Petters' lifestyle anything but cheap
- Article by: JENNIFER BJORHUS and DAVID PHELPS
- Star Tribune staff writers
- December 11, 2008 - 11:42 AM
Just how much did it cost to be Minnesota businessman Tom Petters?
About $227,268 a month, according to documents filed in federal court Tuesday that detail, for the first time, the lifestyles of Petters and five associates linked to the $3.5 billion Ponzi scheme they're accused of running.
The filings outline the monthly personal and property expenses that Petters and the five others, whose assets have been frozen in the case, want paid. They offer a glimpse of an abundant, at times over-the-top, way of life that authorities say was fueled by swindle: Ferraris, Bentleys, Costa Rican getaways and monthly utility bills double a typical mortgage.
Next to each item is a decision by Doug Kelley, the Minneapolis attorney appointed to manage Petters' companies and financial affairs since his arrest in October.
In his motion to approve certain payments, Kelley said he intends to keep current on bills for anything that can be sold later, while denying living expenses beyond day-to-day necessities. Preserving property is a priority. Paying for amenities -- cable-TV bills, gym memberships, dry cleaning, docking fees, a $20 horse blanket -- is not, judging from Kelley's recommendations.
There's plenty to preserve. The filings detail a considerable load of expensive real estate owned by Petters and former allies Deanna Coleman, Robert White, Larry Reynolds, Michael Catain and James Wehmhoff.
Kelley lists four residences for Petters costing a total of $127,209 a month for mortgages, insurance and property taxes. Coleman, Petters' former right-hand assistant and the whistleblower who cracked open the case, shows monthly real estate obligations of $6,745 for her Plymouth home. Catain lists three Twin Cities homes and a Costa Rica property, Casa Tranquila, that altogether cost more than $18,000 a month to maintain. Reynolds has a home in Los Angeles and a new house in Las Vegas for a combined monthly real estate tab of $26,400.
"We're going to get rid of those assets as fast as we can" Kelley said, referring to the need to reimburse creditors where possible.
Coleman, White, Reynolds and Catain have each pleaded guilty to various fraud, money laundering and conspiracy charges related to the alleged investment scheme. Petters, 51, of Wayzata, was indicted this month by a federal grand jury on 20 counts of wire and mail fraud, conspiracy and money laundering. Wehmhoff, Petters' former top accountant, has not been charged, but has been described as a "co-conspirator" in government records.
A seventh person linked to the Petters case but not charged, Frank Vennes Jr., has his own court-appointed receiver, Minneapolis attorney Gary Hansen, who said he put Vennes on a similar restricted budget in November. However, Hansen decided to swiftly sell Vennes' house in Jacksonville, Fla., and a three-bedroom home in North Dakota. Vennes' eight-bathroom lakeshore home in Shorewood is for sale for $4.7 million.
Kelley approved paying nearly all the requested obligations for the homes of individuals. But, like a parent working to rein in teenagers, he took a red pen to personal expenses such as visits to the beauty shop for Antoinette Reynolds and Internet access for Catain.
Along the way he enforced tight budgets for food, clothing and transportation, slashing Coleman's requested monthly food allowance from $600 to $277, and shrinking Wehmhoff's monthly gas and car-maintenance expenses from $420 to $187.
No child left behind
Kelley did approve paying the rest of the year's hefty private school tuition for two elementary school students, as well as fall semester tuition at a local university for another student.
But Wehmhoff's request to pay a 2007 tax bill of $593,010? Nixed.
White's past-due bills totaling $74,988, including $20,000 in credit-card debt? Nope.
How about $350 a month for Petters' prescriptions? Not going to happen.
For Petters' two youngest children, Kelley approved nanny and day-care allowances of $8,158 per month "for now" but said it might be denied later. He was less generous with their mother, Tracy Mixon. He denied her request for $7,000 a month in child support, $5,000 a month in spousal maintenance, $38,000 for her addiction treatment at Hazelden and $25,000 in attorneys fees. Kelley said he recommended denial of maintenance for Mixon because she was not previously receiving monthly support.
But he did say that Mixon can remain in the house where she is now living.
"I wasn't prepared for the magnitude of some of the requests," Kelley said.
Kelley said he calculated living allowances based on guides from the Internal Revenue Service and the Office of the U.S. Trustee of the Justice Department for use in bankruptcy courts.
U.S. District Judge Ann Montgomery in Minneapolis will have the final say at a hearing scheduled for Monday.
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