The attorneys defending Wayzata businessman Tom Petters won a personal victory Wednesday. They convinced a federal judge that they should be paid for their work -- at least, for most of it.
U.S. District Judge Ann Montgomery issued a 13-page order that settles a rancorous dispute over the lofty legal bills for Petters' defense on charges of conspiracy, fraud and money laundering related to an alleged $3.5 billion Ponzi scheme.
The U.S. Attorney's Office had raised concerns that Petters' personal assets, under the control of court-appointed receiver Doug Kelley, should be preserved to the degree possible as restitution for alleged victims.
Petters' lawyers expressed outrage and demanded full payment, along with assurances that their fees would not be capped. And they sought a guarantee that the government wouldn't seek to disgorge the money if Petters is convicted.
In her order, Montgomery wrote that Petters "is entitled to quality legal representation as he challenges the Government's case against him." She noted that the massive scale of the alleged fraud requires extensive defense work, and she found that Petters has no other means to pay for it other than his personal assets.
"The attorney fees that will be compensated are not without limits, however, as Petters' counsel seem to urge," Montgomery cautioned. She said that both she and Kelley would scrutinize the bills to determine whether they're appropriate.
Case in point: Montgomery rejected two bills Petters' lawyers submitted last fall totaling $3,545, but she approved payments of $329,265.20 to the firm of Felhbaber, Larson, Fenlon & Vogt, which also has hired Minneapolis attorney Paul Engh to work on the case.
Montgomery said she can't guarantee that the receivership will contain enough money to pay Petters' attorneys, however. She said the money from his alleged coconspirators' estates couldn't be used for that purpose. Similarly, money belonging to the corporate entities in receivership -- Petters Group Worldwide and Petters Co. Inc. -- and their affiliates might be off-limits, too, she said.
Federic Bruno, the attorney representing Petters' co-defendant Larry Reynolds, also got a trim. Montgomery found that some of Bruno's fees were excessive "in light of the time required to counsel a defendant after the entry of a guilty plea." She approved just $13,000 of his $15,490.50 bill.
Dan Browning • 612-673-4493