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Faith community counts losses in Petters investments
Charities struggle to recover from losses related to the alleged Ponzi scheme.
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Among the victims of the alleged Petters Ponzi scheme is the Minnesota faith community.
More than 100 clergy members, ministries and charities put $20 million into the Tom Petters operation only to lose most of it. None of them wanted to speak publicly about the matter. But their attorneys say a number of them were at retirement age. Some lost their homes as a result of their investments with Petters and his associates. Others lost jobs. Many lost their life savings.
"To have that investment obliterated is something beyond comprehension," said Carolyn Anderson, an attorney with Zimmerman Reed who represents some of the faith community and two investment clubs that included members of that group.
"These are amazing people. They are not vindictive. Their faith is strong," said Anderson. "It's been a huge year of grieving for all of us."
Anderson said some individuals lost as much as $900,000, and others had to move in with their adult children to make ends meet.
Her clients were introduced to the Petters investment by one of their own, Frank Vennes, a onetime donor to charities and Christian ministries who since has been under a cloud for his ties to Petters.
Anderson's law firm filed a lawsuit on behalf of the two investment clubs, but litigation has been on hold by court order since shortly after the Petters operation collapsed last fall and its assets were put in receivership for liquidation.
"The pot's going to be empty at the end of the day and how do we say that's a good thing?" Anderson asked.
Minnesota Teen Challenge, a Christian-based drug and alcohol program for teens and adults, lost $5.7 million it invested with Petters Co. Inc. through the Fidelis Foundation. Within three weeks of the federal raid on the Petters properties, Teen Challenge was forced to lay off 22 employees, or 8 percent of its staff, who provided services to more than 400 clients a year.
Fidelis lost $27 million it had invested with Petters. The loss included funds Fidelis used to help other charities and nonprofits. Last winter, those losses forced Fidelis to drop plans to renovate a Duluth building into a faith-based treatment center for addicts and ex-convicts.
Both Teen Challenge and Fidelis were favorite charities of Vennes. However, the nature of the link between Vennes and the Petters investments is unclear.
Fidelis president Joe Smith declined to comment.
Teen Challenge spokesman and administrator Eric Vagle said his organization was able to weather the financial storm caused by the investment losses and is actually serving more clients now than it was a year ago.
"We went into that period with a lot of concerns with the economy and all. But our supporters stepped up and we pulled through in pretty good shape," Vagle said.
Vennes is the common tie among Anderson's clients, Teen Challenge and Fidelis. Vennes is a felon turned Christian who had a 14-year relationship with Petters and steered investments of $1.2 billion his way, according to federal documents. Vennes told authorities that he earned $38 million in commissions in 2007 alone from the Petters operation. Although his assets were put in receivership a year ago and he is identified in an FBI search warrant as a participant with Petters and others in conversations about the crumbling operation, Vennes has not been charged with a crime in the case.
"His status hasn't changed. He has not be charged," said Vennes' attorney, James Volling. "I'm waiting just like everyone else to see what happens."
David Phelps • 612-673-7269
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