UPDATE: 6/13/12, 2:30 p.m., EDT. A statement from Epstein Becker & Green has been added to the eleventh paragraph of this story.
“In essence, Traub gave Petters business credibility and access to new potential victims for his fraudulent schemes,” states the complaint filed by Douglas Kelley, a name partner and president of six-lawyer Minneapolis firm
Kelley, Wolter & Scott
. “Traub knew of the fraud, or willingly ignored it, and accepted substantial payments and gifts from the scheme, including payments in excess of $726,000 directly from Petters’s personal accounts.”
In sum, Kelley is seeking the return of $803,966 in what he claims are Traub’s ill-gotten gains. The suit was filed in U.S. District Court in Minneapolis, where Kelley is acting as court-appointed receiver for Petters’s personal assets and certain companies affiliated with the convicted Ponzi schemer.
Several Am Law 100 and Minnesota firms, including Kelley’s, have made millions as a result of their legal work on the Petters case,
according to our previous reports
. The Petters fraud has spawned a thicket of litigation in criminal, civil, and bankruptcy courts in Minnesota, as lawyers worked to untangle the legitimate businesses owned by Petters from the wider fraud. (For example,
Polaroid had to be extricated in bankruptcy
from Petters’s larger Ponzi scheme, which unlike the Madoff case, operated such legitimate companies as the camera maker and Sun Country Airlines.)
Traub, who has yet to retain outside counsel in the latest round of Petters-related litigation, did not immediately respond to a request for comment on the suit filed against him last week by Kelley. Esptein Becker said in a statement to The Am Law Daily that the suit filed by Kelley has no bearing on the firm.
“Paul Traub worked within our corporate services practice on a contractual basis for less than a year and a half before moving to Gordon Brothers,” said Epstein Becker spokeswoman Marichelli Hughes. “The allegations recently made against Traub took place long before he joined [the firm].”
Traub, the cochair of Dreier LLP’s bankruptcy practice,
resigned from the firm the same day
that news of its namesake’s arrest became public.
In February 2009
, Traub and former Dreier LLP partners Steven Fox, Wendy Marcari, and Maura Russell joined Epstein Becker. Only Marcari remains with the firm.
Traub isn’t the only lawyer to find himself on the receiving end of litigation stemming from the Petters fiasco. Earlier this year,
a hedge fund seeking to recoup
some of its Petters losses
sued Fredrikson & Byron
over the Minneapolis-based firm’s work for Petters over a 10-year period.