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Petters scandal kills local magazine group

I'm trying to get official confirmation, but two previously credible sources tell me that GreatWater Media, part of Tom Petters' empire, was shuttered today. All employees — I think we're talking about three dozen folks — were terminated.

In July, Petters took over what had been Metropolitan Media Group (MMG), publishers of Sun Country Airline's inflight magazine as well as a couple dozen "local, local, local" lifestyle magazines, mostly targeted to suburbs such as Bloomington, Plymouth, Eagan and Woodbury.

Petters had been a major investor in MMG. In hindsight, with his empire crumbling amid alleged fraud, you have to wonder, "How did the MMG takeover fit into what became the endgame?"

 

When the acquisition was announced July 17, Petters officials told MMG employees they would not be paid for the previous three weeks. After stories appeared in MinnPost and the Star Tribune, Petters relented — offering 38 rehired workers "retention bonuses" equal to three weeks pay.

The offer was conditional on workers staying through Oct. 1. However, according to one laid-off worker's spouse, it was never paid and now won't be.

Even worse, the spouse says workers won't be paid for the past three weeks at GreatWater Media — meaning they've lost six weeks worth of pay overall. Workers were told they might see the money if a new buyer emerges.

(The source asked not to be named because of not being a Petters' employee; a second source is a former Petters worker in touch with ex-colleagues.)

Calls to Douglas Kelley, the court-appointed receiver for Petters Group, and company spokeswoman Andrea Miller were not returned by deadline.

In an email, the spouse opened a vein about what workers are feeling:

"So far, Petters has been rightly victimized for his massive fraud operation. People in the Twin Cities are pretty disgusted with him.

"But the element of innocent employees being screwed out of a significant amount of pay during these times of economic hardship — all as a result of Petters' misdeeds — should really resonate. Some people are hurting pretty bad as a result of today's layoffs.

"These are people who don't have lawyers and the money to go after what's owed to them. As creditors are lining up to squeeze all the assets out of Petters Group that they can, I have a feeling that these people aren't going to get the same sort of consideration that the banks and investors will."

I'll update this item if official sources get back to me.

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