USA v. Petters, et al.

Filing 1862

ORDER FOR AUTHORIZATION TO MAKE PAYMENTS; granting 1811 Motion for Attorney Fees of Fruth Jamison & Elsass, PLLC; granting 1814 Motion for Attorney Fees of Bernick, Lifson, Greenstein, Greene & Liszt, PA; denying 1817 Motion for Attorney Fees L eonard Street & Deinard; granting 1820 Motion for Attorney Fees of Lindquist & Vennum, PLLP; granting 1823 Motion for Attorney Fees of Lindquist & Vennum, PLLP; granting 1826 Motion for Attorney Fees of Lindquist & Vennum, PLLP; granting 1829 Motion for Attorney Fees Lindquist & Vennum PLLP; granting in part and denying in part 1832 Motion for Attorney Fees Felhaber, Larson, Fenlon & Voft, PA; granting in part and denying in part 1835 Motion for Attorney Fees of PricewaterhouseCooper s, LLP; granting in part and denying in part 1838 Motion for Attorney Fees of PricewaterhouseCoopers, LLP; granting in part and denying in part 1841 Motion for Attorney Fees of PricewaterhouseCoopers, LLP; granting 1844 Motion for Attorney Fees of Tonya Rosso; granting 1847 Motion for Attorney Fees of Kelley, Wolter & Scott, PA (Written Opinion). Signed by Judge Ann D. Montgomery on 05/03/2011. (TLU)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
United States of America,
Plaintiff,
v.

Civil No. 08-5348 ADM/JSM

Thomas Joseph Petters; Petters Company,
Inc., a/k/a PCI; Petters Group Worldwide, LLC;
Deanna Coleman, a/k/a Deanna Munson;
Robert White;
James Wehmhoff;
Larry Reynolds, and/or dba Nationwide International
Resources, aka NIR;
Michael Catain and/or dba Enchanted
Family Buying Company;
Frank E. Vennes, Jr., and/or dba Metro Gem
Finance, Metro Gem, Inc., Grace Offerings
of Florida, LLC, Metro Property Financing,
LLC, 38 E. Robinson, LLC, 55 E. Pine, LLC,
Orlando Rental Pool, LLC, 100 Pine Street
Property, LLC, Orange Street Tower, LLC,
Cornerstone Rental Pool, LLC, 2 South
Orange Avenue, LLC, Hope Commons, LLC,
Metro Gold, Inc.,
Defendants,
Douglas A. Kelley,
Receiver,
Gary Hansen,
Receiver.
______________________________________________________________________________
Steven E. Wolter, Esq., Kelley Wolter & Scott, P.A., Minneapolis, MN, on behalf of Receiver
Douglas A. Kelley.
Surya Saxena, Assistant United States Attorney, Minneapolis, MN, on behalf of Plaintiff United
States of America.

Eric Riensche, Esq., Felhaber, Larson, Fenlon & Vogt, P.A., Minneapolis, MN, on behalf of
Felhaber, Larson, Fenlon & Vogt, P.A.
______________________________________________________________________________

ORDER FOR AUTHORIZATION TO MAKE PAYMENTS
On April 27, 2011, the Court heard oral argument on the requests [Docket Nos. 1811,
1814, 1817, 1820, 1823, 1826, 1829, 1832, 1835, 1838, 1841, 1844, and 1847] of Receiver
Douglas A. Kelley (“Receiver Kelley”) to authorize interim payments for the following fee
categories: 1) legal, accounting, and tax services performed for the receivership; 2) legal work
performed on behalf of a former employee of Petters Group Worldwide, LLC (“PGW”), and 3)
legal work performed on behalf of Defendant Thomas Joseph Petters (“Defendant Petters”).
Plaintiff United States of America (“the Government”) filed a Response [Docket No.
1855] to the Motions. The Government does not object to the approval of the fee applications,
but requests that the Receiver apportion the fees among the appropriate receivership entities that
benefitted from the services. The Government also states that it was not privy to the billing
statements submitted in camera in support of the fee applications of Felhaber, Larson, Fenlon &
Vogt, P.A. (“Felhaber”) and Leonard, Street & Deinard, P.A. (“LSD”), and therefore cannot
comment on the reasonableness or justification of the requested fees.
No other responses or objections to the Motions were filed or raised at the hearing.
The Court has reviewed the underlying billing statements and finds the fees to be
reasonable and necessary with the exception of the following fee applications. First, the billing
statements underlying the fee applications of PricewaterhouseCoopers LLP (“PwC”) include
charges for time spent preparing PwC’s invoices. Consistent with the practice in this
receivership case of disallowing compensation for the preparation of invoices and fee

