The trustee in the Tom Petters bankruptcy is accusing a bargain-seeking investor from New York of cooking up a scheme to defraud the estate out of as much as $100 million.

Trustee Doug Kelley alleged in a suit filed Wednesday that investor Michael L. Stern engaged in a series of “deceitful actions, misrepresentations” and other illegal acts that could make it possible for Stern to collect twice on the same debt.

Stern’s lawyer responded that his client did nothing wrong, arguing that Kelley committed an epic blunder by failing to recognize a legitimate claim in one of the biggest, most high-profile bankruptcy cases in Minnesota history.

“The truth is that it was the trustee ... who failed to properly account for this claim, despite having engaged in an extensive claims evaluation process involving over a thousand hours of attorney time,” Stern’s lawyer, Chris Gair, said in a court filing.

Petters, who bilked investors out of $3.65 billion over 10 years, received a 50-year prison term for orchestrating an extraordinary Ponzi scheme that collapsed in 2008 when federal agents launched a raid on Petters’ Minnetonka headquarters.

Over the past decade, Kelley has overseen the liquidation of Petters’ business empire, which included legitimate businesses such as Polaroid, Fingerhut and Sun Country Airlines. By the end of 2017, Kelley had collected a total of $233 million, of which $93 million has been returned to Petters’ victims.

Another $107 million is in the bank, but Stern’s actions could jeopardize further distributions of cash to individual investors, according to the lawsuit. Any payment to Stern would shrink the pool of money available to them.

It will be up to a bankruptcy judge to determine if Stern’s claim is valid, a process that is likely to take a year or more to resolve. Kelley has asked the judge to dismiss Stern’s claim.

So far, one of the biggest beneficiaries of Kelley’s work has been Stern’s company, Stonehill Capital Management, a New York investment company that specializes in turning a profit by acquiring defaulted loans and other liabilities of troubled companies such as Blockbuster Inc., the failed parent of Blockbuster Video.

In a 2016 brochure, Stonehill touted its expertise at finding value when other investors are fleeing. The company, known as a claims trader, typically invests in “industries and markets experiencing significant dislocations, including those caused by cyclical market declines or business troughs, economic crises, market collapse, leverage unwinds and other events,” the company said in the brochure. The firm’s investments totaled $2.8 billion.

In 2011, Stonehill spent an estimated $4 million to $5 million to acquire its first piece of the Petters case, a pool of loans known as Acorn Capital with a paper value of $141 million, according to Kelley. So far, that claim has yielded nearly $8 million in bankruptcy court payments to Stonehill and is likely to bring in another $10 million or so, based on a reorganization plan that promises to pay Petters’ victims 10 to 14 cents on the dollar.

In 2013, another Stonehill affiliate spent $16 million for the so-called Offshore claim, a larger chunk of promissory notes with a paper value of $720 million originally invested through two hedge funds, according to Kelley’s lawsuit. So far, Stonehill has collected $24 million through a related bankruptcy proceeding in Florida, court records show.

The problem, according to Kelley, is that Stern is now trying to collect on the Offshore claim in the Minnesota case, even though Stern and others have repeatedly assured court officials that they would not pursue money in Minnesota if they recovered money on their investment through the Florida bankruptcy.

As a result, Kelley said in the lawsuit, he treated the potential claim as “worthless.”

Kelley said Stern took steps to conceal Stonehill’s interest in the Offshore claim by insisting that the company’s identity be blacked out in court records documenting the transaction. The Offshore deal was struck by Geoff Varga, a New York attorney who was appointed to oversee the liquidation of the two hedge funds by court officials in the Cayman Islands, where the funds were based.

In the lawsuit, Kelley said Stern instructed Varga to “play possum” to fool bankruptcy court officials into believing he was still in charge of the Offshore claim for years after the sale, when in fact Stern was making all the key decisions.

Varga did not respond to a request for comment, but he denied the allegations in a court filing. “At no time during the six-plus years that Offshore’s fraud claim has been pending has Varga ever even hinted that he would withdraw that claim or that he was not pursuing it,” Varga said in the filing.

In his lawsuit, Kelley said Stern, who played an instrumental role in the bankruptcy proceedings by sitting on the unsecured creditors committee, also failed to tell his colleagues about his investment in the Offshore claim to give himself an advantage when the major players negotiated on how to divvy up the proceeds in bankruptcy court.

Kelley said the other major creditors would never have approved the reorganization plan if they knew Stonehill would try to collect twice on the same debt. At a 2016 hearing, Kelley said in the lawsuit, Stern misled court officials when testifying under oath about Stonehill’s interest in the case, playing “coy, feigning ignorance and affirmatively concealing” his desire to pursue the $720 million claim. Kelley said Stern did not make his true intentions known until after the reorganization plan was approved in 2016.

“This was not a ‘mistake’ on the part of the trustees,” Kelley said. “Three court-appointed trustees and three nationally recognized law firms were deceived by the deliberate concealment and deceit on the part of Stern and Varga.”

Stern declined interview requests. In an e-mailed response to the Star Tribune, Gair said Stonehill disclosed its interest in the $720 million claim “to the relevant parties” in 2014.

“The trustee asked for the claim to be withdrawn in March 2016, a month before bankruptcy confirmation,” Gair said in the e-mail. “In response the trustee was told in writing that the claim would not be withdrawn. The Trustee then filed an objection to the claim on March 11, 2016 but postponed litigating the claim until after the bankruptcy plan was confirmed.”

Kelley denied Gair’s version of events, saying that Stern breached his “fiduciary duty” to act with “complete candor and loyalty and to refrain from self-dealing in all actions.”