On June 9, 2023, the U.S. Court of Appeals for the Eighth Circuit affirmed a district court’s decision upholding a settlement bar order and a final accounting between a court-appointed receiver and JPMorgan Chase & Co. (“JPM”) stemming from a billion-dollar Ponzi scheme perpetrated by Thomas Petters. One victim, Ritchie Capital Management, LLC (“Ritchie”), attempted to recover outside the receivership through a direct lawsuit against JPM for aiding and abetting the fraud. The U.S. District Court for the District of Minnesota approved a settlement bar order protecting JPM from lawsuits derivative of rights of Petters’ estates.

Ritchie argued the settlement bar order violated its due process rights. The Eighth Circuit first found that Ritchie lacked standing to pursue its aiding and abetting claims against JPM, because those claims belonged to the receivership and bankruptcy estate. It also held that Ritchie did not identify a deprived protected right. “Even with the bar order,” the Eighth Circuit observed, “Ritchie can still pursue personal claims against JPMorgan in an individual lawsuit.” Because the only deprivation Ritchie identified was its ability to bring claims general to the bankruptcy estate, it lacked standing and was deprived of no protected rights.

The case is United States v. Kelley, No. 21-2973 (8th Cir. June 9, 2023). Ritchie Capital is represented by Larson King, LLP. The receiver is represented by Spencer Fane LLP and Kelley, Wolter & Scott, P.A. The opinion is available here.