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applications, PwC’s fees are reduced by $915.50. See Mem. Opinion and Order, Oct. 12, 2009
[Docket No. 653] at 5 (denying compensation for time spent preparing fee applications and
invoices because such services benefit the service provider and not the receivership estate).
Second, the Felhaber fee application requests over $8,000 to evaluate and assert
Defendant Petters’ personal attorney-client privilege during the deposition of David Baer
(“Baer”), who served as counsel for both Defendant Petters and PGW. The fees are excessive
given that Defendant Petters has no assets and is serving a fifty year prison sentence, and that
Felhaber has already been paid over $2,965,000 for representing Defendant Petters.
Additionally, the billing statement includes charges of $470 for preparing for and attending a
hearing regarding Felhaber’s legal fees. For these reasons, the fees requested in the Felhaber fee
application are reduced to $4,000.
Third, the fee application of LSD requests payment of fees and expenses incurred from
August 2010 through October 2010 to represent Baer, PGW’s former counsel, during a four-day
deposition regarding an adversary proceeding in the Polaroid Corporation (“Polaroid”)
bankruptcy case. In the past, receivership funds have been used to indemnify Baer for legal
costs incurred as a consequence of his former employment with PGW, even though the duty to
indemnify Baer is a responsibility of PGW. See, e.g., Docket Nos. 764, 1017, 1467, and 1506.
However, the Coordination Agreement among the Receiver, the Government, the Polaroid
Trustee, and the PCI/PGW Trustee, approved by this Court and the bankruptcy court on
September 14, 2010, requires all expenses incurred as of July 1, 2010 for the benefit of the
bankruptcy estates to be submitted in the bankruptcy proceedings. See Uphoff Aff. [Docket No.
1351] Ex. A (“Coordination Agreement”) ¶ III.A; Order Approving Coord. Agrmt. [Docket No.

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1466]. Because the fees underlying LSD’s fee petition are liabilities of the PGW bankruptcy
estate that were incurred after July 1, 2010, they must be submitted for payment in the
bankruptcy proceedings.
IT IS HEREBY ORDERED that Receiver Kelley’s Motions are GRANTED as to
Docket Nos. 1811, 1814, 1820, 1823, 1826, 1829, 1844, and 1847 ; GRANTED IN PART and
DENIED IN PART as to Docket Nos. 1832, 1835, 1838, and 1841; and DENIED as to Docket
No. 1817.
1. Receiver Kelley is authorized to make payments as follows:
a. Kelley, Wolter & Scott, P.A.

$148,217.06

b. Lindquist & Vennum PLLP

$135,117.86

c. PricewaterhouseCoopers LLP

$48,134.11

d. Tonya Rosso

$4,431.50

e. Bernick, Lifson, Greenstein, Greene & Liszt, P.A.

$1,637.87

f. Fruth, Jamison & Elsass, PLLC

$8,953.61

g. Felhaber, Larson, Fenlon & Vogt, P.A.

$4,000.00

2. To the extent possible, Receiver Kelley shall apportion the fees among the appropriate
receivership entities that benefitted from the services.

BY THE COURT:

s/Ann D. Montgomery
ANN D. MONTGOMERY
U.S. DISTRICT JUDGE
Dated: May 3, 2011.

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