Dive Brief:
- A jury in a Minnesota bankruptcy court Tuesday ordered BMO Harris Bank to pay $564 million in damages in connection with a Ponzi scheme orchestrated by a client of a bank BMO acquired.
- BMO plans to “file a number of post-trial motions … to reverse the verdict or reduce the damages, and we intend to pursue all avenues” to overturn the outcome, including appealing the case to the 8th U.S. Circuit Court of Appeals, the bank said in a statement.
- The bank will take a C$1.12 billion ($833.6 million) charge from the judgment — a total that includes interest payments it may have to make. That will result in a $617.8 million after-tax charge to be recorded in this year’s fourth quarter, BMO said.
Dive Insight:
The jury found BMO Harris — the U.S. arm of Canadian lender Bank of Montreal — liable for aiding and abetting breach of fiduciary duty, but not liable on three other counts, including aiding and abetting fraud.
The $564 million payout breaks down to $484.2 million in compensatory damages and $79.5 million in punitive damages. The compensatory damages total roughly one-quarter of the $1.9 billion sought by a trustee in bankruptcy proceedings for companies controlled by Tom Petters, who was convicted in 2009 of masterminding a $3.7 billion Ponzi scheme and sentenced to 50 years in prison.
“It has been a long, 14-year road to this verdict, and we are extremely pleased with the jury’s decision to…
