Practice Management

Petters a victim or victimizer? Jury deliberates

A jury will return Tuesday to further deliberate the fate of a Minnesota businessman accused of operating a Ponzi scheme that cost investors more than $3.5 billion.

Assistant U.S. Attorney John Marti told jurors Monday that Tom Petters’ claim he didn’t know his closest associates at Petters Co. Inc. were defrauding investors on a massive scale was nonsense.

“Tom Petters has blamed them and claimed he is their victim, and that is a lie,” Marti said in his closing argument.

But defense attorney Paul Engh said jurors should reject the testimony of the government’s key witnesses — PCI vice presidents Deanna Coleman and Bob White, and other defendants, including Larry Reynolds. He said the witnesses conned Petters and are trying to con the jury in hopes of getting lighter sentences.

Engh said the other defendants committed “a fraud within a fraud” behind Petters’ back. He attacked Coleman as “a flat-out thief” who ran the scheme along with White, whom Engh called “a master forger.” He described Reynolds as “the greatest fraud of all.”

Engh alleged that Reynolds, a disbarred lawyer and convicted felon, was corrupted by La Cosa Nostra as a young attorney, and became a “significant player in the Boston mob” before he went into the witness protection program.

Marti said the jury can rely on the testimony from Coleman, White and Reynolds because their stories are consistent with each other, with e-mails and other documents the prosecution presented, as well as the audio recordings Coleman made after she went to federal authorities in September 2008.

The jury deliberated for about two hours Monday afternoon before they were dismissed for the night.

Petters is charged with 20 counts of wire fraud, mail fraud, conspiracy and money laundering. He could face life in prison if convicted.

Prosecutors allege the scheme worked by using fraudulent documents such as purchase orders and bank statements forged by Coleman and White to trick investors into thinking they were financing purchases of TVs and other electronic goods that would be resold to discount retailers such as Sam’s Club, Costco and BJ’s Wholesale Club. The government says Reynolds and another defendant, Michael Catain, helped launder the money by allowing PCI to run it through their own accounts to make it look like their companies were the source of the nonexistent merchandise.

Marti pointed to testimony and financial documents that showed most of the investors’ money went to pay off other investors, but that some $400 million went to PCI, including $82 million to Petters’ own accounts, to build his business empire and support his high-flying lifestyle.

“This was the lifestyle of a corporate tycoon,” Marti said. “Contrary to what he told you on the stand, he relished it. He did this all with investors’ money.”

Engh argued that the indictment against his client was “fatally flawed” because it says all the merchandise deals done at PCI were fraudulent. He pointed out that several witnesses testified about “real deals for real merchandise” that Petters conducted through PCI.