The Tom Petters fraud case

Attorney seeks Catain's release from custody

  • Article by: DAVID PHELPS , Star Tribune
  • Updated: February 4, 2009 - 11:28 PM

The Excelsior businessman didn't mean to break the law by taking money in violation of a court order, the lawyer wrote.

The attorney for jailed Excelsior businessman Michael Catain filed a motion Wednesday seeking his release from federal custody until he is sentenced for his role in a $3.5 billion investment fraud scheme allegedly run by Tom Petters.

Attorney Michael Colich argued that Catain could be placed under home arrest and removed from any management role at the car wash from which he took nearly $14,000 in violation of a court order. Catain, 52, of Shorewood, poses no flight risks, nor is he a danger to the community, Colich wrote.

Catain was jailed Jan. 28 at the request of federal prosecutors who argued that he committed a felony by taking money from the car wash in violation of his previous release arrangement. Catain had pleaded guilty Oct. 8 to one count of money laundering conspiracy for his role in the alleged Petters' fraud.

Colich argued that Catain's use of the car wash money was neither devious nor malicious.

"The funds retained by Mr. Catain at all times were used to pay bills previously owed, new bills, expenses related to the seizure of all his properties and the miscellaneous day-to-day expenses of Bay Car Wash," he wrote. He noted that Catain immediately turned over nearly $4,700 to the court-appointed receiver in the Petters' matter when asked about the missing money.

Colich said Catain has remained in the Twin Cities since he pleaded guilty and is not a threat to flee despite facing a minimum prison sentence of 17 1/2 years. Colich also emphasized that Catain has cooperated with federal prosecutors and with the receiver, Minneapolis attorney Doug Kelley.

Prosecutors argued last week that Catain's taking of car wash funds violated the provision in his release order that he not violate any federal, state or local law. U.S. Magistrate Judge Franklin Noel agreed.

Catain is one of four individuals who have pleaded guilty to federal charges in connection with the alleged fraud scheme; Petters' accountant pleaded guilty to ax charges.

According to the government, Petters solicited money from investors by promising healthy returns from the sale of consumer electronic goods that never existed. Petters, 51, faces 20 counts of conspiracy, fraud and money laundering. He has maintained his innocence and said he would fight the charges. Petters has remained in federal custody since his arrest at his Wayzata home on Oct. 3.

David Phelps • 612-673-7269

  • about this series

  • The Star Tribune's coverage of the federal fraud case against entrepreneur Tom Petters and the struggles of Petters-owned Sun Country Airlines.
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    The Star Tribune's coverage of the federal fraud case against entrepreneur Tom Petters and the struggles of Petters-owned Sun Country Airlines.

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Michael Catain