Minnesota charities that invested funds with a businessman now in jail on federal fraud and money-laundering charges did not exercise prudent oversight of the donated money, according to nonprofit finance experts, reports the Minneapolis Star Tribune.

Religious nonprofit groups, led by the Fidelis Foundation, in Plymouth, Minn., invested some $27-million in a company run by Tom Petters. Federal authorities alleged last month that he and others had run a massive Ponzi scheme that bilked investors out of more than $3-billion. Mr. Petters has said he is innocent of wrongdoing.

But nonprofit consultants say that the investments charities made in the company were clearly risky, because Fidelis and other groups put most of their assets into the company, and the investments were highly unconventional and offered rates of return that were too good to be true.

Joseph Smith, president of Fidelis Foundation, said his organization has retained a lawyer to attempt to recover the money.