Tom Petters

 ( 1957 Births ) 

On October 3, Petters was arrested at his home in Wayzata. He was denied bail after prosecutors produced documents that alleged Petters had encouraged another person involved with the case to leave the country, that Petters had stated that he regretted turning over his passport, and that he had previously spoken about fleeing the country if the fraudulent scheme were discovered. The U.S. Attorney's Office charged him with mail fraud, wire fraud, money laundering and obstruction of justice.James Walsh and Liz Fedor, Petters jailed; court papers say he planned to flee the country , Star Tribune, October 4, 2008, Accessed October 8, 2008. Application and Affidavit for Search Warrant Copy of Warrant at Minnesota Public RadioAmy Forliti, Petters Group Worldwide founder due in fed court, Associated Press, October 7, 2008, Accessed October 8, 2008.

The U.S. Attorney staff noted that the government knew nothing about the scheme until Deanna Coleman, vice president of operations for Petters Co., approached them to confess and offered to help federal authorities investigate. This led to the prosecution of Robert Dean White, who admitted to being involved in creating false bank statements and other documents that were used to trick investors in what he described as a massive Ponzi scheme. Both individuals made with federal prosecutors in exchange for providing the government information on how the scheme worked. Coleman and White related that, at the direction of Petters, they would fabricate documents for Petters and others to use in obtaining billions of dollars in loans. The phony records were used to show that Petters Co. was buying merchandise, generally electronic goods, from two suppliers (who were named as co-defendants). Petters Co. would tell lenders that it was selling the goods through and provided purchase orders to substantiate the deals, but the deals were phony and the documents were fakes. Most of the money lent to PCI was secured by and sometimes security agreements; the lenders would wire the money to the two suppliers, which would pass it on to Petters Co., less a commission. As more lenders loaned to Petters Co., outstanding loans would be paid off or rolled into new loans from the same lender. Proceeds went to Petters Co. and to Petters himself, and were used to fund other Petters-owned companies, to pay others collaborating in the scheme and, according to court affidavits, for Petters' "extravagant lifestyle."Dan Browning, Longtime executive blew whistle on Petters fraud, Star Tribune, October 8, 2008, Accessed October 8, 2008.

Petters' legal troubles led to Sun Country Airlines filing for bankruptcy; the airline had been relying on an operating loan from Petters, who owned all the voting shares of Sun Country, to help the low-fare carrier pay its bills during the months of October and November 2008.

In addition, Frank E. Vennes Jr., the CEO and sole shareholder of Metro Gem, under a plea agreement, was sentenced to 180 months in prison for aiding and abetting misrepresentations and omissions to investors related to the PCI notes. Metro Gem held 38 outstanding PCI notes with a total principal (face value) of $130.3 million

The FBI Criminal Complaint identifies First Regional Bank, Los Angeles (Century City), California as the bank that moved more than 11 billion dollars through an account for Nationwide International Resources Inc. of Los Angeles. In a separate legal filing in February 2008, more than seven months before the Petters allegations surfaced, the Federal Deposit Insurance Corporation (FDIC) issued a cease and desist order citing First Regional Bank for failing to comply with regulations regarding money laundering with respect to Individual Retirement Accounts and violating rules regarding reporting suspicious activity.Federal Deposit Insurance Corporation, "Order to Cease and Desist", Docket No. DIC-08-006b

On December 2, 2009, Tom Petters was found guilty in the U.S. District Court in St. Paul, Minnesota on 20 counts of conspiracy, wire and mail fraud. In April 2010, he was sentenced to 50 years in prison for his part in the fraud. Five other employees have pleaded guilty and are awaiting sentences. Petters' associate and primary fundraiser, Frank Vennes, has been charged with numerous counts of fraud and was sentenced to 15 years in prison.

After more than three years of refusing to speak with the media, Petters spoke with Twin Cities Business magazine Editor in Chief Dale Kurschner, who spent several hours inside Leavenworth prison interviewing him. In the interview, which was published in the magazine's May 2012 issue, Petters maintained his innocence. It remains Petters' only interview since his arrest. In May 2012, Petters also filed a petition asking the U.S. Supreme Court to review his conviction and sentence.

Petters is incarcerated at United States Penitentiary, Leavenworth in Leavenworth, Kansas. His earliest possible release date is April 25, 2052, when he would be 94 years old.