Eight years after investigators seized control of Tom Petters’ criminal empire, his victims are finally close to getting back some of the money they lost in the largest Ponzi scheme in Minnesota history.

But court records filed this month show the payments will not come close to the $1.9 billion pumped into Petters’ long-running scam by hundreds of investors who were fooled into bankrolling a consumer electronics business that didn’t exist.

So far, more than $450 million has been collected by liquidating the property of Petters and his key associates. But after paying off Petters’ lenders and other creditors, less than $200 million remains for investors. More than $85 million has been spent on the lawyers, accountants and other professionals who sorted through Petters’ dealings — an extraordinary figure compared with other bankruptcies.

Some of Petters’ victims are angry that the fees are so high — and that it is taking so long to get paid. Several victims, who include many retirees, died before their claims were paid.

“The way they are spending the money, I didn’t think there would be anything left,” said Nancy Dobrinich, a Florida retiree whose family lost $94,200 in the scam.

Dobrinich’s husband, who made the decision to invest, died of cancer in 2012. “He was furious,” Dobrinich said. “It’s sad that it didn’t get taken care of sooner.”

The scam, which earned Petters a 50-year prison term, collapsed in September 2008 when federal agents launched a surprise raid on the Minnetonka headquarters of Petters’ business empire.

Since then, court-appointed lawyers have been trying to figure out how much they could collect by liquidating Petters’ vast holdings, ranging from his Bentleys and houses to his 150 companies.

It’s been a daunting task. Petters used his investors’ money to cover expenses for his legitimate businesses, which included Polaroid, Fingerhut and Sun Country Airlines. Auditors had to sort through nearly 50,000 transactions worth more than $100 billion to figure out who owed what to whom.

“It’s a plate of spaghetti noodles, unraveling this thing,” said Assistant U.S. Attorney Greg Brooker, who has been involved on the criminal side of the case since 2008.

Trustee Doug Kelley, who oversees the liquidation of Petters’ bankruptcy estate, said the case will take a few more years to wrap up.

“Sometimes it felt almost overwhelming,” said Kelley, who discussed the challenges in an exclusive four-hour interview with the Star Tribune last week. “It was like drinking out of a firehose for the first 18 months. … I would have liked to wind this up much earlier, but it has been a hard-fought battle.”

In a major milestone, Kelley filed a reorganization plan this month that promises to reimburse investors for about 10 percent of their losses. The plan has the support of most creditors but must be approved by a federal judge.

Under the plan, nearly $160 million would be distributed to Petters’ remaining creditors this year. Kelley continues to pursue lawsuits that could dramatically increase the pot of money available to victims, but he said he can’t predict how much the numbers may grow.

Separately, federal prosecutors will begin distributing about $35 million to Petters’ victims this year through a restitution process. Most of the money in the restitution fund came from property liquidated by Kelley’s team.

Brooker said most of Petters’ 475 victims will likely collect through both programs.

Long wait to collect

Several investors said they were stunned to learn of the pending payments because they have received so little information about the recovery efforts.

“We kind of gave up,” said Gail Arnoldi, 75, who lives in Mora, Minn. Arnold said she and her husband had to cut down on expenses after losing $89,000.

They are looking forward to a check. “The carpet needs replacing and we haven’t been out of the state of Minnesota for eight years,” she said.

Dobrinich said she will probably use the money to cover her own medical expenses. “Anything would be good,” she said.

Like many victims, Dobrinich invested through a hedge fund. In her case, it was Palm Beach Finance, a bankrupt business that played a critical role in the expansion of Petters’ scheme.

Under the reorganization plan, Palm Beach Finance and Lancelot Investment — another hedge fund — will collect the biggest payments. The two funds began investing with Petters in 2002 and eventually rolled about $16 billion into the scheme. Such institutional support “permitted the Petters Ponzi scheme to grow from a million-dollar fraud to a billion-dollar fraud,” the government wrote in support of criminal charges against another fund manager.

Executives at both Lancelot and Palm Beach were convicted of crimes related to misleading investors. The funds have shut down and are being liquidated through separate bankruptcy proceedings. Under Kelley’s plan, the two funds would collect about $147 million, or 90 percent of the funds currently available. Altogether, the two funds lost $1.4 billion.

Kelley said none of the executives convicted of crimes related to Petters’ fraud will get any of the money. The trustees in the Lancelot and Palm Beach bankruptcies will decide how their individual investors are treated, he said.

“I have all kinds of people who are victims here — some are big hedge funds and others are poor people whose retirement plans disappeared in the night,” said Lancelot trustee Ron Peterson.

Complicated process

The Petters case has presented challenges that took longer to resolve than even the notorious Ponzi case involving Wall Street fraudster Bernard Madoff.

Both bankruptcy cases began in 2008, but Madoff’s investors got their first court-approved checks in 2011. A sixth round of payments is underway.

Altogether, the trustee in the Madoff case has spent $1.2 billion on fees while distributing nearly $11 billion to investors — fees equal to about 10 percent of all recoveries.

By comparison, Kelley has spent about 30 percent of the Petters proceeds on lawyers, accountants and other expenses. In a typical corporate bankruptcy, fees are less than 5 percent, according to multiple legal studies.

Some critics have derided the Petters bankruptcy as a “fee fest.” Thane Ritchie, an Illinois hedge fund manager, even helped finance a documentary called “The Second Fraud: A Ponzipalooza.”

Peterson said he questions some of the spending on accountants, and he wishes Kelley would curtail his aggressive litigation tactics. So far he has filed more than 200 lawsuits seeking “false profits” from investors who managed to take out more money than they put into the scheme.

Altogether, Kelley has collected $65 million by settling 84 of these so-called clawback lawsuits, but his legal team continues to pursue more than $1 billion in 108 pending cases

“I do concede the fees are high here,” Kelley said. “But I don’t regret any of the decisions we made. … There were no shortcuts that would yield the results we needed.”