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Fraud may halt plans to develop former Nopeming nursing home

The multibillion-dollar investment fraud scheme that imploded in late 2008 around Twin Cities businessman Tom Petters may have dashed plans to reinvent the former Nopeming nursing home in Midway Township.

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The Nopeming building is structurally sound, but since a potential investor got into legal troubles, no plans are in the works for the former nursing home. [News Tribune file]
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The multibillion-dollar investment fraud scheme that imploded in late 2008 around Twin Cities businessman Tom Petters may have dashed plans to reinvent the former Nopeming nursing home in Midway Township.

Twin Cities-based developer Frank Vennes Jr. bought the Nopeming property from St. Louis County for $1,050,000 in 2005, with visions of remodeling the facility to help troubled youth.

But in September, federal agents raided Vennes' Shorewood, Minn., home and froze his assets on suspicions that he profited by funneling investors to Petters' businesses. Vennes has not been charged in the alleged Petters fraud, but he is linked to it in federal documents related to the case.

Now much of the Nopeming property is in receivership. The foundation to which Vennes deeded the building doesn't want to keep it, and locals who still hold strong connections to Nopeming aren't sure what comes next.

The four-story, 212-bed nursing home "still touches people's hearts," said Proctor schools Superintendent Diane Rauschenfels.

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She and representatives from several churches, local governments, nonprofit agencies and schools have been meeting occasionally for about a year to discuss how best to use the site.

St. Louis County closed Nopeming in 2002 after years of emotional debate. The county then searched long and hard for a suitable buyer before Vennes stepped forward.

Rauschenfels said Vennes wanted the property to benefit Minnesota Teen Challenge, the statewide Christian alcohol and drug recovery program. But when Vennes offered the site to the Duluth-area program, they were unable to accept it, Rauschenfels said.

The Nopeming building remains structurally sound, though the water line that served the complex has deteriorated. Restoring water service probably would cost millions of dollars, if it could be done at all, said Midway Township Supervisor Jim Aird. He said it's unclear if a new source of water could be found, a major stumbling block to any kind of redevelopment.

As Petters' alleged Ponzi scheme fell apart, Vennes' own investments in the Petters Co. took a nosedive. In December 2007, Vennes gave the Nopeming property to another faith-based nonprofit, the Plymouth-based Fidelis Foundation. Vennes had long been a supporter of the foundation, which had large assets invested in Petters' companies, according to the Associated Press.

Fidelis President Joseph Smith said his agency is open to several options for the Nopeming property, from selling it to donating it to another agency.

"Our mission is not to hold property," Smith said.

St. Louis County property tax records show that the "FedelisFoundation" owns nearly 40 acres and a building in Midway Township valued at $286,200 total.

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Vennes, meanwhile, kept about 170 acres in multiple parcels in Midway Township under the name "Metro Development Properties LLC," based in Tequesta, Fla. The property, valued at about $793,000, is now being handled by Minneapolis attorney and Vennes' court-appointed receiver, Gary Hansen.

Hansen said he is selling several of Vennes' properties, including multimillion-dollar homes in Tequesta and Shorewood.

In fraud cases, the federal government wants proceeds from liquidated assets distributed to the fraud victims, Hansen said. But since Vennes has not been charged with anything yet, the proceeds will be held in an account. If the government decides not to bring any charges against Vennes, the money will go back to him.

Hansen said that there are no immediate plansto offer the Nopeming property for sale.

Petters remains in federal prison awaiting trial in February.

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