UNITED STATES DISTRICT COURT                             
                    DISTRICT OF MINNESOTA                                


Douglas A. Kelley, in his Capacity as the    Case No. 0:18-cv-00868 (SRN/TNL) 
PCI Liquidating Trustee for the PCI                                      
Liquidating Trust,                                                       

          Plaintiff,                                                     
                                     MEMORANDUM OPINION                  
v.                                  AND ORDER RE: MOTIONS IN             
                                             LIMINE                      
Gus Boosalis,                                                            

          Defendant.                                                     


Andrew B. Brantingham, Christina Hanson, J. David Jackson, Lucas J. Olson, Elizabeth 
A.  Sellers,  Dorsey  &  Whitney  LLP,  50  South  6th  Street,  Suite  1500,  Minneapolis, 
Minnesota 55402, for Plaintiff Douglas A. Kelley, in his Capacity as the PCI Liquidating 
Trust for the PCI Liquidating Trust.                                      

Daniel J. Frisk, Don R. Grande, and Mark A. Schwab, Grande Frisk & 

 
34th Avenue East, Suite 200, West Fargo, ND, 58078, for Defendant Gus Boosalis.  


SUSAN RICHARD NELSON, United States District Judge                        
    Plaintiff Douglas A. Kelley, in his Capacity as the PCI Liquidating Trustee for the 
PCI Liquidating Trust (“the Trustee”) and Defendant Gus Boosalis are scheduled for trial 
in this action on November 26, 2018. The parties have collectively filed seven motions in 
limine.  For the reasons set forth herein, Defendant’s motions are denied in part and 
deferred in part and the Trustee’s motions are granted in part and deferred in part.  
 I.   BACKGROUND                                                         
    This action is one of numerous lawsuits that has arisen in the aftermath of a multi-
billion-dollar Ponzi scheme1 principally designed and operated by Tom Petters.  (See 

Second Am. Compl. ¶ 17 [Doc. No. 4-22].)  Petters operated the Ponzi scheme from 
approximately 1993 to 2008 with the assistance of several associates including Deanna 
Coleman, Robert White, Michael Catain, Larry Reynolds, Frank Vennes, and Greg Bell.  
Petters purported to operate a “diverting goods business” through PCI, which contemplated 
the purchase of electronic goods at wholesale to be resold, at a substantial profit, to large 

retailers.  United States v. Petters, 

 (8th Cir. 2011).  However, PCI 
functioned as the central funding mechanism of Petters’ Ponzi scheme, whereby Petters 
and his associates sought investors’ funding to allegedly purchase non-existent electronic 
goods. See United States v. Reynolds, 

 (8th Cir. 2011); In re Polaroid, 

 (Bankr. D. Minn. 2012).   Petters used the funds invested by later investors 

to repay initial investors.  (See Second Am. Compl. ¶¶ 21, 28–30.)        
    The Trustee alleges here that Boosalis transferred money to PCI in at least 65 
transactions totaling at least $4,640,000 in principal and received Promissory Notes.  (Id.  
¶¶ 39–41.)  Ultimately, the Trustee contends, Boosalis received at least $8,380,590 in 
distributions from PCI, representing a return of the principal that he had invested, plus 



1 A “Ponzi scheme” generally describes a fraudulent investment scheme in which money 
taken from later participants is paid to earlier participants to create the false appearance 
that  the  scheme  is  generating  returns. See Cunningham  v.  Brown, 

,  7–9 
(1924) (describing the schemes of Charles Ponzi).                         
interest, and distributions representing false profits.  (Id. ¶¶ 39–42.)  The Trustee alleges 
that the “interest rates” on the transactions between Defendant and PCI ranged from 

38.71% to 70.82% on an annualized basis.  (Id. ¶ 42.)                     
    Petters’ Ponzi scheme began to officially and permanently unravel on September 8, 
2008, when Coleman revealed to government authorities that she was assisting Petters in 
perpetrating a massive fraud through PCI.  Petters, 

.  Following a criminal 
investigation, Petters was convicted of numerous counts of fraud, for which he received a 
50-year  sentence,2  and  several  of  his  co-conspirators  were  also  convicted  for  their 

respective roles in the Ponzi scheme.3                                    
    In October 2008, this Court placed PCI in receivership and appointed Douglas 
Kelley, now the Trustee, to serve as the equity receiver (“Receiver”) of all of the Petters-
owned entities, including PCI.  (See Second Am. Compl. ¶¶ 4–5.)  At Kelley’s direction, 
PCI filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the District 

of Minnesota (“Bankruptcy Court”), and Kelley was appointed the Chapter 11 Trustee for 


2 (Second Hanson Decl. [Doc. No. 76], Ex. 1 (United States v. Petters, No. 08-CR-364(1) 
(RHK/AJB), ECF No. 400 at 1 (D. Minn.) [Doc. No. 76-1]) (judgment following jury trial 
verdict of guilty on numerous counts of wire fraud, mail fraud, money laundering, and two 
conspiracy counts).                                                       

3 (See, e.g., Second Hanson Decl., Ex. 2, United States v. Coleman, No. 08-CR-304 (RHK), 
ECF No. 40 at 1 (D. Minn.) [Doc. No. 76-1] (judgment following guilty plea to one count 
of conspiracy to commit mail fraud); 

 Ex. 3, United States v. White, No. 08-CR-299 
(RHK), ECF No. 37 at 1 (D. Minn.) [Doc. No. 76-1] (judgment after a guilty plea to one 
count of aiding and abetting mail fraud and one count of illegal monetary transactions); 

 
Exs. 4 & 6, United States v. Bell, 09-CR-269 (RHK), ECF Nos. 34 & 68 (D. Minn.) [Doc. 
No. 76-1] (judgment following guilty plea to one count of wire fraud as set forth in criminal 
Information).                                                             
all the Chapter 11 debtors, including PCI, in a jointly-administrated proceeding.  (See 

 
¶¶  7–9.)    Pursuant  to  a  confirmed  Chapter  11  Plan,  Kelley  now  serves  as  the  PCI 

Liquidating Trustee for the PCI Liquidating Trust, the successor to the Chapter 11 Trustee 
and the bankruptcy estates for the debtors.  (Id. ¶ 10.)                  
    The Trustee brought this adversary proceeding against Boosalis pursuant to various 
provisions of the Bankruptcy Code and the Minnesota Uniform Fraudulent Transfer Act, 
(the  “MUFTA”),  

.41–.51,  to  recover,  or  “clawback,”  allegedly 
fraudulent transfers that Boosalis received from PCI, and to impose a constructive trust in 

connection with any such transfers for the benefit of PCI’s bankruptcy estates.  (Second 
Am. Compl. ¶ 15.)  The Trustee alleges that every transfer that Boosalis and PCI entered 
into was based on fraudulent and fabricated financial transactions.  (Id. ¶ 45.)  The Trustee 
alleges that Boosalis should have been aware, or, through the exercise of due diligence, 
should have known of the fraudulent nature of the transactions, noting that Boosalis 

ignored several indicia of fraud and financial irregularity. (Id.)  He therefore brings fraud-
based claims against Boosalis, including fraudulent transfer claims, based on both actual 
and constructive fraud. (id. ¶¶ 50–89.)  The Trustee seeks to set aside the transfers and to 
recover the full amount of the transfers, or, alternatively, the alleged false profits and other 
payments, along with interest, attorneys’ fees, and costs.  (See 

 at 49–52.)   

    Boosalis has denied the Trustee’s allegations and raised a number of affirmative 
defenses, including:  (1) that the transfers were made to him for value and as payment of 
principal and interest on an antecedent debt; (2) that he took the transfers in good faith and 
without knowledge of the alleged voidability of the transfers at the time they were received; 
and (3) that PCI received reasonably equivalent value for the transfers.  (Answer, Aff. 
Defenses Nos. 11–13 [Doc. No. 4-24].)                                     

    In March 2018, the Honorable Kathleen H. Sanberg, the Bankruptcy Court Judge 
who presided over the adversary action in Bankruptcy Court, denied Plaintiff’s motion for 
summary judgment.  (See Mar. 28, 2018 Bankr. Ct. Order [Doc. No. 5-29].)  At that time, 
because Boosalis demanded a jury trial and did not consent to a jury trial in Bankruptcy 
Court, Judge Sanberg transferred the adversary proceeding to this Court.  (See Mar. 28, 
2018 Bankr. Ct. Transfer Order [Doc. No. 1].)                             

 II.  Defendant’s Motions in Limine                                      
            Defendant’s Motion in Limine No. 1 [Doc. No. 41]:            
                    Reasonably Equivalent Value                          

    A.   Defendant’s Argument                                            
    Boosalis argues that any testimony from the Trustee’s expert, Theodore Martens, 
relating to the “reasonably equivalent value” of Defendant’s transfers should be excluded. 
(Def.’s Mem. in Supp. Mot. in Limine No. 1 ¶ 1 [Doc. No. 42].)  While Boosalis agrees 
that Martens possesses expertise as an accountant, he contends that Martens’ opinions 
regarding reasonably equivalent value constitute improper interpretations of substantive 
law.  (Id. ¶¶ 14–15.)  Furthermore, Defendant argues that if the Court were to allow 
Martens to opine on the law, it would fall outside the scope of Martens’ expertise as an 
accountant.  (Id.)                                                        
    B.   Trustee’s Response                                              
    The Trustee argues that Martens does not intend to testify about the legal meaning 

of “reasonably equivalent value,” and that he is qualified to offers his opinion based on his 
expertise as an accountant. (Pl.’s Mem. of Law in Opp’n to Def.’s Mots. in Limine Nos. 1, 
2, 4, and 5 at 13–14 (“Pl.’s Main Opp’n”) [Doc. No. 77].)                 
    C.   Ruling                                                          
    The issue of “reasonably equivalent value” is relevant to the Trustee’s prima facie 
case as well as Defendant’s affirmative defense.  One element of a claim for constructive 

fraud under the MUFTA requires the Trustee to show that PCI made transfers to Boosalis 
“without receiving reasonably equivalent value” in return.  Finn v. Alliance Bank, 

 (Minn. 2015).  And, as part of Defendant’s affirmative defense to the 
Trustee’s claim of actual fraud, Boosalis may show that he took PCI’s transfers “in good 
faith and for reasonably equivalent value.”4 

  As defined under the MUFTA, “reasonably 

equivalent value” means that “the value of the consideration received by the debtor was 
reasonably equivalent to the value of the asset transferred or the amount of the obligation 
incurred . . . .”  

