The bank BMO Harris has agreed to pay $16 million to two Florida hedge funds for its role as a financial conduit in the $3.65 billion Ponzi scheme of former Wayzata businessman Tom Petters.

The agreement, which was filed this week in U.S. Bankruptcy Court in West Palm Beach, covers allegations of complicity in the fraud by M&I Bank before it was acquired by BMO Harris in 2011.

The original lawsuit against BMO Harris by hedge fund trustee Barry Mukamal sought $24 billion for the failure of an M&I Bank in Edina to raise red flags when more than $37 billion went in and out of accounts there.

"After years of investigating and prosecuting these claims, this $16 million recovery will benefit many of the victims of the massive Petters fraud," said Mukamal, representing the estate of Palm Beach Finance and Palm Beach Finance Partners.

BMO Harris did not respond to a request for comment.

The settlement still needs the approval of a bankruptcy judge.

A similar lawsuit against BMO Harris in the Minnesota bankruptcy of Petters' corporate estate is still pending. That suit is seeking at least $68 million in damages.

The two Florida hedge funds were part of a network of investors that provided financing to the ­Petters operation, which purportedly involved the wholesale purchase and retail sale of consumer electronic goods that did not exist.

Petters is now serving a 50-year prison sentence in the federal ­penitentiary in Leavenworth, Kan.