes the assets of Frank Vennes and the Vennes Entities to creditors. Trustee Hansen requests an order compelling Faegre to transfer the property to him for distribution under the Asset Distribution Plan.

Hansen has been supervising the assets of Frank Vennes since October 2008, when he was appointed as Receiver for Frank Vennes and the Vennes Entities pursuant to a Receivership Order [Docket No. 59] entered by this Court. Shortly after Hansen's appointment as Receiver, Volling informed him that Faegre was holding a large amount of cash and coins that Frank Vennes had delivered to Faegre as a retainer for Frank Vennes' legal services (the "Frank Vennes Retainer"). Hansen Aff. [Docket No. 2727] ¶ 4.

At the time Frank Vennes provided the Frank Vennes Retainer to Faegre, he also delivered a diamond ring and rare coins that were to be held by Faegre as a retainer for potential legal fees attributable to Kimberly Vennes (the "Kimberly Vennes Retainer"). Volling Decl. ¶ 3; Kimberly Vennes Decl. ¶¶ 2-3. Unlike the Frank Vennes Retainer, Hansen was not informed of the Kimberly Vennes Retainer. Hansen Aff. ¶ 4.

In November 2008, Hansen made several requests to Frank Vennes and his attorneys for a listing of all assets owned or controlled by him, as well as all assets owned by Kimberly Vennes and titled in her name. For example, Hansen asked Frank Vennes and Faegre to complete a Financial Statement in which Frank Vennes was required to list "all other assets... possessed or owned by you, your spouse, or dependents." Hansen Aff. Ex. B at Question 56 (emphasis added). Frank Vennes' response was "Please see asset list." Id. The asset list provided with the Financial Statement spanned nine pages but did not include the property being held in trust at Faegre for Kimberly Vennes, nor was such property disclosed in any other section of the Financial Statement. Id. ¶ 8, Ex. B. After receiving the Financial Statement and asset list, Receiver Hansen sent an email dated November 17, 2008 to Faegre that stated in part:

I have some level of discomfort about whether I have received full information about the accounts and assets that are available to Frank.... I may need to talk to you about a more formal way of making an additional disclosure, but in the interim would appreciate hearing from Frank through you as to 1) whether he has now disclosed and produced (or had the government seize) ALL coins, collectibles, art, etc. owned or controlled by him, 2) whether his prior disclosures included all assets titled in his wife's name, and 3) ...

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