The Minnesota unit of Canada’s Bank of Montreal (CSE:BMO) (BMO) has been found liable for over US$550mln in damages regarding a Ponzi scheme operated by a local businessman, resulting in the bank to book a charge of US$834mln.
Thomas Petters was found guilty of masterminding a US$3.65bn Ponzi scheme in 2009.
A lawsuit in Minnesota looked to recoup US$2bn, based on sums the businessman, sentenced to 50 years in prison, transferred from an account at Marshall & Ilsley (NYSE:MI) Bank, bought by BMO in 2011.
According to a trustee in the lawsuit, cited in Reuters, the sums became unavailable for repayment to creditors when the fraud was uncovered in 2008.
The jury said the BMO unit “aided and abetted” in the breach of fiduciary duty to Petters’ firm, Petters Company Inc.
"BMO knew Petters' fraudulent conduct constituted a breach of fiduciary duty to PCI and substantially assisted or encouraged Petters to commit the breach," the ruling read.
However, the jury did not believe that BMO directly aided the fraud.