Kahn had already been asked that question in bankruptcy court, but pleaded the Fifth Amendment to avoid incriminating herself. Vail wanted to ask Petters the same question under oath. And he wanted to know what records Klobuchar had seized from Kahn’s and Hettler’s home in that January 1999 raid.
“We know that she had executed a search warrant, so she had proof and she had the records,” Vail said.
Judge Dreher denied Vail’s requests on a technicality, ruling that a bankruptcy trustee was the only party who should be asking those questions.
Vail told TheDC that deals were cut and settlements were reached in the bankruptcy matter. Petters was allowed to make a six-figure settlement payment, he said, and walk away.
“Ultimately, that lawsuit was settled, over the ownership of the [promissory] notes,” Vail said. “What happened was Petters paid in a lump sum — probably every nickel he stole from somebody — and then that money was distributed among Premier Bank and Ruth Kahn’s creditors, and the trustee for Ruth Kahn got about $50,000, and then all the victims of Hettler.”
Klobuchar criminally prosecuted Kahn for wire fraud; she pleaded guilty in 2001.
Vail recalled that as Kahn was accepting a plea agreement for wire fraud, “Klobuchar prosecuted her for aggravated forgery — which was a jolt because they were claiming that she somehow forged this assignment [of interest] from Hettler.” That interest “assignment” was the promised $60,000 payment Kahn had used as collateral for her Premier Bank loan.
“Klobuchar,” Vail said, “was taking the position that it wasn’t legitimate and that it was a forgery. It doesn’t make sense. You don’t forge your own signature. At any rate, Kahn entered into some kind of a plea bargain with Klobuchar in September 2000. She pled guilty to aggravated forgery and got probation or something.”
As for Hettler, Klobuchar pursued criminal charges against him for not paying child support — an outcome she bragged about as a success in April 1999 media reports. The Minneapolis Star Tribune reported that Hettler was sentenced to “nearly three years in prison and ordered to pay $130,000 in delinquent child support.”
In an interview with TheDC, Hettler accused Klobuchar of prosecuting him and Kahn, but not Petters, for political reasons.
Noting that Klobuchar passed on indicting Petters in 1999, Hettler said, “She would have, had she not been paid off. I mean, Petters paid her off, basically. He gave money to Klobuchar to do his bidding.”
When TheDC asked Hettler if Klobuchar ignored documents, like the promissory notes and the interest reassignment to Kahn, that were a sufficient basis to prosecute Petters in 1999, he said, “Yes. That’s true.”
“If something like this were to get out,” Hettler added, “her chances of continuing on the Senate Judiciary Committee would be very limited.”
Hettler added that some Minnesota Republicans were also tainted by Petters’ political donations. “He doled money out to both sides of the aisle, depending on whoever got elected,” Hettler said. Names he mentioned include former Minnesota Gov. Tim Pawlenty, Rep. Michele Bachmann and former Sen. Norm Coleman.
“There’s this lawsuit between Premier Bank and Kahn for the notes,” Vail said. “There were civil cases against Hettler. Klobuchar was pursuing Hettler on the notes and then there was this theft of collateral. So, there’s all kinds of dubious circumstances, and Klobuchar elects to prosecute Hettler, prosecute Kahn, but overlook Petters.”
“Petters had a criminal record that had been expunged, and it turns out that Ted Mondale is the vice president over there. Klobuchar is a Democrat, Klobuchar had worked at Dorsey & Whitney with Walter Mondale. And, then — surprise, surprise! — Petters turns out to be one of her largest contributors.”
Klobuchar, Vail added, took the position “that Kahn had committed a crime. She makes a plea bargain with Hettler, a plea bargain with Kahn — and Petters walks. And he’s the one with a financial criminal record.”
That’s the record that was expunged in 1994.
“When it’s expunged, that just means the public doesn’t have it,” Vail cautioned. “I think it’s fair to say Klobuchar could be charged with knowing what’s in that file there.”
Klobuchar’s Senate office originally tried to delay the publication of this report, and ultimately refused to comment on the record. A Hennepin County Attorney official did not return a request for comment. Through counsel, Kahn was also unavailable for comment.