Jury Trial, Adverse Inference Sanction Ordered in Case Against BMO Harris Bank

Judge orders sanctions, denies BMO’s motion for summary judgment; case bound for trial

Judge Kathleen Sanberg of the U.S. Bankruptcy Court has ordered an adverse inference jury instruction at trial in the case Kelley v. BMO Harris Bank. Robins Kaplan represents Plaintiff Douglas A. Kelley, in his capacity as trustee for the BMO Litigation Trust. With interest, the plaintiff seeks more than $3.5 billion from BMO.

On July 1, the judge ordered the jury be instructed that BMO intentionally destroyed emails that it knew were harmful to them in this case. The judge ruled that BMO gave “false and misleading” testimony, “lied” to the court and plaintiff, and that BMO’s destruction was “intentional and willful.” The judge also denied BMO’s motion for summary judgment and then transferred the case to the district court for trial.

The plaintiff alleges that BMO knew about and helped Tom Petters perpetuate one of the biggest Ponzi schemes in U.S. history. Petters conducted the fraud using accounts held at M&I Bank, which was acquired in 2011 by BMO Harris Bank. The lawsuit alleges that BMO helped Petters use his checking account to launder nearly $40 billion in Ponzi scheme proceeds through BMO between 2002 and 2008.

“Judge Sanberg’s order is absolutely the correct decision here. BMO intentionally destroyed incriminating evidence to keep it out of this case. And then BMO lied to hide what it had done. It took us more than a year to figure this out through a full evidentiary hearing, and many depositions and court arguments in front of Judge Sanberg. We couldn’t be more pleased with how detailed and completely thorough the Court’s opinion is,” said Michael Collyard, partner at Robins Kaplan LLP. 

The court also denied BMO’s motion for summary judgment and barred their legal defenses. Thomas Hamlin, partner at Robins Kaplan LLP, said, “We’re looking forward to holding BMO accountable at trial.”

The case is Kelley v. BMO Harris Bank, N.A., No. 19-cv-01756-WMW in the United States District Court for the District of Minnesota (originally filed as Adversary Proceeding No. 12‑04288 as part of the Petters bankruptcy (No. 08-045257) in the United States Bankruptcy Court for the District of Minnesota). 

The plaintiff is represented by Thomas Hamlin, Michael Collyard, Peter Ihrig, Michael Reif, and Valerie Stacey. The order granting spoliation can be viewed here. The order denying summary judgment can be viewed here.