.                                  
    Although “expert testimony on legal matters is not admissible” because “[m]atters 
of law are for the trial judge,” S. Pine Helicopters, Inc. v. Phoenix Aviation Managers, Inc., 

, 841 (8th Cir. 2003), Boosalis appears to misunderstand the nature of 
Martens’ proposed testimony.  Martens will not testify regarding the legal meaning of 


4 

(a)(1).                                             
“reasonably equivalent value.”  (Pl.’s Main Opp’n at 13.)  Rather, as the Trustee asserts, 
Martens’ testimony related to this issue will address the following:  (1) the number of 

separate note transactions between Defendant and PCI; (2) the amount of principal that 
Boosalis invested with PCI; (3) the interest income that Defendant received pursuant to his 
loans  with  PCI;  (4)  whether  the  transactions  to  and  from  Boosalis  were  related  to 
potentially legitimate PCI purchases and/or sales transactions; and (5) whether the funds 
received from or sent to Boosalis were part of the PCI Ponzi scheme.  (Id.)  Such evidence 
is relevant to the factual question of whether there was an exchange for reasonably 

equivalent value.  This anticipated evidence does not constitute improper opinion on the 
substantive legal meaning of “reasonably equivalent value.”  Instead, this testimony will 
be helpful and relevant to the jury’s determination of liability.         
    However, any such testimony is only admissible subject to adequate foundation 
being laid.  Accordingly, because this motion is premature, the Court defers ruling until 

trial.                                                                    
            Defendant’s Motion in Limine No. 2 [Doc. No. 43]:            
                        Insolvency Analysis                              

    A.   Defendant’s Argument                                            
    Boosalis  also  argues  that  the  Court  should  exclude  from  evidence  Martens’ 
anticipated testimony regarding the insolvency of PCI at the time of Defendant’s transfers, 
which Boosalis contends occurred between 1996 and 2001. (Def.’s Mem. Supp. of Mot. in 
Limine No. 2 ¶ 16 [Doc. No. 44].)                                         
    Boosalis maintains that Finn, 860 N.W.2d at 646–47, prohibits any presumption of 
actual fraud based on the mere existence of a Ponzi scheme. (Def.’s Mem. Supp. of Mot. 

in Limine No. 2 ¶ 5.)  Rather, the Ponzi scheme operator must have been insolvent at the 
time of each claimed transfer.  (Id. ¶ 8) (citing Finn, 860 N.W.2d at 648–49).  Defendant 
argues that Martens fails to analyze PCI’s insolvency on a transfer-by-transfer basis at the 
time of each transaction.  Accordingly, he argues, any testimony regarding PCI’s general 
insolvency must be excluded.   (Id. ¶¶ 15–16.)                            
    B.   Trustee’s Response                                              

    Based on Martens’ analysis, the Trustee maintains that PCI was insolvent no later 
than December 31, 1996 and remained insolvent until its collapse in 2008.  (Trustee’s Main 
Opp’n at 10.)  The Trustee claims that the evidence supports Martens’ reasonable inference 
that PCI was therefore insolvent at the time of each of Defendant’s transfers.  (Id.)  
Moreover, the Trustee contends, Defendant’s argument goes to the weight of this evidence 

rather than its admissibility.  (Id.)                                     
    C.   Ruling                                                          
    In fraudulent transfer cases alleging actual fraud, because proof of actual intent 
“may rarely be established by direct evidence,” courts may “infer fraudulent intent from 
the circumstances surrounding the transfer.”  In re Sherman, 

 (8th 

Cir. 1995).  A common method of inferring actual fraudulent intent requires the court to 
consider whether the transfer in question bears indicia of fraud, or “badges of fraud.”  

   
The MUFTA contains a non-exclusive list of types of evidence that may constitute “badges 
of fraud.”  

(b).                                      
    Another method that courts have used in cases involving Ponzi schemes is to infer 
actual  fraud  by  applying  the  “Ponzi  scheme  presumption.”  See  In  re  Vaughan  Co., 

Realtors, 

 (Bankr. D. N.M. 2012) (collecting cases).  In such cases, courts 
have found that the existence of a Ponzi scheme satisfies the requirement of “actual intent.”  

  Courts applying the presumption have reasoned that “transfers made in the course of a 
Ponzi scheme could have been made for no other purpose other than to hinder, delay or 
defraud creditors,” In re Manhattan Inv. Fund Ltd., 

 (Bankr. S.D.N.Y. 
2007), rev’d in part, 

 (S.D.N.Y. 2007), and that, due to the constant churn of 

investors’ contributions and pay-outs, “[a] Ponzi scheme is insolvent from its inception.”  
Warfield v. Byron, 

 (5th Cir. 2006) (citing Cunningham v. Brown, 

, 7–8 (1924)).                                                      
    In the Minnesota Supreme Court’s 2015  decision in Finn, however, the court 
rejected the application of the Ponzi scheme presumption to fraudulent transfer claims 

under the MUFTA.  860 N.W.2d at 646–50.  Rather than applying a presumption based on 
the form of the entity making the transfer, the court held that the MUFTA “requires a 
creditor to prove the elements of a fraudulent transfer with respect to each transfer.”  Id. at 
647.                                                                      
    The court also considered the question of a debtor’s insolvency for constructive 

fraudulent transfers—and the timing of that insolvency—in noting that “a conclusive 
presumption that a Ponzi scheme is insolvent from its inception may be incorrect.”  Id. at 
649.  The court explained,                                                
    [A]s a factual matter, it is not at all clear that every fraudulent investment 
    arrangement that is later determined to be a Ponzi scheme necessarily will 
    have been insolvent from its inception. For example, it is not hard to imagine 
    a debtor that begins as a legitimate business and eventually turns to fraud, 
    which the Respondent Banks insist occurred here. Similarly, a debtor could 
    have assets or legitimate business operations aside from the Ponzi scheme, 
    as Alliance Bank argues here, that it uses to stave off insolvency, at least for 
    a while. Such an entity could be financially stable for a time, whether its 
    stability is measured by the technical definition of insolvency in 

 and 513.45(a), or the alternate methods of measuring financial 
    distress in 

(a)(2).                              

  The court acknowledged that such a Ponzi scheme “may be rare,” 

 but because under 
such circumstances, the application of the Ponzi scheme presumption could fail to correctly 
establish insolvency as to the specific date of each allegedly fraudulent transfer, the court 
rejected the presumption that a Ponzi scheme is insolvent from its inception.   

    
    Here, Martens analyzed the potential sources and uses of funds transferred between 
PCI and Defendant to determine if any of the notes issued by PCI were related to potentially 
real purchases or sales transactions.  (Third Hanson Decl. [Doc. No. 78], Ex. 1 (Martens 
Tracing Report ¶ 10 [Doc. No. 78-1]).)  In his detailed Tracing Report, Martens describes 
his investigative process, including the examination of each transaction between PCI and 
Boosalis.  (See 

 ¶¶ 11–36.)  He ultimately finds “no evidence to indicate that the 
course/use of the transfers to/from the Defendant were related to potentially real purchases 
and/or sales transactions.  Rather the Defendant’s PCI Transactions appear to have been 
associated with the serial churn of funds observed in connection with the Petters Ponzi 
scheme.”  (Id. ¶ 12.)  Martens references a separate insolvency report that he prepared 
regarding the financial condition of PCI and PGW at the time of Defendant’s transactions 
with PCI, which involved a review of those entities’ financial statements.  (See id. ¶ 35.)  
He offers the opinion that PCI was insolvent by December 31, 1996 at the latest, and never 
emerged from insolvency.  (Id.)                                           

    Boosalis argues that Martens’ opinion regarding PCI’s insolvency at the time of the 
relevant transfers should be excluded because it fails to meet the standard of proof under 
Finn.  To be sure, Finn foreclosed a creditor from solely relying on the existence of a Ponzi 
scheme to establish insolvency.  See Finn, 860 N.W.2d at 647–52.  But it did not address 
the type of proof on which a plaintiff could rely to establish a debtor’s insolvency.  Martens 
has examined PCI’s financial records during a period that includes the relevant period here, 

1996 to 2002, and found that PCI was insolvent during that entire period.  (See Martens 
Tracing Report ¶ 35.)  This review process is not the same as simply relying on a blanket 
Ponzi scheme presumption, as prohibited by Finn.                          
    The Court will not rule on this motion, however, before the testimony in question is 
proffered.  Assuming the proper foundation has been laid, Finn does not prohibit this 

testimony.                                                                
            Defendant’s Motion in Limine No. 3 [Doc. No. 45]:            
       Evidence of Criminal Prosecutions of Ponzi Scheme Participants    

    A.   Defendant’s Argument                                            
    Boosalis argues that any reference to the criminal prosecutions and testimony of 
Tom Petters and his co-conspirators should be excluded from evidence as irrelevant.  
(Def.’s Mem. Supp. of Mot. in Limine No. 3 ¶¶ 4–5, 7 [Doc. No. 46].)  Boosalis asserts 
that his involvement with PCI, from 1996 to 2001, pre-dated the years-later activities for 
which White was convicted.5  (Id. ¶¶ 4–5.)  Further, he contends that the convictions of 
Petters, Coleman, and Catain were based on their participation in the overall Ponzi scheme, 

without reference to specific dates, transactions, or dealings, and evidence concerning their 
prosecutions is similarly irrelevant. (Id.)                               
    In addition, Boosalis maintains that admission of this evidence would be prejudicial. 
(Id. ¶ 8.)  Given the lack of temporal proximity, Boosalis contends that this evidence would 
be confusing and  misleading, inviting the jury to unfairly decide this case based on 
emotion.  (Id. ¶ 9.)  He asserts that the admission of such evidence would also be a waste 

of time, asserting that while the Trustee is attempting “to blanket the entire PCI operation 
as a Ponzi scheme,” there was “substantial legitimate business for years prior to the 
convictions.” (Id. ¶ 10.)                                                 
    Boosalis also argues that such evidence is inadmissible under Finn.  (Id. ¶ 11.)  
Essentially, Boosalis contends that evidence of the convictions would serve as a proxy for 

the Ponzi scheme presumption, which Finn prohibits. (Id.) (citing 

).)  
    B.   Trustee’s Response                                              
    The Trustee asserts that evidence of the criminal convictions of several Ponzi 
scheme participants is relevant to establish that PCI functioned as a Ponzi scheme from the 
time of its inception in 1994 through September 2008, when the fraud was uncovered.  



