* 8th Circuit revives lawsuit against two ex-Petters execs
* Money that was to be secured by Polaroid assets was lost
* Petters appealing conviction, 50-year prison sentence
By Jonathan Stempel
NEW YORK, Sept 6 Two former executives who
worked for convicted Ponzi scheme operator Thomas Petters can
be sued by an investment firm victimized in his $3.65 billion
fraud, a federal appeals court ruled.
The 8th U.S. Circuit Court of Appeals in St. Paul,
Minnesota on Tuesday revived a civil racketeering and fraud
lawsuit against Mary Jeffries, who was president of Petters
Group Worldwide Inc, and Camille Chee-Awai, who was chief
executive of its Petters Capital LLC unit.
Ritchie Capital Management LLC, a private equity and asset
management firm, had accused the defendants of conspiring with
Petters to fraudulently extract more than $100 million of
It said the defendants had represented that the money would
be secured by assets of camera company Polaroid Corp, which
Petters owned and where Jeffries was also chief executive.
A federal judge in Minneapolis had dismissed Ritchie's case
in 2010, citing a bankruptcy court ban on new lawsuits that
interfered with the assets or documents of Petters' companies,
which had been put in receivership.
But Judge Kermit Bye wrote for the 8th Circuit that the ban
was not meant to cover the lawsuit by Ritchie against other
defendants it believed were actively involved in the fraud.
It would "drastically expand the scope of the anti-suit
injunction" to cover lawsuits that required the interpretation
of documents possessed by companies in receivership, Bye wrote.
"We think such interpretation goes too far."
Petters, 54, was sentenced to 50 years in prison in April
2010 after a St. Paul federal jury convicted him the prior
December on all 20 criminal counts he faced, in one of the
biggest Ponzi schemes on record. His appeal of his conviction
and sentence is pending before the 8th Circuit.
Prosecutors said Petters bilked investors who thought he
was using their money to buy consumer electronics for resale to
retailers such as BJ's Wholesale Club Inc BJ.N and Costco
Wholesale Corp (COST.O).
Andrew Birrell, a lawyer for Jeffries, and Terrence Canade,
a lawyer for Chee-Awai, did not immediately respond to requests
for comment on Tuesday.
Ritchie has offices in Wheaton, Illinois, New York and
Menlo Park, California, according to its website.
The 8th Circuit returned the case to the Minneapolis
district judge for further proceedings.
The case is Ritchie Capital Management LLC v. Jeffries et
al, 8th U.S. Circuit Court of Appeals, No. 10-02568.
(Reporting by Jonathan Stempel, editing by Dave Zimmerman)