Star Tribune sued for canceling Petters victims' ads

An organization claiming to represent victims of the Tom Petters fraud scheme filed a lawsuit against the Star Tribune Co. on Thursday, alleging breach of contract after the newspaper decided to stop publishing the group's advertisements.

The Stop the Petters Scam Foundation has run ads accusing "insiders" of mishandling Petters' assets and bilking ordinary investors.

Petters, a Wayzata businessman, was found guilty on 20 counts of wire fraud, mail fraud, conspiracy and money laundering on Dec. 2, in what prosecutors said was a $3.5 billion Ponzi scheme.

The Stop the Petters Scam Foundation said it initially contracted with the Star Tribune to run 15 ads, part of a series called "Where's the Money?" But the newspaper backed out after running the ninth piece.

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The group has provided little information about its activities or membership. In November, Lew Phelps, a spokesman for former Petters investor Thane Ritchie, told the Star Tribune that the foundation was created by Steve Denari, a Chicago-based political consultant.

Phelps also confirmed that Ritchie belongs to the organization, which has a Web site outlining its claims.

In a statement released this week, the Stop the Petters Scam Foundation said it will seek damages from the Star Tribune and 30 unknown defendants for interference with contractual relations and related charges.

The group also claims the Star Tribune's decision to halt the advertising series prevented the group from airing a $250,000 documentary film about Petters "on any Minneapolis area network television stations," according to the statement.

The foundation alleges the newspaper "apparently succumbed to pressure from as yet unknown powerful interests, and breached a fully executed oral agreement and abandoned its journalistic obligation to educate and enlighten its readers," according to the statement.

The Star Tribune called the allegations "preposterous" in a statement released after the lawsuit was filed.

"The Star Tribune made an independent judgment to stop publishing the 'Stop the Petters Scam' ads," the statement said. "We were not pressured by anyone to do this. It was absolutely our own judgment based on the content of the ads and the direction they were going."

The company said it discussed the decision with the Stop the Petters Scam Foundation before the lawsuit was filed, and fully refunded the money for the ads, including those that had already run.

"Suing for their money back after they have already received it makes no sense to us," the statement said.