5 For the same reason, Boosalis also sought to exclude evidence concerning Ponzi scheme 
participants Vennes and Bell.  (Def.’s Mem. Supp. of Mot. in Limine No. 3 ¶¶ 4–5.)  
However, the Trustee no longer seeks to introduce evidence concerning their convictions.  
The Court’s discussion is therefore limited to evidence concerning the convictions of 
White, Petters, Coleman, Catain, Reynolds, and the entity PCI.            
(Pl.’s Opp’n Crim. Pros. at 2 [Doc. No. 75].)   The Trustee asserts that he should be allowed 
to  introduce  this  evidence  to  rebut  Defendant’s  “unsubstantiated  claims”  that  PCI 

conducted legitimate business during the time of Defendant’s transfers and to prove that 
PCI “made transfers to Boosalis with intent to defraud its creditors.” (Id. at 3.)  
    The Trustee contends that White’s conviction was based on his actions from 1995 
to 2008, a portion of which time Boosalis was, in fact, engaged in transactions with PCI.  
(id. at 6) (citing Second Hanson Decl., Exs. 3 & 5 (United States v. Robert White, No. 08-
cr-299, ECF Nos. 37 & 1 ¶ 1 (D. Minn) [Doc. No. 76-1]), and that all of the evidence  with 

respect to the other convicted participants relates to acts that occurred between 1996 and 
2001.  The Trustee contends that Finn does not prohibit the admissibility of specific types 
of evidence offered as proof of fraudulent transfer.  (Id. at 4) (citing Finn, 

).  To the contrary, the Trustee argues, Finn contemplates the use of this type of 
evidence, noting that “a court could consider a debtor’s operation of a Ponzi scheme” as a 

badge of fraud.  (Id.) (citing 

).   In sum, the Trustee claims that evidence 
related to the criminal prosecutions of Petters and his associates is relevant and forms only 
one part of the Trustee’s proof that PCI made a fraudulent transfer to Boosalis.  (Id. at 5.)   
    Moreover, the Trustee claims that Boosalis has failed to meet his burden to exclude 
the evidence under Federal Rule of Evidence 403, as the convictions are not substantially 

more prejudicial than probative.  (Id. at 7–8.)  The Trustee contends that Boosalis is free to 
argue to the jury that they should not give any weight to the convictions.  (Id. at 8.)   At a 
minimum,  the  Trustee  asserts,  the  Court  should  defer  ruling  on  the  relevance  and 
admissibility of any conviction until trial.  (Id.)                       
    C.   Ruling                                                          
    The Court agrees with the Trustee that evidence related to the criminal prosecutions 

of the participants in Petters’ Ponzi scheme at the time of Boosalis’ transactions with PCI, 
including participants with involvement throughout the entire life of the Ponzi scheme, is 
relevant to the question of whether PCI operated as a legitimate business.  As noted, Finn 
does not bar any specific type of evidence that may be admitted to establish badges of fraud, 
and in fact acknowledges that courts may consider the debtor’s operation of a Ponzi scheme 
as a non-conclusive badge of fraud.  

.   Granted, Finn prohibits any 

presumption or conclusive determination of fraudulent transfer simply due to the existence 
of a Ponzi scheme.  But the Trustee does not seek to invoke such a presumption through 
the admission of this evidence.  Defendant’s motion is therefore denied and evidence 
concerning the criminal convictions of Petters, Coleman, White, Reynolds, Catain, and the 
entity PCI shall not be excluded based on Finn.                           

            Defendant’s Motion in Limine No. 4 [Doc. No. 47]:            
                   Transfer-By-Transfer Analysis                         

    A.   Defendant’s Argument                                            
    Boosalis  argues  that  any  testimony  from  Martens  concerning  the  transfer-by-
transfer analysis of Boosalis’ promissory notes should be excluded in light of Finn.  (Def.’s 
Mem. Supp. of Mot. in Limine No. 4 ¶ 2 [Doc. No. 48].)  Boosalis contends that Martens 
cannot account for the ultimate use or disposition of every one of Boosalis’ transfers, some 
of which may have funded legitimate business expenditures.  (Id. ¶ 14.)  He points to 
certain deposition testimony in which Martens acknowledged that the funds received by 
PCI were “comingled,” some of which may have been used for apparently legitimate 
purchases such as “Apex or Samsonite.”  (Id. ¶¶ 10–11).  Accordingly, Boosalis argues, 

because Martens did not analyze Boosalis’ transfers individually once they reached PCI, 
his testimony exceeds the scope of his expertise and should be excluded. (Id. ¶¶ 17–18, 
20.)                                                                      
    B.   Trustee’s Response                                              
    The Trustee contends that while Finn requires evidence of each transfer, neither 
Finn nor any other applicable law requires the Trustee to trace the sources and uses of the 

funds exchanged between Defendant and PCI.  (Pl.’s Main Opp’n at 6) (citing 

).  Rather, he argues, Martens’ expert report details each of Boosalis’ transactions with 
PCI.  (Id.)  Moreover, in his Tracing Report, Martens did trace the potential sources of 
funding to, or use of proceeds from, each of Boosalis’ transfers with PCI.  (Id.) (citing 
Third Hanson Decl., Ex. 1 (Exs. D & E to Martens Tracing Report [Doc. No. 78-1]).) 

    In the Tracing Report, Martens “concluded that there was no evidence to indicate 
that the source or use of any transfers to or from [Boosalis] were related to potentially real 
purchases and/or sales transactions,” instead of fraudulent activities. (Id. at 7–8) (citing 
Martens Tracing Report ¶ 36) (“there was no evidence to indicate that the source/use of the 
transfers  to/from  [Boosalis]  were  related  to  potentially  real  purchases  and/or  sales 

transactions”).                                                           
    C.   Ruling                                                          
    The Court will not rule on this motion before the testimony in question is offered 
and proper foundation has been laid.                                      
            Defendant’s Motion in Limine No. 5 [Doc. No. 49]:            
                          Interest Rates                                 

    A.   Defendant’s Argument                                            
    Boosalis argues that Martens may not opine on the reasonableness of the interest 
paid on Boosalis’ promissory notes. (Def.’s Mem. Supp. Mot. in Limine No. 5 ¶ 1 [Doc. 
No. 50].)  He contends that Martens does not have the requisite experience or knowledge 
in purchase order financing or diverting businesses to offer this opinion, and he failed to 
conduct a proper analysis. (Id. ¶¶ 3–4, 14.)   Accordingly, Boosalis asserts, Martens’ 
opinion as to the reasonableness of interest rates is unreliable. (Id. ¶ 14.)  
    B.   Trustee’s Response                                              
    The Trustee maintains that Martens has the requisite knowledge and experience 

related  to  the  financial  transactions  in  question, as  he  has  been involved  in account 
investigations related to PCI for “nearly a decade” and has worked as a Certified Public 
Accountant since 1981. (Trustee Main Opp’n at 11) (citing Third Hanson Decl., Ex. 1 (Ex. 
1 to Martens Tracing Report [Doc. No. 78-1]).)  Thus, the Trustee contends, it is within the 
scope of Martens’ expertise to compare typical lending rates with the rates on Boosalis’ 

notes—rates that ranged from 38.71% to 70.82% on an annualized basis for transactions 
characterized as zero-risk deals for the purchase and resale of goods to a guaranteed buyer. 
(Id.) (citing Third Hanson Decl., Ex. 1 (Martens Tracing Report ¶ 8).)  Also, the Trustee 
notes that Defendant will have the opportunity to cross examine Martens and the jury will 
decide how much weight to afford his testimony. (Id. at 12) (citing Weaver v. Mobile 

Diagnostech, Inc., Civ. No. 02-1719, 

, at *8 (W.D. Pa. April 30, 2009)).  
The Trustee therefore asserts that the Court should allow Martens to testify regarding the 
reasonableness of interest paid on Boosalis’ promissory notes, or defer the question until 

trial, when the Court will be more familiar with Martens’ knowledge and experience with 
respect to Defendant’s note transactions with PCI.  (Id.)                 
    C.   Ruling                                                          
    Subject to proper foundation being laid, the Court defers ruling on this motion until 
trial.                                                                    
III.   Trustee’s Motions in Limine                                        

             Trustee’s Motion in Limine No. 1 [Doc. No. 58]:             
          Evidence Concerning Vice President Walter Mondale,             
                    Ted Mondale, and Tom Hays                            

    A.   Trustee’s Argument                                              
    The Trustee seeks to preclude evidence concerning the supposed involvement of 
Ted Mondale and former Dorsey & Whitney attorneys Vice President Walter Mondale and 
Tom Hay, with Tom Petters.  (See Pl.’s Mem. Supp. Mot. in Limine No. 1 at 2 [Doc. No. 
59].)  Specifically, with respect to Hay, the Trustee seeks to exclude evidence regarding 
Hay’s work for Petters-related entities other than PCI.  (Id. at 1.) Boosalis has asserted that 
their purported involvement with Petters played a role in Boosalis’ decision to lend funds 
to PCI, because it suggested that Petters was running a legitimate business.  (Id.)  The 
Trustee contends that this evidence does not meet the relevance standard under Federal 
Rule of Evidence 401 and should also be excluded as unfairly prejudicial under Federal 
Rule of Evidence 403. (Id. at 4.)                                         
    In a separate adversary proceeding in Bankruptcy Court, Ted Mondale testified that 
beginning in approximately 1999 through 2002 or 2003, he was the part-time President of 
Red Tag World, a Petters-controlled entity unrelated to PCI.6  (First Hanson Decl. [Doc. 

No. 60], Ex. C (Mondale Dep. at 8, 17 [Doc. No. 60-1]).)  He testified that his primary duty 
was to travel to Asia four times per year to develop relationships between Red Tag World 
and various Asian enterprises, (id. at 9), and that he was not involved with PCI or any 
Petters-related financial transactions. (Id. at 18.)  Also, Mondale stated that his father, Vice 
President Mondale, never served as an officer, director, employee, or attorney for any 

Petters entity, although at one time, perhaps unbeknownst to Vice President Mondale, Tom 
Petters identified him as a “senior advisor” to Red Tag Japan.  (Id. at 14–15.)  Ted Mondale 
testified that his father had very little to do with Red Tag Japan, noting that he helped 
arrange a meeting between Ted and a Japan-based chamber of commerce and made an 
introduction.  (Id. at 19–20.)                                            

    Tom Hay is a retired Dorsey & Whitney attorney who worked with the Petters 
entities from approximately 1998 to 1999 as Executive Vice President, Legal Affairs and 
Development.  (Hanson Decl., Ex. E (Hay Dep. at 42–44, 69).)  He testified that he was 
unaware of the specific Petters entity for which he worked.  (Id. at 44.)  Hay also testified 



6 In the separate Bankruptcy Court proceeding, certain defendants had sought discovery 
concerning Dorsey & Whitney’s relationship with PCI and other Petters entities unrelated 
to PCI.  (See Pl.’s Mem. Supp. Mot. in Limine No. 1 at 2–3.)  Although the Bankruptcy 
Court questioned the relevance of the evidence, (First Hanson Decl. [Doc. No. 60], Ex. B 
(Bankr. D. Minn. Oct. 25, 2017 Hr’g Tr. at 21 [Doc. No. 60-1])), it permitted the deposition 
of Ted Mondale.                                                           
that he did not assist or participate in any PCI transactions, nor did he see a PCI bank 
statement.  (Id. at 188–89.)                                              

    In addition to stressing the limited involvement of the Mondales and Hay with 
Petters, the Trustee also emphasizes the lack of a temporal connection between Boosalis’ 
investments and the time periods in which the Mondales and Hay worked for Petters-
related entities.  He contends that Ted Mondale did not become part-time president of Red 
Tag World, and Vice President Mondale was not identified as a senior advisor to Red Tag 
World, until 1998—two years after Boosalis had executed his December 1996 promissory 

note to PCI.  (Pl.’s Mem. Supp. Mot. in Limine No. 1 at 5.)  Thus, the Trustee asserts, any 
suggestion that the Mondales influenced Boosalis’ due diligence, is belied by the fact that 
Boosalis made his investments in PCI before the Mondales were involved with Red Tag 
World.  (Id. at 4–6.)   Finally, the Trustee asserts that Boosalis never spoke to Walter or 
Ted Mondale about their involvement with Red Tag World. (Id.)             

