Petters Gets 50 Years for $3.65B Fraud
The implosion of Minnesota businessman Tom Petters’ corporate empire which defrauded investors of $3.65 billion involving not just hedge funds, but at least 10 pastors, three missionaries, dozens of retirees and a half-dozen nursing home residents, according to federal court filings cited in the New York Times. Prosecutors are arguing that the Ponzi scheme is so massive that Petters deserves the maximum sentence: 335 years in prison. The defense, using Bernie Madoff’s sentence as a model and some creative math, is arguing that 4 years would be sufficient for 52 year-old Petters. U.S. District Judge Richard Kyle compromised and sentenced him to 50 years, which is effectively a life sentence.
The former owner of Polaroid and Sun Country Airlines was convicted of 20 counts of wire fraud, mail fraud, money laundering and conspiracy four months ago.
Prosecutor Joe Dixon wrote:
The defendant’s fraud is beyond comprehension in size and scope. The offense is the largest fraud in the history of Minnesota. Indeed, there are only a handful of fraud schemes that are even comparable in the history of the United States.
According to the New York Times, Petters defense has an appeal in the works and he maintains his innocence, claiming the fraud was orchestrated by his underlings without his knowledge. The defense also plans to attack the claim that what occurred was a Ponzi scheme, in which previous investors are paid off with money from later investors.
The New York Times reports,
According to testimony and documents presented at trial, PCI used fake purchase orders and bogus bank records to persuade investors to finance what they were told would be purchases of electronics such as big-screen televisions that PCI would resell to discount retailer such as Sam’s Club and Costco. In reality, the prosecution contended, the merchandise never existed and the sales never took place.
Petters’ attorneys blamed other business associates — who all pleaded guilty in hopes of leniency when they’re sentenced later — and said his biggest mistake was trusting them.
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