The U.S. trustee for Minnesota is seeking court approval to launch an independent investigation of commodities trader Tim Krieger and his businesses, according to a recent filing in U.S. Bankruptcy Court.
The investigation could be good news for Krieger's investors, who stand to lose about $30 million unless the trustee is able to find other assets that rightfully belong to Aspirity Energy, which filed for bankruptcy earlier this year.
Krieger, who owns about 70 percent of Aspirity, transferred most of the company's assets to another business he controls before the energy company collapsed, corporate records show. Since 2011, Krieger paid himself more than $18 million, mostly in the form of distributions from the company's dwindling cash reserves, records show.
Aspirity now has less than $50,000 in the bank, according to its most recent financial statement.
In his motion, filed last week, trustee Daniel M. McDermott said he wants to find out if assets were fraudulently removed from Aspirity. He said the move was prompted by a Star Tribune article that raised questions of whether Krieger or others engaged in what he called "improper conduct."
"There is no reason to believe that current management will independently and zealously pursue these assets," McDermott said in the motion. "Instead, an independent trustee is needed to make sure that everything available for liquidation is in fact liquidated."
A hearing on McDermott's motion will be held on Nov. 15.
In divorce records, Krieger's estranged wife, Whitney, said the couple previously maintained an "extravagant" lifestyle, including frequent vacations to five-star resorts and the purchase of luxury vehicles, such as a $200,000 Porsche Cayenne. However, Whitney Krieger said she recently fired her divorce attorney because she doesn't believe she will be able to obtain a significant cash settlement from her husband. She is now negotiating her own divorce settlement with Krieger.