    Similarly, the Trustee asserts that Boosalis made his initial investments in PCI in 
December 1996, well before Hay began working for the Petters entities in early 1998.  (Id. 
at 6.)                                                                    
    B.   Defendant’s Response                                            
    Boosalis responds that evidence regarding the Mondales and Hay is relevant to 

“issues of good faith” and the appearance of legitimacy because “[t]he involvement of the 
Mondales and Mr. Hay lent credibility to [PCI’s] good-will.” (Def.’s Opp’n to Pl.’s Mot. 
in Limine No. 1 ¶¶ 2, 5–6, 8 [Doc. No. 70].)                              
    Regarding the Mondales, Boosalis asserts that numerous magazine articles and 
Petters’ publicity materials noted their association with Tom Petters and PCI, although 

Boosalis does not provide any examples as exhibits.  (Id. ¶ 3.)  Boosalis states that while 
he does not intend to call either of the Mondales as trial witnesses, he plans to mention 
them during his own testimony.  (Id. ¶ 13.)  As to Hay, Boosalis acknowledges that he 
never spoke with him directly.  (Id. ¶ 6.)  However, Boosalis claims that even if Hay’s 
involvement with Petters did not begin until 1997, Hay’s involvement nonetheless caused 
Boosalis to continue to loan money to PCI. (Id.)                          

    C.   Ruling                                                          
    The Court finds that any evidence concerning the involvement of the Mondales is 
irrelevant  to  Defendant’s  decision  to  engage  in  transactions  with  PCI.  Boosalis’ 
investments  were  with  PCI  and  were  initially  made  before  any  involvement  of  the 
Mondales with Red Tag World.  Neither Vice President Mondale nor Ted Mondale were 

involved with PCI, and Vice President Mondale’s role even with respect to Red Tag World 
was minimal.  Plaintiff’s motion in limine is therefore granted with respect to evidence 
concerning the Mondales.                                                  
    Hay’s involvement with the Petters’ entities was a bit less clear, as Hay testified that 
he was unsure which Petters entity initially employed him.  (Hanson Decl., Ex. E (Hay 

Dep. at 44) (“Q: Who did you think you were working for in the beginning?  A:  Petters 
Company; Q: Inc. or -- ? A: I don’t know, working for Petters.  I mean, it didn’t matter to 
me.  They were putting me on the payroll and they were going to send me $5,000 a month, 
as long as I wasn’t fired.”).  Although Hay disclaimed any involvement with PCI financial 
transactions, (id., Ex. A (Hay Dep. 188–89), given Hay’s potentially broader role within 
“the Petters entities,” to the extent that evidence demonstrates his involvement with PCI, 

it may be relevant to Boosalis’ defense.  However, the Trustee does not seek to exclude 
evidence regarding Hay as it relates to Hay’s work for PCI.  (See Pl.’s Mem. Supp. Mot. 
in Limine No. 1 at 1.)                                                    
    At the hearing on the motions in limine, the Court requested that the Trustee file a 
complete copy of Hay’s deposition.  Following the Court’s review of the deposition 
transcript, it will rule on this motion.  Accordingly, a ruling on this portion of the Trustee’s 

motion is deferred.                                                       
             Trustee’s Motion in Limine No. 2 [Doc. No. 63]:             
                   Hearsay in Investigative Reports                      

    A.   Trustee’s Argument                                              
    The Trustee argues that eleven FBI and IRS investigative memoranda should be 
excluded from evidence on hearsay grounds. (Pl.’s Mem. Supp. Mot. in Limine No. 2 at 1 
[Doc. No. 64].)  These documents were filed as Defendant’s Trial Exhibits D-2 through D-
12.  The Trustee contends that the reports contain hearsay within hearsay, pointing to out-
of-court statements made by the agents who conducted the interviews, as well as the 
statements purportedly made by the interviewees, some of whom relied on yet more 
hearsay in responding to the agents’ questions. (Id. at 1–2.)             
    Considering the multi-layered hearsay, the Trustee asserts that the reports are not 
admissible under the business records or public records exception to the hearsay rule. (Id.) 

(citing Fed. R. Evid. 803(6), 803(8).)  In addition, the Trustee argues that the residual 
exception to the hearsay rule, Federal Rule of Evidence 807, is inapplicable because there 
is no guarantee of the statements’ trustworthiness, as the statements in question were not 

made under oath and were summarized by an agent. (Id. at 3.)  Moreover, the Trustee 
asserts that the statements are not recorded recollections under Federal Rule of Evidence 
803(5) because the witnesses did not make or adopt the reports, the reports were not 
transcripts, and the reports were not signed by the witnesses. (Id.)      
    B.   Defendant’s Response                                            
    Boosalis  argues  that  the  memoranda  should  be  admitted  under  the  hearsay 

exceptions for regularly conducted business activity, Fed. R. Evid. 803(6), or public 
records, Fed. R. Evid. 803(8).  (Def.’s Opp’n to Pl.’s Mot. in Limine No. 2 [Doc. No. 69].)  
The reports that Boosalis seeks to admit, he asserts, satisfy the criteria for the business 
records exception, because (1) they were made at or near the time of the interview and were 
transmitted by a person with knowledge; (2) they were kept in the regular course of 

business; (3) FBI and IRS agents regularly draft such memoranda; (4) the documents bear 
signatures or certification; and (5) there is no indication of a lack of trustworthiness.  (Id. 
at 3.)                                                                    
    Boosalis also claims that the memoranda are admissible pursuant to the public 
records exception to the hearsay rule, asserting that under this rule, “factual findings 

resulting  from  an  investigation  made  pursuant  to  authority  granted  by  law”  may  be 
admitted, unless a lack of trustworthiness is indicated.  (Id. at 4) (citing Gardner v. Comm’r 
of Pub. Safety, 

 (Minn. Ct. App. 1988).)  Defendant contends that this 
exception is satisfied because: (1) the memoranda set forth the agents’ activities; (2) the 
subject  matter  was  observed  in  the  course  of  the  declarants’  legal  duties;  (3)  the 
investigation was part of a criminal case; and (4) the source does not lack trustworthiness, 

as the memoranda are signed by the agents in question.  (Id.)             
    Additionally, Boosalis contends that the reports fall under the residual exception to 
the hearsay rule, which permits a court to admit statements that have “circumstantial 
guarantees of trustworthiness” provided that they also meet the other requirements for 
admissibility including “materiality, probative value, the interests of justice, and notice.” 
(Id. at 4–5) (citing United States v. Halk, 

, 488–89 (8th Cir. 2011)).   

    Finally, Boosalis claims that at least one of the witnesses interviewed, Deanna 
Coleman, will testify at trial. (Id. at 2.)  Boosalis states that he will only seek to admit the 
report in question for purposes of impeachment. (Id.)                     
    C.   Ruling                                                          
    Under Federal Rule of Evidence 805, hearsay within hearsay is inadmissible unless 

“‘each part of the combined statements conforms with an exception to the rule [against 
hearsay].’” Glaze v. Byrd, 

 (8th Cir. 2013) (quoting Fed. R. Evid. 805).  
Here, even if the memoranda in question were regularly maintained in the course of the 
agencies’ “businesses,” or constitute public records, the witness statements contained 
within the documents remain hearsay, and in some instances, hearsay within hearsay.  

Boosalis does not identify the hearsay exceptions applicable to the specific portions of 
these reports.                                                            
    Moreover, the residual exception under Fed. R. Evid. 807 is inapplicable.  Evidence 
admitted under this exception requires the proponent to establish that:   
         (1) the  statement  has  equivalent  circumstantial  guarantees  of 
           trustworthiness;                                              

         (2) it is offered as evidence of a material fact;               

         (3) it is more probative on the point for which it is offered than any 
           other evidence that the proponent can obtain through reasonable 
           efforts; and                                                  

         (4) admitting it will best serve the purposes of these rules and the 
           interests of justice.                                         

Fed.  R.  Evid.  807  (a).    This  rule  is  applied  “very  rarely  and  only  in  exceptional 
circumstances.”  Halk, 

.  As the Trustee notes, these interviews, which were 
not made under oath, nor transcribed, fail to satisfy the requirement of circumstantial 
guarantees of trustworthiness.                                            
    To the extent that Coleman is expected to testify, “a law enforcement memorandum 
“is not more probative . . . than live testimony.”  See United States v. Sparkmak, 

 (E.D. Mo. 2006).  If Coleman testifies, Defendant will have an opportunity to 
obtain testimony.  But many of the statements attributed to Coleman in the IRS memoranda 
marked as D-5, are hearsay, and contain hearsay within hearsay.           
    For all the foregoing reasons, Plaintiff’s motion is granted, and these memoranda 
are excluded from evidence as they contain inadmissible hearsay.          
IV.  Order                                                                
    Based on the foregoing, and all the files, records, and proceedings herein, IT IS 
HEREBY ORDERED that:                                                      
    1.   Defendant’s Motion in Limine No. 1, to exclude any and all evidence, 
    references  to  evidence,  testimony,  or  any  argument  from  Plaintiff’s  expert, 
Theodore  Martens,  relating  to  reasonably  equivalent  value  [Doc.  No.  41],  is 
DEFERRED;                                                            

2.   Defendant’s Motion in Limine No. 2, to preclude Plaintiff’s expert, Theodore 
Martens,  from  testifying  with  respect  to  any  transfer-by-transfer  analysis  re: 
insolvency [Doc. No. 43], is DEFERRED;                               
3.   Defendant’s Motion in Limine No. 3, to exclude evidence and testimony of 
criminal prosecutions [Doc. No. 45] is DENIED;                       
4.   Defendant’s Motion in Limine No. 4, to exclude any and all evidence, 

testimony or any argument from Plaintiff’s expert, Theodore Martens, relating to 
transfer-by-transfer analysis of Defendant’s notes [Doc. No. 47], is DEFERRED;  
5.   Defendant’s Motion in Limine No. 5, to exclude any and all evidence and 
testimony by Plaintiff’s expert, Theodore Martens, relative to interest rates paid to 
defendant [Doc. No. 49], is DEFERRED;                                

6.   The Trustee’s Motion in Limine No. 1 [Doc. No. 58] is GRANTED in part 
with  respect  to  the  exclusion  of  evidence  regarding  and  testimony  from  Vice 
President Mondale, and his son, Ted Mondale, and DEFERRED in part with 
respect to evidence regarding and testimony from Tom Hay regarding his work for 
Petters-related entities other than Petters Company, Inc.; and       

7.   The  Trustee’s  Motion  in  Limine  No.  2,  to  exclude  any  IRS  or  FBI 
investigative memoranda Defendant may seek to admit into evidence [Doc. No. 63], 
is GRANTED.                                                          
November 19, 2018                  s/Susan Richard Nelson            
                                  Susan Richard Nelson              
                                  United States District Judge      

                UNITED STATES DISTRICT COURT                             
                    DISTRICT OF MINNESOTA                                


Douglas A. Kelley, in his Capacity as the    Case No. 0:18-cv-00868 (SRN/TNL) 
PCI Liquidating Trustee for the PCI                                      
Liquidating Trust,                                                       

          Plaintiff,                                                     
                                     MEMORANDUM OPINION                  
v.                                  AND ORDER RE: MOTIONS IN             
                                             LIMINE                      
Gus Boosalis,                                                            

          Defendant.                                                     


Andrew B. Brantingham, Christina Hanson, J. David Jackson, Lucas J. Olson, Elizabeth 
A.  Sellers,  Dorsey  &  Whitney  LLP,  50  South  6th  Street,  Suite  1500,  Minneapolis, 
Minnesota 55402, for Plaintiff Douglas A. Kelley, in his Capacity as the PCI Liquidating 
Trust for the PCI Liquidating Trust.                                      

Daniel J. Frisk, Don R. Grande, and Mark A. Schwab, Grande Frisk & 

 
34th Avenue East, Suite 200, West Fargo, ND, 58078, for Defendant Gus Boosalis.  


