Accused Ponzi schemer: I learned of fraud late
ST. PAUL, Minnesota (Reuters) - Minnesota businessman Tom Petters made a final push on Friday to convince a federal jury he was not responsible for a $3.65 billion Ponzi scheme that bankrupted his company.
Petters testified for a little over half an hour on Friday, after previously testifying for two full days and part of a third, before his lawyers rested their case.
Questioned by prosecutor Joe Dixon in St. Paul federal court, Petters maintained that he was not responsible for a fraud at his company Petters Group Worldwide LLC, which defense lawyers have tried to pin on subordinates.
"You were living in a false world," Dixon said, alluding to the defense that Petters lacked intimate involvement in daily operations that might have uncovered the fraud sooner.
"Apparently I was," Petters responded.
"Sir, you were raising money fraudulently."
"That is a fact I realized after it happened."
Petters' now-bankrupt empire once included companies such as Polaroid Corp and Sun Country Airlines Inc.
It crashed last year when he was accused in a 20-count indictment of fraud, money laundering and other charges.
A Ponzi scheme occurs when money from new investors is used to repay earlier investors. Petters has tried to convince jurors that a former subordinate, Deanna Coleman, and others conducted the fraud for which he is being tried.
Coleman has pleaded guilty in the case, and testified earlier this month against Petters as a prosecution witness. The two had a brief sexual relationship, Petters testified.
Prosecutors have accused Petters of promising investors big returns through financing his company's purchase and sale of electronics goods to retailers such as Costco Wholesale Corp and BJ's Wholesale Club Inc.
They have also said Petters concocted fake checks and purchase orders to deceive retailers into believing that he was transacting more business with them than he actually was.
U.S. District Judge Richard Kyle scheduled closing arguments and jury instructions for Monday, and the case may go to the jury that day.
The judge said jurors will decide whether to deliberate on Wednesday if they have by then yet to reach a verdict, or else resume deliberations the following Monday. The trial began more than three weeks ago.
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 Matthew Lewis)
