Petters Insists In Testimony Associates Hid Fraud

STEVE KARNOWSKI

ST. PAUL, Minn. (AP) — A Minnesota businessman accused of running a Ponzi scheme and defrauding investors out of billions of dollars said Friday that a 2008 raid by federal agents on his company was unnecessary and caused its collapse.

Testifying before his attorneys rested their case, Tom Petters said he was consulting with his lawyers and preparing to go to the U.S. attorney himself when agents raided his business. His statements led to a series of deeply skeptical questions from federal prosecutor Joe Dixon.

Prosecutors accuse Petters of running a Ponzi scheme that cost investors $3.65 billion when it collapsed. The scam used bogus purchase orders to fool investors into thinking their money was backed by electronics goods that Petters Co. Inc. would buy from various suppliers and resell to discount chains like Sam's Club, Costco and BJ's Wholesale Club. The merchandise didn't exist, prosecutors say, and the money went instead to pay other investors or to support Petters and his companies.

Petters — whose holdings through Petters Group Worldwide also included Polaroid and Sun Country Airlines — is charged with 20 counts of wire fraud, mail fraud, conspiracy and money laundering. He faces life in prison if convicted. The other defendants in the case reached plea deals and testified against him, hoping for lighter sentences.

In testimony that stretched over four days this week, Petters insisted that Deanna Coleman and Bob White, who were both vice presidents at PCI, were responsible for the fraud.