SUSAN RICHARD NELSON, United States District Judge                        
    Plaintiff Douglas A. Kelley, in his Capacity as the PCI Liquidating Trustee for the 
PCI Liquidating Trust (“the Trustee”) and Defendant Gus Boosalis are scheduled for trial 
in this action on November 26, 2018. The parties have collectively filed seven motions in 
limine.  For the reasons set forth herein, Defendant’s motions are denied in part and 
deferred in part and the Trustee’s motions are granted in part and deferred in part.  
 I.   BACKGROUND                                                         
    This action is one of numerous lawsuits that has arisen in the aftermath of a multi-
billion-dollar Ponzi scheme1 principally designed and operated by Tom Petters.  (See 

Second Am. Compl. ¶ 17 [Doc. No. 4-22].)  Petters operated the Ponzi scheme from 
approximately 1993 to 2008 with the assistance of several associates including Deanna 
Coleman, Robert White, Michael Catain, Larry Reynolds, Frank Vennes, and Greg Bell.  
Petters purported to operate a “diverting goods business” through PCI, which contemplated 
the purchase of electronic goods at wholesale to be resold, at a substantial profit, to large 

retailers.  United States v. Petters, 

 (8th Cir. 2011).  However, PCI 
functioned as the central funding mechanism of Petters’ Ponzi scheme, whereby Petters 
and his associates sought investors’ funding to allegedly purchase non-existent electronic 
goods. See United States v. Reynolds, 

 (8th Cir. 2011); In re Polaroid, 

 (Bankr. D. Minn. 2012).   Petters used the funds invested by later investors 

to repay initial investors.  (See Second Am. Compl. ¶¶ 21, 28–30.)        
    The Trustee alleges here that Boosalis transferred money to PCI in at least 65 
transactions totaling at least $4,640,000 in principal and received Promissory Notes.  (Id.  
¶¶ 39–41.)  Ultimately, the Trustee contends, Boosalis received at least $8,380,590 in 
distributions from PCI, representing a return of the principal that he had invested, plus 



1 A “Ponzi scheme” generally describes a fraudulent investment scheme in which money 
taken from later participants is paid to earlier participants to create the false appearance 
that  the  scheme  is  generating  returns. See Cunningham  v.  Brown, 

,  7–9 
(1924) (describing the schemes of Charles Ponzi).                         
interest, and distributions representing false profits.  (Id. ¶¶ 39–42.)  The Trustee alleges 
that the “interest rates” on the transactions between Defendant and PCI ranged from 

38.71% to 70.82% on an annualized basis.  (Id. ¶ 42.)                     
    Petters’ Ponzi scheme began to officially and permanently unravel on September 8, 
2008, when Coleman revealed to government authorities that she was assisting Petters in 
perpetrating a massive fraud through PCI.  Petters, 

.  Following a criminal 
investigation, Petters was convicted of numerous counts of fraud, for which he received a 
50-year  sentence,2  and  several  of  his  co-conspirators  were  also  convicted  for  their 

respective roles in the Ponzi scheme.3                                    
    In October 2008, this Court placed PCI in receivership and appointed Douglas 
Kelley, now the Trustee, to serve as the equity receiver (“Receiver”) of all of the Petters-
owned entities, including PCI.  (See Second Am. Compl. ¶¶ 4–5.)  At Kelley’s direction, 
PCI filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the District 

of Minnesota (“Bankruptcy Court”), and Kelley was appointed the Chapter 11 Trustee for 


2 (Second Hanson Decl. [Doc. No. 76], Ex. 1 (United States v. Petters, No. 08-CR-364(1) 
(RHK/AJB), ECF No. 400 at 1 (D. Minn.) [Doc. No. 76-1]) (judgment following jury trial 
verdict of guilty on numerous counts of wire fraud, mail fraud, money laundering, and two 
conspiracy counts).                                                       

3 (See, e.g., Second Hanson Decl., Ex. 2, United States v. Coleman, No. 08-CR-304 (RHK), 
ECF No. 40 at 1 (D. Minn.) [Doc. No. 76-1] (judgment following guilty plea to one count 
of conspiracy to commit mail fraud); 

 Ex. 3, United States v. White, No. 08-CR-299 
(RHK), ECF No. 37 at 1 (D. Minn.) [Doc. No. 76-1] (judgment after a guilty plea to one 
count of aiding and abetting mail fraud and one count of illegal monetary transactions); 

 
Exs. 4 & 6, United States v. Bell, 09-CR-269 (RHK), ECF Nos. 34 & 68 (D. Minn.) [Doc. 
No. 76-1] (judgment following guilty plea to one count of wire fraud as set forth in criminal 
Information).                                                             
all the Chapter 11 debtors, including PCI, in a jointly-administrated proceeding.  (See 

 
¶¶  7–9.)    Pursuant  to  a  confirmed  Chapter  11  Plan,  Kelley  now  serves  as  the  PCI 

Liquidating Trustee for the PCI Liquidating Trust, the successor to the Chapter 11 Trustee 
and the bankruptcy estates for the debtors.  (Id. ¶ 10.)                  
    The Trustee brought this adversary proceeding against Boosalis pursuant to various 
provisions of the Bankruptcy Code and the Minnesota Uniform Fraudulent Transfer Act, 
(the  “MUFTA”),  

.41–.51,  to  recover,  or  “clawback,”  allegedly 
fraudulent transfers that Boosalis received from PCI, and to impose a constructive trust in 

connection with any such transfers for the benefit of PCI’s bankruptcy estates.  (Second 
Am. Compl. ¶ 15.)  The Trustee alleges that every transfer that Boosalis and PCI entered 
into was based on fraudulent and fabricated financial transactions.  (Id. ¶ 45.)  The Trustee 
alleges that Boosalis should have been aware, or, through the exercise of due diligence, 
should have known of the fraudulent nature of the transactions, noting that Boosalis 

ignored several indicia of fraud and financial irregularity. (Id.)  He therefore brings fraud-
based claims against Boosalis, including fraudulent transfer claims, based on both actual 
and constructive fraud. (id. ¶¶ 50–89.)  The Trustee seeks to set aside the transfers and to 
recover the full amount of the transfers, or, alternatively, the alleged false profits and other 
payments, along with interest, attorneys’ fees, and costs.  (See 

 at 49–52.)   

    Boosalis has denied the Trustee’s allegations and raised a number of affirmative 
defenses, including:  (1) that the transfers were made to him for value and as payment of 
principal and interest on an antecedent debt; (2) that he took the transfers in good faith and 
without knowledge of the alleged voidability of the transfers at the time they were received; 
and (3) that PCI received reasonably equivalent value for the transfers.  (Answer, Aff. 
Defenses Nos. 11–13 [Doc. No. 4-24].)                                     

    In March 2018, the Honorable Kathleen H. Sanberg, the Bankruptcy Court Judge 
who presided over the adversary action in Bankruptcy Court, denied Plaintiff’s motion for 
summary judgment.  (See Mar. 28, 2018 Bankr. Ct. Order [Doc. No. 5-29].)  At that time, 
because Boosalis demanded a jury trial and did not consent to a jury trial in Bankruptcy 
Court, Judge Sanberg transferred the adversary proceeding to this Court.  (See Mar. 28, 
2018 Bankr. Ct. Transfer Order [Doc. No. 1].)                             

 II.  Defendant’s Motions in Limine                                      
            Defendant’s Motion in Limine No. 1 [Doc. No. 41]:            
                    Reasonably Equivalent Value                          

    A.   Defendant’s Argument                                            
    Boosalis argues that any testimony from the Trustee’s expert, Theodore Martens, 
relating to the “reasonably equivalent value” of Defendant’s transfers should be excluded. 
(Def.’s Mem. in Supp. Mot. in Limine No. 1 ¶ 1 [Doc. No. 42].)  While Boosalis agrees 
that Martens possesses expertise as an accountant, he contends that Martens’ opinions 
regarding reasonably equivalent value constitute improper interpretations of substantive 
law.  (Id. ¶¶ 14–15.)  Furthermore, Defendant argues that if the Court were to allow 
Martens to opine on the law, it would fall outside the scope of Martens’ expertise as an 
accountant.  (Id.)                                                        
    B.   Trustee’s Response                                              
    The Trustee argues that Martens does not intend to testify about the legal meaning 

of “reasonably equivalent value,” and that he is qualified to offers his opinion based on his 
expertise as an accountant. (Pl.’s Mem. of Law in Opp’n to Def.’s Mots. in Limine Nos. 1, 
2, 4, and 5 at 13–14 (“Pl.’s Main Opp’n”) [Doc. No. 77].)                 
    C.   Ruling                                                          
    The issue of “reasonably equivalent value” is relevant to the Trustee’s prima facie 
case as well as Defendant’s affirmative defense.  One element of a claim for constructive 

fraud under the MUFTA requires the Trustee to show that PCI made transfers to Boosalis 
“without receiving reasonably equivalent value” in return.  Finn v. Alliance Bank, 

 (Minn. 2015).  And, as part of Defendant’s affirmative defense to the 
Trustee’s claim of actual fraud, Boosalis may show that he took PCI’s transfers “in good 
faith and for reasonably equivalent value.”4 

  As defined under the MUFTA, “reasonably 

equivalent value” means that “the value of the consideration received by the debtor was 
reasonably equivalent to the value of the asset transferred or the amount of the obligation 
incurred . . . .”  

