Suit: Benefits Mistakenly Paid to Murderer Husband

June 4, 2004 ( - The stepdaughter of novelist Mike Peterson sued Nortel Networks, her mother's former employer, arguing that it shouldn't have paid Peterson $384,000 in death benefits while he was awaiting trial in his wife's murder.

Caitlin Atwater, the daughter of Kathleen Peterson, filed the suit in U.S. Middle District Court in Greensboro, North Carolina against Nortel to recover the money it paid to Mike Peterson a month after the death of his wife. The lawsuit claims that the law prevents killers from profiting from their crimes.

‘s suit charged that she should have been the beneficiary of her mother’s benefits, which include money for deferred compensation, pension plan death benefits and retirement benefits. The lawsuit claims the money should be paid again, this time to Atwater.

Mike Peterson, a former mayoral candidate in Durham, was convicted in October of murder and sentenced to life in prison.

Kathleen Peterson, a Nortel manager, had named her husband as the beneficiary for retirement and death benefits. Kathleen Peterson died at the bottom of a staircase in the couple’s home in Durham in December 2001. Eleven days after the death, Peterson was indicted on a murder charge.

Federal laws prohibit a murderer from profiting from the crime, and the company had been notified both of her death and the police investigation, according to the suit.

contended in her lawsuit that Nortel should have put the money aside until the courts were done with Peterson. Within a week of the death, the suit said, Nortel and its in-house lawyer knew police considered the incident suspicious and that Michael Peterson was a suspect. “They had to have known he was under indictment,” Jay Trehy, Atwater’s attorney, told reporters. “Their position is, `Oops. Well, you should have sued us to stop us from distributing the money.'”

Another related case involves more than $1.4 million in Kathleen Peterson’s life insurance. That case is nearly resolved, Trehy said. A recent stipulation reached between attorneys will allow Atwater and her biological father, Fred Atwater, to split the policy proceeds.