Court-appointed receiver Doug Kelley moved to halt payments to Tracy Mixon, the mother of two of Petters' children.
Tracy Mixon, the one-time fiance of convicted businessman Tom Petters and the mother of two of his children, may have exhausted the monthly expense payments she's collected for nearly four years from Petters' seized Wayzata-based estate.
On Tuesday, court-appointed receiver Doug Kelley filed a motion in U.S. District Court to terminate the $1,879 monthly child support and health insurance payments on the grounds that Mixon has had ample time to find means to support herself and her two children, ages 7 and 5.
"Like countless other wives and girlfriends left behind when criminal fathers are sent to prison, she must learn to live within her means and support herself and her family without demanding that fraud victims subsidize her lifestyle," Kelley wrote in a memorandum supporting his motion.
The U.S. attorney's office said in a separate filing that it supports Kelley's motion to terminate the payments, which total more than $22,000 a year.
"Ms. Mixon has had three years and eight months to make arrangements for the support of her minor children," said Assistant U.S. Attorney Gregory Brooker.
The payments were first approved in December 2008, shortly after the collapse of Petters' $3.65 billion Ponzi scheme. The payments were to cover living expenses including housing, transportation, medical insurance, day care and other services for the two boys. In court documents Kelley said he informed Mixon of his intention to end the payments first in March and then again on Aug. 1.
A hearing on the matter is scheduled for early September.
"I am informed," Kelley continued, "that the living expenses that have been paid vastly exceed child support which would be payable to the children under Minnesota state law."
Continued payment would deplete the resources available from Petters' personal estate "for distribution to victims," Kelley said.
In 2010, another Kelley document notes, he terminated monthly day-care payments of $2,659 after discovering that Mixon was no longer bringing the children to the day-care provider. He previously stopped making a $5,500 monthly payment for nanny services after the nanny resigned.
The tall, stylish Mixon stayed mainly in the background during Petters' criminal proceedings, which resulted in a 20-count conviction on fraud, conspiracy and money laundering charges. He is serving a 50-year sentence in federal prison.
Petters' personal assets placed in the receivership included expensive homes and luxury cars. Kelley also served as receiver in liquidating the assets of Petters' co-conspirators.
The receivership case in federal court is separate from two bankruptcy cases in U.S. Bankruptcy Court involving Petters' corporate assets, although Kelley is trustee for one of the bankruptcy cases. Combined, the bankruptcy and receivership cases have recovered about $302 million in claims and assets. Recently compiled figures showed that approved attorney and professional fees in those cases so far total nearly $70 million.
The Petters Ponzi scheme lasted more than a decade and lured investors with the promise of high returns on investments that were said to be used for the purchase of consumer electronics goods for sale to big-box retailers. But the goods didn't exist, and early investors were paid off with money from new investors until the fraud collapsed in September 2008.
David Phelps • 612-673-7269