.                                  
    Although “expert testimony on legal matters is not admissible” because “[m]atters 
of law are for the trial judge,” S. Pine Helicopters, Inc. v. Phoenix Aviation Managers, Inc., 

, 841 (8th Cir. 2003), Boosalis appears to misunderstand the nature of 
Martens’ proposed testimony.  Martens will not testify regarding the legal meaning of 


4 

(a)(1).                                             
“reasonably equivalent value.”  (Pl.’s Main Opp’n at 13.)  Rather, as the Trustee asserts, 
Martens’ testimony related to this issue will address the following:  (1) the number of 

separate note transactions between Defendant and PCI; (2) the amount of principal that 
Boosalis invested with PCI; (3) the interest income that Defendant received pursuant to his 
loans  with  PCI;  (4)  whether  the  transactions  to  and  from  Boosalis  were  related  to 
potentially legitimate PCI purchases and/or sales transactions; and (5) whether the funds 
received from or sent to Boosalis were part of the PCI Ponzi scheme.  (Id.)  Such evidence 
is relevant to the factual question of whether there was an exchange for reasonably 

equivalent value.  This anticipated evidence does not constitute improper opinion on the 
substantive legal meaning of “reasonably equivalent value.”  Instead, this testimony will 
be helpful and relevant to the jury’s determination of liability.         
    However, any such testimony is only admissible subject to adequate foundation 
being laid.  Accordingly, because this motion is premature, the Court defers ruling until 

trial.                                                                    
            Defendant’s Motion in Limine No. 2 [Doc. No. 43]:            
                        Insolvency Analysis                              

    A.   Defendant’s Argument                                            
    Boosalis  also  argues  that  the  Court  should  exclude  from  evidence  Martens’ 
anticipated testimony regarding the insolvency of PCI at the time of Defendant’s transfers, 
which Boosalis contends occurred between 1996 and 2001. (Def.’s Mem. Supp. of Mot. in 
Limine No. 2 ¶ 16 [Doc. No. 44].)                                         
    Boosalis maintains that Finn, 860 N.W.2d at 646–47, prohibits any presumption of 
actual fraud based on the mere existence of a Ponzi scheme. (Def.’s Mem. Supp. of Mot. 

in Limine No. 2 ¶ 5.)  Rather, the Ponzi scheme operator must have been insolvent at the 
time of each claimed transfer.  (Id. ¶ 8) (citing Finn, 860 N.W.2d at 648–49).  Defendant 
argues that Martens fails to analyze PCI’s insolvency on a transfer-by-transfer basis at the 
time of each transaction.  Accordingly, he argues, any testimony regarding PCI’s general 
insolvency must be excluded.   (Id. ¶¶ 15–16.)                            
    B.   Trustee’s Response                                              

    Based on Martens’ analysis, the Trustee maintains that PCI was insolvent no later 
than December 31, 1996 and remained insolvent until its collapse in 2008.  (Trustee’s Main 
Opp’n at 10.)  The Trustee claims that the evidence supports Martens’ reasonable inference 
that PCI was therefore insolvent at the time of each of Defendant’s transfers.  (Id.)  
Moreover, the Trustee contends, Defendant’s argument goes to the weight of this evidence 

rather than its admissibility.  (Id.)                                     
    C.   Ruling                                                          
    In fraudulent transfer cases alleging actual fraud, because proof of actual intent 
“may rarely be established by direct evidence,” courts may “infer fraudulent intent from 
the circumstances surrounding the transfer.”  In re Sherman, 

 (8th 

Cir. 1995).  A common method of inferring actual fraudulent intent requires the court to 
consider whether the transfer in question bears indicia of fraud, or “badges of fraud.”  

   
The MUFTA contains a non-exclusive list of types of evidence that may constitute “badges 
of fraud.”  

(b).                                      
    Another method that courts have used in cases involving Ponzi schemes is to infer 
actual  fraud  by  applying  the  “Ponzi  scheme  presumption.”  See  In  re  Vaughan  Co., 

Realtors, 

 (Bankr. D. N.M. 2012) (collecting cases).  In such cases, courts 
have found that the existence of a Ponzi scheme satisfies the requirement of “actual intent.”  

  Courts applying the presumption have reasoned that “transfers made in the course of a 
Ponzi scheme could have been made for no other purpose other than to hinder, delay or 
defraud creditors,” In re Manhattan Inv. Fund Ltd., 

 (Bankr. S.D.N.Y. 
2007), rev’d in part, 

 (S.D.N.Y. 2007), and that, due to the constant churn of 

investors’ contributions and pay-outs, “[a] Ponzi scheme is insolvent from its inception.”  
Warfield v. Byron, 

 (5th Cir. 2006) (citing Cunningham v. Brown, 

, 7–8 (1924)).                                                      
    In the Minnesota Supreme Court’s 2015  decision in Finn, however, the court 
rejected the application of the Ponzi scheme presumption to fraudulent transfer claims 

under the MUFTA.  860 N.W.2d at 646–50.  Rather than applying a presumption based on 
the form of the entity making the transfer, the court held that the MUFTA “requires a 
creditor to prove the elements of a fraudulent transfer with respect to each transfer.”  Id. at 
647.                                                                      
    The court also considered the question of a debtor’s insolvency for constructive 

fraudulent transfers—and the timing of that insolvency—in noting that “a conclusive 
presumption that a Ponzi scheme is insolvent from its inception may be incorrect.”  Id. at 
649.  The court explained,                                                
    [A]s a factual matter, it is not at all clear that every fraudulent investment 
    arrangement that is later determined to be a Ponzi scheme necessarily will 
    have been insolvent from its inception. For example, it is not hard to imagine 
    a debtor that begins as a legitimate business and eventually turns to fraud, 
    which the Respondent Banks insist occurred here. Similarly, a debtor could 
    have assets or legitimate business operations aside from the Ponzi scheme, 
    as Alliance Bank argues here, that it uses to stave off insolvency, at least for 
    a while. Such an entity could be financially stable for a time, whether its 
    stability is measured by the technical definition of insolvency in 

 and 513.45(a), or the alternate methods of measuring financial 
    distress in 

(a)(2).                              

  The court acknowledged that such a Ponzi scheme “may be rare,” 

 but because under 
such circumstances, the application of the Ponzi scheme presumption could fail to correctly 
establish insolvency as to the specific date of each allegedly fraudulent transfer, the court 
rejected the presumption that a Ponzi scheme is insolvent from its inception.   

    
    Here, Martens analyzed the potential sources and uses of funds transferred between 
PCI and Defendant to determine if any of the notes issued by PCI were related to potentially 
real purchases or sales transactions.  (Third Hanson Decl. [Doc. No. 78], Ex. 1 (Martens 
Tracing Report ¶ 10 [Doc. No. 78-1]).)  In his detailed Tracing Report, Martens describes 
his investigative process, including the examination of each transaction between PCI and 
Boosalis.  (See 

 ¶¶ 11–36.)  He ultimately finds “no evidence to indicate that the 
course/use of the transfers to/from the Defendant were related to potentially real purchases 
and/or sales transactions.  Rather the Defendant’s PCI Transactions appear to have been 
associated with the serial churn of funds observed in connection with the Petters Ponzi 
scheme.”  (Id. ¶ 12.)  Martens references a separate insolvency report that he prepared 
regarding the financial condition of PCI and PGW at the time of Defendant’s transactions 
with PCI, which involved a review of those entities’ financial statements.  (See id. ¶ 35.)  
He offers the opinion that PCI was insolvent by December 31, 1996 at the latest, and never 
emerged from insolvency.  (Id.)                                           

    Boosalis argues that Martens’ opinion regarding PCI’s insolvency at the time of the 
relevant transfers should be excluded because it fails to meet the standard of proof under 
Finn.  To be sure, Finn foreclosed a creditor from solely relying on the existence of a Ponzi 
scheme to establish insolvency.  See Finn, 860 N.W.2d at 647–52.  But it did not address 
the type of proof on which a plaintiff could rely to establish a debtor’s insolvency.  Martens 
has examined PCI’s financial records during a period that includes the relevant period here, 

1996 to 2002, and found that PCI was insolvent during that entire period.  (See Martens 
Tracing Report ¶ 35.)  This review process is not the same as simply relying on a blanket 
Ponzi scheme presumption, as prohibited by Finn.                          
    The Court will not rule on this motion, however, before the testimony in question is 
proffered.  Assuming the proper foundation has been laid, Finn does not prohibit this 

testimony.                                                                
            Defendant’s Motion in Limine No. 3 [Doc. No. 45]:            
       Evidence of Criminal Prosecutions of Ponzi Scheme Participants    

    A.   Defendant’s Argument                                            
    Boosalis argues that any reference to the criminal prosecutions and testimony of 
Tom Petters and his co-conspirators should be excluded from evidence as irrelevant.  
(Def.’s Mem. Supp. of Mot. in Limine No. 3 ¶¶ 4–5, 7 [Doc. No. 46].)  Boosalis asserts 
that his involvement with PCI, from 1996 to 2001, pre-dated the years-later activities for 
which White was convicted.5  (Id. ¶¶ 4–5.)  Further, he contends that the convictions of 
Petters, Coleman, and Catain were based on their participation in the overall Ponzi scheme, 

without reference to specific dates, transactions, or dealings, and evidence concerning their 
prosecutions is similarly irrelevant. (Id.)                               
    In addition, Boosalis maintains that admission of this evidence would be prejudicial. 
(Id. ¶ 8.)  Given the lack of temporal proximity, Boosalis contends that this evidence would 
be confusing and  misleading, inviting the jury to unfairly decide this case based on 
emotion.  (Id. ¶ 9.)  He asserts that the admission of such evidence would also be a waste 

of time, asserting that while the Trustee is attempting “to blanket the entire PCI operation 
as a Ponzi scheme,” there was “substantial legitimate business for years prior to the 
convictions.” (Id. ¶ 10.)                                                 
    Boosalis also argues that such evidence is inadmissible under Finn.  (Id. ¶ 11.)  
Essentially, Boosalis contends that evidence of the convictions would serve as a proxy for 

the Ponzi scheme presumption, which Finn prohibits. (Id.) (citing 

).)  
    B.   Trustee’s Response                                              
    The Trustee asserts that evidence of the criminal convictions of several Ponzi 
scheme participants is relevant to establish that PCI functioned as a Ponzi scheme from the 
time of its inception in 1994 through September 2008, when the fraud was uncovered.  



