Accused Ponzi schemer Petters is no victim - gov't

* Petters accused of running $3.65 billion Ponzi scheme

* Prosecutors say Petters is not a victim

By Art Hughes

ST. PAUL, Minn., Nov 23 (Reuters) - The government made a final effort to convince jurors on Monday that accused Ponzi schemer Tom Petters orchestrated a $3.65 billion fraud, and is not the victim he claims to be.

In closing arguments after a more than three-week trial in St. Paul federal court, prosecutors urged the jury to reject the Minnesota businessman's argument that subordinates were in fact responsible for a fraud at the now-collapsed Petters Group Worldwide LLC.

"Tom Petters is not a victim." prosecutor John Marti told jurors. "Tom Petters was committing fraud of a massive, massive scale."

Prosecutors accused Petters of duping hedge funds and other investors by promising big returns from financing purchases and sales of consumer electronics to retailers such as Costco Wholesale Corp (COST.O) and BJ's Wholesale Club Inc BJ.N.

In fact, they said, Petters made up much of this business, deceiving the retailers as well.

"Follow the money," Marti said. "Creating this fake image of a corporate tycoon: he relished it, he did it all with investors' money."

Petters' now-bankrupt empire once included companies such as Polaroid Corp and Sun Country Airlines Inc. It collapsed into bankruptcy last year after Petters was charged with 20 counts of fraud, money laundering and other charges.

Lawyers for Petters were expected to make their own closing argument on Monday, with the jury to get the case afterward.

The case has transfixed the Minneapolis area for the last year, causing the courtroom to overflow last week when Petters testified for two full days and parts of two others.

It gained greater notoriety after Bernard Madoff was arrested last December for engineering his own, estimated $65 billion Ponzi scheme.

A Ponzi scheme occurs when money from new investors is used to repay earlier investors.

Jurors have heard testimony from dozens of witnesses, including former subordinates Deanna Coleman and Bob White, as prosecutors tried to show Petters masterminded the Ponzi scheme.

"Tom Petters knew Deanna Coleman and Bob White were committing fraud," Marti said. "He continually encouraged them to do so. He paid them to do so."

Central to the government case were recorded conversations of Petters in September 2008, just before the fraud became public, which prosecutors said reflected his admission of his role.

Defense counsel have said the recorded comments reflected Petters' having come to discover that a fraud was taking place, not that he was orchestrating it.

Coleman has pleaded guilty in the case, and testified against Petters as a prosecution witness.

U.S. District Judge Richard Kyle has said jurors will decide whether to deliberate on Wednesday, just ahead of the Thanksgiving Day holiday, if there is no verdict by then. Otherwise, they will resume deliberations next Monday.

The case is USA v. Petters et al, U.S. District Court, District of Minnesota, No. 08-00364. (Reporting by Art Hughes; Writing by Jonathan Stempel; Editing by Tim Dobbyn) ((jon.stempel@thomsonreuters.com +1 646 223 6317; Reuters Messaging: jon.stempel.reuters.com@reuters.net))