Minnesota AG's Office seeks changes to scam restitution fund

An account created last year to help scam victims become financially whole could receive some changes to provide funds to more people.

The Consumer Protection Restitution Account currently has $4.5 million and the Attorney General’s Office is in the process of distributing the first funds from the account, which will go to patients of a Woodbury dentist who shut down his practice without giving notice or refunds to patients.

The office has received 320 claims for restitution from the account, 76 of which have been approved for the first distribution totaling more than $1 million, according to Jason Pleggenkuhle, manager of the Consumer Protection Division at the Attorney General’s Office.

Sponsored by Rep. Liz Lee (DFL-St. Paul), HF4867 would remove the $5 million annual limit on deposits into the account. It would also implement a formula for restitution payouts that would distribute full restitution up to $50,000 and 50% of the amount over $50,000.

The House Commerce Finance and Policy Committee laid the bill over Wednesday.

Rep. Josh Heintzeman (R-Nisswa) is glad to see the deposit limit lifted, but questioned if there was a way to address the larger restitution amounts since there may be more money flowing into the account. Lee said the bill’s details are a “starting position” for discussion as it moves through the Legislature.

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Account funding comes from 50% of all money recovered by the Attorney General’s Office in consumer enforcement action and restitution funds that can’t be feasibly distributed to consumers.

Minnesotans can file a complaint with the office when they are a victim of a consumer scam, which triggers the process to receive a court order for restitution and receive a distribution from the account if the defendant doesn’t have funds for restitution.

Pleggenkuhle said the office continues to attempt to collect restitution from a defendant even if restitution is paid out of the account and anything recovered would go into the restitution account.

The bill wouldn’t change the funding mechanism for the account, but it would allow the Attorney General’s Office to continue to deposit funds into the account annually without worrying about a limit, Pleggenkuhle said.

It also would set a fair formula for restitution that would allow the office to distribute money to as many consumers as possible, he said.

“Without this change, despite the fact that there might be hundreds of consumers waiting in line for restitution, consumers that have an outsized amount of loss threatened to exhaust the fund to the detriment of other consumers,” he said, pointing out that the top 10 claim amounts total $6.5 million.