5 For the same reason, Boosalis also sought to exclude evidence concerning Ponzi scheme 
participants Vennes and Bell.  (Def.’s Mem. Supp. of Mot. in Limine No. 3 ¶¶ 4–5.)  
However, the Trustee no longer seeks to introduce evidence concerning their convictions.  
The Court’s discussion is therefore limited to evidence concerning the convictions of 
White, Petters, Coleman, Catain, Reynolds, and the entity PCI.            
(Pl.’s Opp’n Crim. Pros. at 2 [Doc. No. 75].)   The Trustee asserts that he should be allowed 
to  introduce  this  evidence  to  rebut  Defendant’s  “unsubstantiated  claims”  that  PCI 

conducted legitimate business during the time of Defendant’s transfers and to prove that 
PCI “made transfers to Boosalis with intent to defraud its creditors.” (Id. at 3.)  
    The Trustee contends that White’s conviction was based on his actions from 1995 
to 2008, a portion of which time Boosalis was, in fact, engaged in transactions with PCI.  
(id. at 6) (citing Second Hanson Decl., Exs. 3 & 5 (United States v. Robert White, No. 08-
cr-299, ECF Nos. 37 & 1 ¶ 1 (D. Minn) [Doc. No. 76-1]), and that all of the evidence  with 

respect to the other convicted participants relates to acts that occurred between 1996 and 
2001.  The Trustee contends that Finn does not prohibit the admissibility of specific types 
of evidence offered as proof of fraudulent transfer.  (Id. at 4) (citing Finn, 

).  To the contrary, the Trustee argues, Finn contemplates the use of this type of 
evidence, noting that “a court could consider a debtor’s operation of a Ponzi scheme” as a 

badge of fraud.  (Id.) (citing 

).   In sum, the Trustee claims that evidence 
related to the criminal prosecutions of Petters and his associates is relevant and forms only 
one part of the Trustee’s proof that PCI made a fraudulent transfer to Boosalis.  (Id. at 5.)   
    Moreover, the Trustee claims that Boosalis has failed to meet his burden to exclude 
the evidence under Federal Rule of Evidence 403, as the convictions are not substantially 

more prejudicial than probative.  (Id. at 7–8.)  The Trustee contends that Boosalis is free to 
argue to the jury that they should not give any weight to the convictions.  (Id. at 8.)   At a 
minimum,  the  Trustee  asserts,  the  Court  should  defer  ruling  on  the  relevance  and 
admissibility of any conviction until trial.  (Id.)                       
    C.   Ruling                                                          
    The Court agrees with the Trustee that evidence related to the criminal prosecutions 

of the participants in Petters’ Ponzi scheme at the time of Boosalis’ transactions with PCI, 
including participants with involvement throughout the entire life of the Ponzi scheme, is 
relevant to the question of whether PCI operated as a legitimate business.  As noted, Finn 
does not bar any specific type of evidence that may be admitted to establish badges of fraud, 
and in fact acknowledges that courts may consider the debtor’s operation of a Ponzi scheme 
as a non-conclusive badge of fraud.  

.   Granted, Finn prohibits any 

presumption or conclusive determination of fraudulent transfer simply due to the existence 
of a Ponzi scheme.  But the Trustee does not seek to invoke such a presumption through 
the admission of this evidence.  Defendant’s motion is therefore denied and evidence 
concerning the criminal convictions of Petters, Coleman, White, Reynolds, Catain, and the 
entity PCI shall not be excluded based on Finn.                           

            Defendant’s Motion in Limine No. 4 [Doc. No. 47]:            
                   Transfer-By-Transfer Analysis                         

    A.   Defendant’s Argument                                            
    Boosalis  argues  that  any  testimony  from  Martens  concerning  the  transfer-by-
transfer analysis of Boosalis’ promissory notes should be excluded in light of Finn.  (Def.’s 
Mem. Supp. of Mot. in Limine No. 4 ¶ 2 [Doc. No. 48].)  Boosalis contends that Martens 
cannot account for the ultimate use or disposition of every one of Boosalis’ transfers, some 
of which may have funded legitimate business expenditures.  (Id. ¶ 14.)  He points to 
certain deposition testimony in which Martens acknowledged that the funds received by 
PCI were “comingled,” some of which may have been used for apparently legitimate 
purchases such as “Apex or Samsonite.”  (Id. ¶¶ 10–11).  Accordingly, Boosalis argues, 

because Martens did not analyze Boosalis’ transfers individually once they reached PCI, 
his testimony exceeds the scope of his expertise and should be excluded. (Id. ¶¶ 17–18, 
20.)                                                                      
    B.   Trustee’s Response                                              
    The Trustee contends that while Finn requires evidence of each transfer, neither 
Finn nor any other applicable law requires the Trustee to trace the sources and uses of the 

funds exchanged between Defendant and PCI.  (Pl.’s Main Opp’n at 6) (citing 

).  Rather, he argues, Martens’ expert report details each of Boosalis’ transactions with 
PCI.  (Id.)  Moreover, in his Tracing Report, Martens did trace the potential sources of 
funding to, or use of proceeds from, each of Boosalis’ transfers with PCI.  (Id.) (citing 
Third Hanson Decl., Ex. 1 (Exs. D & E to Martens Tracing Report [Doc. No. 78-1]).) 

    In the Tracing Report, Martens “concluded that there was no evidence to indicate 
that the source or use of any transfers to or from [Boosalis] were related to potentially real 
purchases and/or sales transactions,” instead of fraudulent activities. (Id. at 7–8) (citing 
Martens Tracing Report ¶ 36) (“there was no evidence to indicate that the source/use of the 
transfers  to/from  [Boosalis]  were  related  to  potentially  real  purchases  and/or  sales 

transactions”).                                                           
    C.   Ruling                                                          
    The Court will not rule on this motion before the testimony in question is offered 
and proper foundation has been laid.                                      
            Defendant’s Motion in Limine No. 5 [Doc. No. 49]:            
                          Interest Rates                                 

    A.   Defendant’s Argument                                            
    Boosalis argues that Martens may not opine on the reasonableness of the interest 
paid on Boosalis’ promissory notes. (Def.’s Mem. Supp. Mot. in Limine No. 5 ¶ 1 [Doc. 
No. 50].)  He contends that Martens does not have the requisite experience or knowledge 
in purchase order financing or diverting businesses to offer this opinion, and he failed to 
conduct a proper analysis. (Id. ¶¶ 3–4, 14.)   Accordingly, Boosalis asserts, Martens’ 
opinion as to the reasonableness of interest rates is unreliable. (Id. ¶ 14.)  
    B.   Trustee’s Response                                              
    The Trustee maintains that Martens has the requisite knowledge and experience 

related  to  the  financial  transactions  in  question, as  he  has  been involved  in account 
investigations related to PCI for “nearly a decade” and has worked as a Certified Public 
Accountant since 1981. (Trustee Main Opp’n at 11) (citing Third Hanson Decl., Ex. 1 (Ex. 
1 to Martens Tracing Report [Doc. No. 78-1]).)  Thus, the Trustee contends, it is within the 
scope of Martens’ expertise to compare typical lending rates with the rates on Boosalis’ 

notes—rates that ranged from 38.71% to 70.82% on an annualized basis for transactions 
characterized as zero-risk deals for the purchase and resale of goods to a guaranteed buyer. 
(Id.) (citing Third Hanson Decl., Ex. 1 (Martens Tracing Report ¶ 8).)  Also, the Trustee 
notes that Defendant will have the opportunity to cross examine Martens and the jury will 
decide how much weight to afford his testimony. (Id. at 12) (citing Weaver v. Mobile 

Diagnostech, Inc., Civ. No. 02-1719, 

, at *8 (W.D. Pa. April 30, 2009)).  
The Trustee therefore asserts that the Court should allow Martens to testify regarding the 
reasonableness of interest paid on Boosalis’ promissory notes, or defer the question until 

trial, when the Court will be more familiar with Martens’ knowledge and experience with 
respect to Defendant’s note transactions with PCI.  (Id.)                 
    C.   Ruling                                                          
    Subject to proper foundation being laid, the Court defers ruling on this motion until 
trial.                                                                    
III.   Trustee’s Motions in Limine                                        

             Trustee’s Motion in Limine No. 1 [Doc. No. 58]:             
          Evidence Concerning Vice President Walter Mondale,             
                    Ted Mondale, and Tom Hays                            

    A.   Trustee’s Argument                                              
    The Trustee seeks to preclude evidence concerning the supposed involvement of 
Ted Mondale and former Dorsey & Whitney attorneys Vice President Walter Mondale and 
Tom Hay, with Tom Petters.  (See Pl.’s Mem. Supp. Mot. in Limine No. 1 at 2 [Doc. No. 
59].)  Specifically, with respect to Hay, the Trustee seeks to exclude evidence regarding 
Hay’s work for Petters-related entities other than PCI.  (Id. at 1.) Boosalis has asserted that 
their purported involvement with Petters played a role in Boosalis’ decision to lend funds 
to PCI, because it suggested that Petters was running a legitimate business.  (Id.)  The 
Trustee contends that this evidence does not meet the relevance standard under Federal 
Rule of Evidence 401 and should also be excluded as unfairly prejudicial under Federal 
Rule of Evidence 403. (Id. at 4.)                                         
    In a separate adversary proceeding in Bankruptcy Court, Ted Mondale testified that 
beginning in approximately 1999 through 2002 or 2003, he was the part-time President of 
Red Tag World, a Petters-controlled entity unrelated to PCI.6  (First Hanson Decl. [Doc. 

No. 60], Ex. C (Mondale Dep. at 8, 17 [Doc. No. 60-1]).)  He testified that his primary duty 
was to travel to Asia four times per year to develop relationships between Red Tag World 
and various Asian enterprises, (id. at 9), and that he was not involved with PCI or any 
Petters-related financial transactions. (Id. at 18.)  Also, Mondale stated that his father, Vice 
President Mondale, never served as an officer, director, employee, or attorney for any 

Petters entity, although at one time, perhaps unbeknownst to Vice President Mondale, Tom 
Petters identified him as a “senior advisor” to Red Tag Japan.  (Id. at 14–15.)  Ted Mondale 
testified that his father had very little to do with Red Tag Japan, noting that he helped 
arrange a meeting between Ted and a Japan-based chamber of commerce and made an 
introduction.  (Id. at 19–20.)                                            

    Tom Hay is a retired Dorsey & Whitney attorney who worked with the Petters 
entities from approximately 1998 to 1999 as Executive Vice President, Legal Affairs and 
Development.  (Hanson Decl., Ex. E (Hay Dep. at 42–44, 69).)  He testified that he was 
unaware of the specific Petters entity for which he worked.  (Id. at 44.)  Hay also testified 



6 In the separate Bankruptcy Court proceeding, certain defendants had sought discovery 
concerning Dorsey & Whitney’s relationship with PCI and other Petters entities unrelated 
to PCI.  (See Pl.’s Mem. Supp. Mot. in Limine No. 1 at 2–3.)  Although the Bankruptcy 
Court questioned the relevance of the evidence, (First Hanson Decl. [Doc. No. 60], Ex. B 
(Bankr. D. Minn. Oct. 25, 2017 Hr’g Tr. at 21 [Doc. No. 60-1])), it permitted the deposition 
of Ted Mondale.                                                           
that he did not assist or participate in any PCI transactions, nor did he see a PCI bank 
statement.  (Id. at 188–89.)                                              

    In addition to stressing the limited involvement of the Mondales and Hay with 
Petters, the Trustee also emphasizes the lack of a temporal connection between Boosalis’ 
investments and the time periods in which the Mondales and Hay worked for Petters-
related entities.  He contends that Ted Mondale did not become part-time president of Red 
Tag World, and Vice President Mondale was not identified as a senior advisor to Red Tag 
World, until 1998—two years after Boosalis had executed his December 1996 promissory 

note to PCI.  (Pl.’s Mem. Supp. Mot. in Limine No. 1 at 5.)  Thus, the Trustee asserts, any 
suggestion that the Mondales influenced Boosalis’ due diligence, is belied by the fact that 
Boosalis made his investments in PCI before the Mondales were involved with Red Tag 
World.  (Id. at 4–6.)   Finally, the Trustee asserts that Boosalis never spoke to Walter or 
Ted Mondale about their involvement with Red Tag World. (Id.)             

