Bloomberg News

Ritchie Gets Suit Against Petters Executives Reinstated

September 06, 2011

(Updates with excerpt from ruling in fourth paragraph.)

Sept. 6 (Bloomberg) -- Ritchie Capital Management LLC won a U.S. appeals court ruling reinstating its lawsuit against two executives who worked for convicted fraud-scheme operator Thomas J. Petters.

Ritchie filed the civil racketeering and fraud suit in 2009 against former Petters Group Worldwide LLC Chief Executive Officer Mary Jeffries and Camille Chee-Awai, who was chief operating officer of Petters Co. Ritchie claimed they schemed with Petters to deprive Ritchie of its collateralized investment in Petters-owned Polaroid Corp.

A federal judge in Minneapolis dismissed the case last year, finding it was barred by another court’s injunction against new suits involving Petters’s companies, which were in receivership. The dismissal was improper, the U.S. Court of Appeals in Minneapolis said today.

“The district court erred in concluding Ritchie’s action was barred by the receivership order,” the three-judge appeals panel said in a 17-page decision. “Nor did the receivership have the power to cast its anti-suit injunction net that broadly.”

Petters was sentenced to 50 years in prison in 2009 after being found guilty of running a $3.5 billion fraud. Petters conned investors into giving him money to finance phony consumer-goods purchase contracts, U.S. prosecutors said.

Andrew Birrell, Jeffries’s attorney, and Terrence Canade, Chee-Awai’s lawyer, didn’t immediately return calls for comment on the appeals-court ruling.

The appeal is Ritchie Capital Management v. Jeffries, 10- 2568, 8th U.S. Circuit Court of Appeals; the lower-court case is Ritchie Capital Management LLC v. Jeffries, 10-00668, U.S. District Court, District of Minnesota (Minneapolis).

--Editors: Fred Strasser, Stephen Farr.

To contact the reporters on this story: Andrew Harris in Chicago at aharris16@bloomberg.net; Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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