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BMO Harris Bank, a unit of Bank of Montreal, must face billions of dollars in investor claims tied to a massive Ponzi scheme run by former client Tom Petters, a judge ruled, Bloomberg News reported. A request by BMO Harris to have the case thrown out before trial was rejected Friday by a federal judge in St. Paul, Minnesota. The claim was brought by a court-appointed trustee seeking to recover money for a group of hedge funds that were victimized in the fraud. Petters, a Minnesota businessman, convinced investors he and his associates were financing the purchase of consumer electronics for resale to big-box retailers, but he never bought any and used money from new investors to pay returns to older ones. Prosecutors pegged losses at $3.5 billion. Petters was convicted of fraud in 2009 and sentenced to 50 years in prison. Paul Gammal, a spokesman for the bank, said that the allegations relate to a period before BMO’s involvement. Petters originally used an account at National City Bank, which was acquired by M&I Marshall and Ilsley Bank in 2001. M&I was in turn bought by BMO in 2011. Friday’s ruling by U.S. District Court Judge Wilhelmina Wright upholds an earlier one by U.S. Bankruptcy Judge Kathleen Sanberg in favor of the trustee, who is seeking $3.5 billion. Judge Sanberg is overseeing the bankruptcy of Petters Company Inc.

Herbalife Nutrition Ltd. has set aside $40 million to resolve foreign bribery probes centered on its business in China, the Wall Street Journal reported. The Los Angeles-based multilevel-marketing company is in negotiations with the U.S. Justice Department and U.S. Securities and Exchange Commission to resolve the investigations, which focus on its compliance with the Foreign Corrupt Practices Act, the company said in its annual report. Herbalife said that it couldn't predict the exact timing of a possible settlement. The provision, which represents the cost the company could incur as a result of any settlement, was recorded in the annual report on Feb. 18. Last year, two former Herbalife executives, both Chinese nationals, were indicted in the U.S. on criminal and civil charges of violating the FCPA.

A San Bernardino County, Calif., man who worked as a bankruptcy petition preparer (BPP) was arrested on Friday on federal criminal charges that allege he acted as an unlicensed attorney in bankruptcy cases, charged fees well over those permitted by law and then repeatedly lied to the U.S. bankruptcy court, according to a DOJ press release. Richard Allen Mease of Victorville, Calif., was taken into custody this morning by special agents with the FBI. The indictment, which was returned on Wednesday by federal grand jury, charges Mease with four counts of making a false statement in a bankruptcy proceeding. The indictment alleges that, on at least four separate occasions, Mease concealed his identity as a BPP on bankruptcy petitions he prepared on behalf of clients. Under applicable law and regulations, a BPP is permitted to charge fees of up to $200 to prepare and file a bankruptcy petition, but is not permitted to offer or provide legal advice. Mease repeatedly violated these laws and regulations since at least September 2009, charging clients fees well over the legally permitted limit and acting as an unlicensed lawyer, the indictment alleges. In response to these violations, a bankruptcy court in 2011 barred him from acting as a BPP after he had charged a client more than $1,000 for BPP services and provided legal advice, according to the indictment. In 2013, the bankruptcy court issued another order holding Mease in contempt of court for continuing to prepare bankruptcy petitions in violation of the injunction. But Mease allegedly continued to break the law and violate the court’s injunction against him. If convicted of all charges, Mease would face a statutory maximum sentence of 20 years in federal prison.

President Donald Trump pardoned Michael Milken almost exactly 30 years after the junk-bond king pleaded guilty to securities fraud, Bloomberg News reported. Milken’s rise behind an X-shaped desk in Beverly Hills was so sharp that it fueled the buyout boom and the reign of junk bonds, though his colleagues inside Drexel Burnham Lambert preferred the term high yield. His fall, culminating in 22 months in prison for illegal trades, was so steep that it helped turn him into a symbol for the avarice of an entire industry and era. The 73-year-old billionaire’s rescue by Trump was so astounding that Wall Street observers wondered if he would try to return to the securities industry that banned him for life. Around the time that Trump was trying to transform himself into a king of 1980s New York real estate, Milken was helping to turn junk bonds from a backwater of risky corporate debt into a trillion-dollar market. Those bonds let a ragtag group of corporate raiders borrow enough to take over some of America’s best-known companies, and Milken inspired Wall Street acolytes who stayed loyal well past Drexel’s bankruptcy — and his tearful apology in court for securities fraud.

Bernard L. Madoff, the mastermind of the largest Ponzi scheme in history, said in a court filing on Wednesday that he was dying and asked for an early release from prison, the New York Times reported. Madoff, 81, has less than 18 months to live after entering the final stages of kidney disease, the filing said. In 2009, Madoff admitted to running a scheme that bilked thousands of investors out of their cash, wiping out his victims’ savings and destroying lives. He was sentenced to 150 years in federal prison. “Madoff does not dispute the severity of his crimes, nor does he seek to minimize the suffering of his victims,” his lawyer, Brandon Sample, wrote in the filing. “Madoff humbly asks this court for a modicum of compassion.” Doctors determined in September that Madoff had less than a year and a half to live, according to Bureau of Prisons medical records included in the filing. Under federal guidelines, prisoners who receive a diagnosis of an incurable illness that is expected to kill them in 18 months or less can be eligible for early release.

Federal prosecutors have charged the owner of a bankrupt dairy business in Pennsylvania with defrauding some $60 million from members of the Amish and Mennonite religious communities, WSJ Pro Bankruptcy reported. The Justice Department said that Philip Riehl, the owner of Trickling Springs Creamery LLC in Chambersburg, Penn., perpetrated a Ponzi scheme in which he raised tens of millions of dollars of investments from community members. He then diverted those funds into the creamery, as well as solicited direct investments in the business without informing them of its mounting financial problems, according to the complaint filed on Wednesday in U.S. District Court in Philadelphia. Riehl, an accountant, was unable to pay back his investors after Trickling Springs filed for bankruptcy in December. “Riehl presented himself as a trusted member of their religious community, only to betray that trust and swindle them out of tens of millions of dollars,” said U.S. Attorney William McSwain. “It is only natural for members of a tightly knit community to want to take care of one another, but Riehl did not care about anyone but himself.” Riehl is facing charges of conspiracy, securities fraud, and wire fraud. If convicted, the defendant faces a maximum possible sentence of 45 years in prison and a $5.5 million fine, the Justice Department said.