    Similarly, the Trustee asserts that Boosalis made his initial investments in PCI in 
December 1996, well before Hay began working for the Petters entities in early 1998.  (Id. 
at 6.)                                                                    
    B.   Defendant’s Response                                            
    Boosalis responds that evidence regarding the Mondales and Hay is relevant to 

“issues of good faith” and the appearance of legitimacy because “[t]he involvement of the 
Mondales and Mr. Hay lent credibility to [PCI’s] good-will.” (Def.’s Opp’n to Pl.’s Mot. 
in Limine No. 1 ¶¶ 2, 5–6, 8 [Doc. No. 70].)                              
    Regarding the Mondales, Boosalis asserts that numerous magazine articles and 
Petters’ publicity materials noted their association with Tom Petters and PCI, although 

Boosalis does not provide any examples as exhibits.  (Id. ¶ 3.)  Boosalis states that while 
he does not intend to call either of the Mondales as trial witnesses, he plans to mention 
them during his own testimony.  (Id. ¶ 13.)  As to Hay, Boosalis acknowledges that he 
never spoke with him directly.  (Id. ¶ 6.)  However, Boosalis claims that even if Hay’s 
involvement with Petters did not begin until 1997, Hay’s involvement nonetheless caused 
Boosalis to continue to loan money to PCI. (Id.)                          

    C.   Ruling                                                          
    The Court finds that any evidence concerning the involvement of the Mondales is 
irrelevant  to  Defendant’s  decision  to  engage  in  transactions  with  PCI.  Boosalis’ 
investments  were  with  PCI  and  were  initially  made  before  any  involvement  of  the 
Mondales with Red Tag World.  Neither Vice President Mondale nor Ted Mondale were 

involved with PCI, and Vice President Mondale’s role even with respect to Red Tag World 
was minimal.  Plaintiff’s motion in limine is therefore granted with respect to evidence 
concerning the Mondales.                                                  
    Hay’s involvement with the Petters’ entities was a bit less clear, as Hay testified that 
he was unsure which Petters entity initially employed him.  (Hanson Decl., Ex. E (Hay 

Dep. at 44) (“Q: Who did you think you were working for in the beginning?  A:  Petters 
Company; Q: Inc. or -- ? A: I don’t know, working for Petters.  I mean, it didn’t matter to 
me.  They were putting me on the payroll and they were going to send me $5,000 a month, 
as long as I wasn’t fired.”).  Although Hay disclaimed any involvement with PCI financial 
transactions, (id., Ex. A (Hay Dep. 188–89), given Hay’s potentially broader role within 
“the Petters entities,” to the extent that evidence demonstrates his involvement with PCI, 

it may be relevant to Boosalis’ defense.  However, the Trustee does not seek to exclude 
evidence regarding Hay as it relates to Hay’s work for PCI.  (See Pl.’s Mem. Supp. Mot. 
in Limine No. 1 at 1.)                                                    
    At the hearing on the motions in limine, the Court requested that the Trustee file a 
complete copy of Hay’s deposition.  Following the Court’s review of the deposition 
transcript, it will rule on this motion.  Accordingly, a ruling on this portion of the Trustee’s 

motion is deferred.                                                       
             Trustee’s Motion in Limine No. 2 [Doc. No. 63]:             
                   Hearsay in Investigative Reports                      

    A.   Trustee’s Argument                                              
    The Trustee argues that eleven FBI and IRS investigative memoranda should be 
excluded from evidence on hearsay grounds. (Pl.’s Mem. Supp. Mot. in Limine No. 2 at 1 
[Doc. No. 64].)  These documents were filed as Defendant’s Trial Exhibits D-2 through D-
12.  The Trustee contends that the reports contain hearsay within hearsay, pointing to out-
of-court statements made by the agents who conducted the interviews, as well as the 
statements purportedly made by the interviewees, some of whom relied on yet more 
hearsay in responding to the agents’ questions. (Id. at 1–2.)             
    Considering the multi-layered hearsay, the Trustee asserts that the reports are not 
admissible under the business records or public records exception to the hearsay rule. (Id.) 

(citing Fed. R. Evid. 803(6), 803(8).)  In addition, the Trustee argues that the residual 
exception to the hearsay rule, Federal Rule of Evidence 807, is inapplicable because there 
is no guarantee of the statements’ trustworthiness, as the statements in question were not 

made under oath and were summarized by an agent. (Id. at 3.)  Moreover, the Trustee 
asserts that the statements are not recorded recollections under Federal Rule of Evidence 
803(5) because the witnesses did not make or adopt the reports, the reports were not 
transcripts, and the reports were not signed by the witnesses. (Id.)      
    B.   Defendant’s Response                                            
    Boosalis  argues  that  the  memoranda  should  be  admitted  under  the  hearsay 

exceptions for regularly conducted business activity, Fed. R. Evid. 803(6), or public 
records, Fed. R. Evid. 803(8).  (Def.’s Opp’n to Pl.’s Mot. in Limine No. 2 [Doc. No. 69].)  
The reports that Boosalis seeks to admit, he asserts, satisfy the criteria for the business 
records exception, because (1) they were made at or near the time of the interview and were 
transmitted by a person with knowledge; (2) they were kept in the regular course of 

business; (3) FBI and IRS agents regularly draft such memoranda; (4) the documents bear 
signatures or certification; and (5) there is no indication of a lack of trustworthiness.  (Id. 
at 3.)                                                                    
    Boosalis also claims that the memoranda are admissible pursuant to the public 
records exception to the hearsay rule, asserting that under this rule, “factual findings 

resulting  from  an  investigation  made  pursuant  to  authority  granted  by  law”  may  be 
admitted, unless a lack of trustworthiness is indicated.  (Id. at 4) (citing Gardner v. Comm’r 
of Pub. Safety, 

 (Minn. Ct. App. 1988).)  Defendant contends that this 
exception is satisfied because: (1) the memoranda set forth the agents’ activities; (2) the 
subject  matter  was  observed  in  the  course  of  the  declarants’  legal  duties;  (3)  the 
investigation was part of a criminal case; and (4) the source does not lack trustworthiness, 

as the memoranda are signed by the agents in question.  (Id.)             
    Additionally, Boosalis contends that the reports fall under the residual exception to 
the hearsay rule, which permits a court to admit statements that have “circumstantial 
guarantees of trustworthiness” provided that they also meet the other requirements for 
admissibility including “materiality, probative value, the interests of justice, and notice.” 
(Id. at 4–5) (citing United States v. Halk, 

, 488–89 (8th Cir. 2011)).   

    Finally, Boosalis claims that at least one of the witnesses interviewed, Deanna 
Coleman, will testify at trial. (Id. at 2.)  Boosalis states that he will only seek to admit the 
report in question for purposes of impeachment. (Id.)                     
    C.   Ruling                                                          
    Under Federal Rule of Evidence 805, hearsay within hearsay is inadmissible unless 

“‘each part of the combined statements conforms with an exception to the rule [against 
hearsay].’” Glaze v. Byrd, 

 (8th Cir. 2013) (quoting Fed. R. Evid. 805).  
Here, even if the memoranda in question were regularly maintained in the course of the 
agencies’ “businesses,” or constitute public records, the witness statements contained 
within the documents remain hearsay, and in some instances, hearsay within hearsay.  

Boosalis does not identify the hearsay exceptions applicable to the specific portions of 
these reports.                                                            
    Moreover, the residual exception under Fed. R. Evid. 807 is inapplicable.  Evidence 
admitted under this exception requires the proponent to establish that:   
         (1) the  statement  has  equivalent  circumstantial  guarantees  of 
           trustworthiness;                                              

         (2) it is offered as evidence of a material fact;               

         (3) it is more probative on the point for which it is offered than any 
           other evidence that the proponent can obtain through reasonable 
           efforts; and                                                  

         (4) admitting it will best serve the purposes of these rules and the 
           interests of justice.                                         

Fed.  R.  Evid.  807  (a).    This  rule  is  applied  “very  rarely  and  only  in  exceptional 
circumstances.”  Halk, 

.  As the Trustee notes, these interviews, which were 
not made under oath, nor transcribed, fail to satisfy the requirement of circumstantial 
guarantees of trustworthiness.                                            
    To the extent that Coleman is expected to testify, “a law enforcement memorandum 
“is not more probative . . . than live testimony.”  See United States v. Sparkmak, 

 (E.D. Mo. 2006).  If Coleman testifies, Defendant will have an opportunity to 
obtain testimony.  But many of the statements attributed to Coleman in the IRS memoranda 
marked as D-5, are hearsay, and contain hearsay within hearsay.           
    For all the foregoing reasons, Plaintiff’s motion is granted, and these memoranda 
are excluded from evidence as they contain inadmissible hearsay.          
IV.  Order                                                                
    Based on the foregoing, and all the files, records, and proceedings herein, IT IS 
HEREBY ORDERED that:                                                      
    1.   Defendant’s Motion in Limine No. 1, to exclude any and all evidence, 
    references  to  evidence,  testimony,  or  any  argument  from  Plaintiff’s  expert, 
Theodore  Martens,  relating  to  reasonably  equivalent  value  [Doc.  No.  41],  is 
DEFERRED;                                                            

2.   Defendant’s Motion in Limine No. 2, to preclude Plaintiff’s expert, Theodore 
Martens,  from  testifying  with  respect  to  any  transfer-by-transfer  analysis  re: 
insolvency [Doc. No. 43], is DEFERRED;                               
3.   Defendant’s Motion in Limine No. 3, to exclude evidence and testimony of 
criminal prosecutions [Doc. No. 45] is DENIED;                       
4.   Defendant’s Motion in Limine No. 4, to exclude any and all evidence, 

testimony or any argument from Plaintiff’s expert, Theodore Martens, relating to 
transfer-by-transfer analysis of Defendant’s notes [Doc. No. 47], is DEFERRED;  
5.   Defendant’s Motion in Limine No. 5, to exclude any and all evidence and 
testimony by Plaintiff’s expert, Theodore Martens, relative to interest rates paid to 
defendant [Doc. No. 49], is DEFERRED;                                

6.   The Trustee’s Motion in Limine No. 1 [Doc. No. 58] is GRANTED in part 
with  respect  to  the  exclusion  of  evidence  regarding  and  testimony  from  Vice 
President Mondale, and his son, Ted Mondale, and DEFERRED in part with 
respect to evidence regarding and testimony from Tom Hay regarding his work for 
Petters-related entities other than Petters Company, Inc.; and       

7.   The  Trustee’s  Motion  in  Limine  No.  2,  to  exclude  any  IRS  or  FBI 
investigative memoranda Defendant may seek to admit into evidence [Doc. No. 63], 
is GRANTED.                                                          
November 19, 2018                  s/Susan Richard Nelson            
                                  Susan Richard Nelson              
                                  United States District Judge