Petters seeks new trial after Ponzi conviction

NEW YORK (Reuters) - Lawyers for convicted U.S. Ponzi schemer Tom Petters on Friday asked an appeals court to send the case back for a new trial, saying they were not able to fully present arguments against some of his accusers.

In a brief sent on Friday to the U.S. 8th Circuit Court of Appeals on Friday, attorneys for the imprisoned Minnesota businessman argued that the government had prevented them from presenting a complete defense by not allowing details about witness Larry Reynolds’ participation in a federal witness protection program to be presented.

“His accusers ... were amongst the most prolific liars, forgers, and con artists in recent memory,” Petters’ lawyers wrote in the appellate brief. “By their own admission they conned most everyone they contacted for more than a decade. One of them was secretly in the federal witness security program because of his long record of committing similar grandiose frauds.”

In April, a federal judge sentenced Petters, 53, to 50 years in prison for running a $3.65 billion Ponzi scheme, one of the largest ever uncovered. A federal jury had convicted Petters in December on all 20 criminal counts he faced for running a scheme that used one of his companies to bilk investors who thought he had been using their money to buy consumer electronics and reselling them to wholesale retailers.

Reynolds was a co-defendant in the case who agreed to cooperate with the government and testify against Petters in exchange for leniency. Petters attorneys claim Reynolds lied on the stand. An attorney for Reynolds was not immediately available for comment on Friday.

Petters’ lawyers argued in the court papers again on Friday that Petters had been unaware of the fraud within his own company and said the case should have been tried in a different court because of negative publicity in Minnesota.

Petters is serving his sentence at the U.S. medium security penitentiary in Leavenworth, Kansas, according to the Bureau of Prisons. His projected release date is 2052.

The case is USA v. Petters et al, U.S. District Court, District of Minnesota, No. 08-364.

Reporting by Emily Chasan; Editing by Richard Chang