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Dec 16, 2008 10:19 am US/Central
Judge OKs Expenses For Petters' Children
MINNEAPOLIS (AP) ―
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Petters is accused of masterminding a multibillion dollar fraud scheme. He has pleaded not guilty and remains in jail.
Sherburne County Jail
A federal judge has approved an expense plan that will keep money flowing to indicted Twin Cities businessman Tom Petters' two children -- at least for now.
But U.S. District Judge Ann Montgomery has rejected the $68,000-a-month expenses their mother -- Petters' girlfriend, Tracy Mixon -- had wanted.
For the most part, Montgomery accepted the judgments of a court-appointed receiver, Minneapolis attorney Douglas Kelley.
The judge approved monthly expenses of $5,500 for a nanny and $2,658 for day care for Petters' children, saying she didn't want to "disrupt their lives unnecessarily."
Petters, founder and former CEO of Minnetonka-based Petters Group Worldwide and Petters Co. Inc., is accused of running an alleged $3 billion Ponzi scheme. He was indicted earlier this month on 20 federal counts alleging conspiracy, money laundering and mail and wire fraud.
Meanwhile, the U.S. attorney's office on Monday charged James Wehmhoff, Petters' former chief accountant, with conspiracy to defraud the United States and with aiding and assisting in the filing of false tax returns.
According to the charging document, Wehmhoff worked for Petters from July 2004 to Sept 2008, when prosecutors uncovered the alleged Ponzi scheme.
Wehmhoff is the sixth person charged in the case. Four other defendants have pleaded guilty. Petters has pleaded not guilty and remains in jail.
The co-defendants submit monthly expense requests to the court for approval. Kelley, the receiver, goes through them and makes recommendations to the court as to whether the expenses should be granted, pared or denied.
Some have more expenses than others. An attorney for co-defendant Larry Reynolds was told that even though living expenses might be higher in West Hollywood, where Reynolds lives, he and his wife will have to get by on $528 a month in groceries instead of the $1,000 they'd asked for.
The attorney, Frederic Bruno, told the judge he feared the lower figure will mean that Reynolds and his wife -- who also own a home in Las Vegas, as well as a Bentley and a Ferrari -- will have to subsist on "macaroni and cheese, grape soda and an apple."
The judge said that because of some other questions involving the Reynolds' expenses, she would hold off in approving the receiver's recommendations regarding them.
Mixon, Petters' girlfriend, asked for $68,000 a month -- $38,000 a month for Hazelden treatment center, $25,000 a month for attorneys' fees and $5,000 a month for maintenance. Kelley recommended that none of it be approved.
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Items federal agents seized at Tom Petters' Wayzata home in the fall of
2008 included $13,000 in cash, numerous credit cards, a .22 caliber
revolver and 11 high-end watches, including four Rolexes.
(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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