Petters scheme: Duluth haven imperiled

  • Article by: LARRY OAKES
  • Star Tribune
  • January 5, 2009 - 10:34 PM

DULUTH - The place called Nopeming -- Ojibwe for "place of rest" -- has stood for a century on a wind-blown hillside near Duluth, first as a tuberculosis sanatorium, then a nursing home.

But plans to turn the now-vacant complex into a faith-based haven for addicts and ex-convicts could not weather the collapse of the alleged Ponzi scheme Tom Petters is accused of running.

The government says Petters solicited more than $3.5 billion from investors under false pretenses and used the money to pay debts, to run undisclosed business ventures and to support an extravagant lifestyle. Petters, 51, of Wayzata, has said he intends to fight the 20 felony charges he faces, although four of his associates have pleaded guilty to related charges and his accountant pleaded guilty to tax charges.

Nopeming's owner, Plymouth-based Fidelis Foundation, says it lost so much money in the alleged Petters scheme that it no longer can afford the repairs needed to make Nopeming usable for the nonprofit groups that would like to make it a center for recovery.

Originally, that was the stated wish of Twin Cities developer and Petters associate Frank Vennes Jr., himself an ex-con, who bought the property from St. Louis County in 2005 for $1 million. Vennes, 51, of Shorewood, has said he turned his life over to God in prison. He became a millionaire philanthropist by referring investors to Petters, according to court papers. He has not been charged in the scheme centering on Petters.

Officials of Minnesota Teen Challenge, a Christian recovery program that was one of Vennes' favorite charities, confirmed Monday that they were offered the 110,000-square-foot Nopeming complex but turned it down because it was too large for them to maintain. Fidelis, another faith-based nonprofit Vennes supported, got the property as a donation in late 2007, said Joseph Smith, the foundation's president.

"Our hope was it could be renovated," Smith said. "But Fidelis had over $27 million invested in Petters Inc., and when that went away, our capability to renovate it went away."

Smith said Fidelis would like to sell or even donate the property for the right purpose. The foundation has been in talks with a group of nonprofit agencies in Duluth, including Champion Life Ministries, which envisions a home run by a coalition of nonprofits for people recovering from addictions and for people to get back on their feet after prison.

Proctor public schools Superintendent Diane Rauschenfels, who is part of a group brainstorming new uses for the property, said the major obstacle is the need to replace the aging water line that serves Nopeming's complex of buildings. A new line could cost hundreds of thousands of dollars, Smith said.

Jack Johnson, a volunteer with both Minnesota Teen Challenge and Champion Life Ministries, said he's had several telephone conversations with Vennes -- the last one about six weeks ago -- and that Vennes had not let go of his dreams for Nopeming. Johnson said he and Vennes prayed together about it.

"I think he has a heart to help people," Johnson said. "From what I gather, he was stuck in the middle of a bad situation."

Much of Vennes' fortune is under the control of a receivership ordered by U.S. District Judge Ann Montgomery after Petters was arrested in October and ordered held without bond.

Vennes's attorney, James Volling, said Vennes would have no comment for this report.

"The Petters mess has ended a lot of dreams," Volling said.

Larry Oakes • 1-800-266-9648

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