U.S. District Judge Ann Montgomery on Tuesday approved a $50,000 settlement between Ted Mondale, the executive director of the Minnesota Sports Facilities Authority, and the receiver dissolving the estate of convicted Wayzata businessman Tom Petters.
Montgomery called the settlement of what was originally a $150,000 loan “fair and reasonable based on the claims, defenses and financial condition” of Mondale.
Montgomery’s order came after a brief morning hearing on the Mondale settlement and two others in which receiver’s attorney Patricia Pedersen called the negotiated figure “in the best interests of the receivership.”
For the second day in a row, Mondale, 55, did not respond to requests for comment on the matter. Late Tuesday, his attorney also declined to comment.
The issue of the unpaid loan came to light this week in a motion filed by receiver Doug Kelley.
Kelley said in an interview that Mondale did not have the financial wherewithal to pay more than $50,000 of the $150,000 personal loan made by Petters in 2005, three years before his $3.65 billion Ponzi scheme became known publicly.
The loan purportedly was given to Mondale to help his business at the time, Nazca Solutions, a software company that planned to help clients track and search property records on the Internet for a fee.
Nazca, founded in 2004, was struggling at the time, having never posted a profit, and soon was overdue on a software project for Hennepin County. In 2008, Nazca posted a net loss of $5.7 million, according to a forensic accountant who examined the transaction on behalf of Kelley. The company was sold in 2010 in a deal where the acquiring company assumed Nazca’s debt.
Mondale, the former chairman of the Metropolitan Council, is paid $160,325 a year as executive director of the Sports Facilities Authority, which is overseeing the new Minnesota Vikings stadium.
From 1999 to 2003, Mondale held several executive positions with the Petters organization, including executive vice president for business development for Petters Group Worldwide. Petters in turn, invested $750,000 in Nazca and sat on its board of directors until 2007.
The other two settlements approved by Montgomery Tuesday included $16,400 from Petters business associate Robert Wolbert of Milaca, or 3 percent of a $600,000 transfer he received from Petters in 2005. The third settlement was for $23,190 from former Polaroid executive Stephen Ratliff, or 4 percent of the amount he received from Petters.
Ratliff has also agreed to separately pay an additional $81,875 to the Petters’ corporate business estate in bankruptcy.
Petters and a group of associates operated a Ponzi scheme in which money from new investors was used to pay off earlier investors while the parties thought they were purchasing wholesale electronic goods to sell at a profit.