It's the beginning of the end in what's been a tedious, four-years-in-the-making effort to recover assets from the personal estates of convicted felon Tom Petters and his cohorts to repay victims of their infamous $3.65 billion Ponzi scheme.

On Wednesday, Assistant U.S. Attorney Gregory Brooker asked U.S. District Judge Ann Montgomery to conditionally close the receivership of Petters associate and money launderer Larry Reynolds and put his assets in a pool. The funds eventually will be distributed to individuals and organizations that invested and lost money in the fraud scheme that operated behind the doors of Petters Companies Inc. The judge's ruling is expected within a week.

"This is an important day for the life of this case," Booker said in making his motion. "The fraud has been stopped. ... This took awhile, but it played out in orderly fashion."

However, the federal civil action is separate from the case in U.S. Bankruptcy Court, where the corporate assets of Petters are being liquidated and where the so-called phantom profits of investors who made money in the scheme have become the targets of clawback lawsuits. The bankruptcy case, where recoveries are expected to be significantly higher, will likely last for the foreseeable future.

The decade-old Petters fraud ended on Sept. 24, 2008, when it collapsed in a raid of federal agents who had been provided with an inside account of the operation by longtime Petters lieutenant and whistleblower Deanna Coleman.

After the raid, the personal assets of Petters, Reynolds, Coleman, Michael Catain, Robert White and accountant James Wehmhoff were placed in receivership as the criminal investigation unfolded.

Reynolds, Coleman, Catain and Wehmhoff eventually pleaded guilty to a variety of criminal charges. Wehmhoff, who pleaded guilty to tax fraud charges, was placed in home detention; the others are doing, or already have done, prison time. Petters was convicted at trial and sentenced to 50 years in prison as mastermind of the operation.

Brooker said the receiverships of White and Coleman will be the next to be closed, followed by those for Catain and Wehmhoff.

"This is a good omen," said receiver Doug Kelley in an interview. "You're seeing the beginning of the end."

Kelley also is trustee in the bankruptcy case.

Brooker told Montgomery that the government wants to keep the receivership for Petters open because "that is the most complicated one" and in case more assets are recovered.

Victims of the fraud won't be getting any remittance soon. But Brooker said a claims process is in place and a claims administrator has been hired.

With approximately $4 million recovered from Reynolds and similar or lesser amounts expected from the others, any return to investors will likely be pennies on the dollar from the receivership case.

Assets recovered by the receiver and his investigators ranged from pricey mansions in Florida to expensive luxury cars to paintings done by the late actor Tony Curtis and a collection of Muhammad Ali boxing mementos.

Between the receivership and the bankruptcy case, Kelley puts total recoveries to date in the vicinity of $300 million.

Included in that amount are proceeds from the sale of Sun Country Airlines and Polaroid Corp., and several large clawback settlements. Those include one for $13.5 million from the Minneapolis law firm of Fredrikson & Byron, which did legal work for Petters, and one for $19 million from General Electric Capital Corp., at one time a lender to Petters and his businesses.

David Phelps • 612-673-7269