ST. PAUL, Minn. -- Tom Petters is putting the blame on top associates for the fraud at Petters Co. Inc.
Deanna Coleman and Bob White were vice presidents at PCI -- the company the government says was at the heart of a Ponzi scheme that cost investors $3.65 billion.
Petters testified Wednesday he did a large number of legitimate merchandise deals with PCI in the 1990s. But then his involvement with PCI waned and Coleman and White took on greater roles.
He says he wanted to sell off PCI, but Coleman and White stood in his way. He says some of PCI's deals were so troublesome they scared the "bejesus" out of him.
Petters grew emotional while he talked about the murder of his son in Italy in 2004.
He says that he spent little time with his company, Petters Co. Inc., before the murder and virtually none after it. Instead, he says, he dedicated himself to charitable work.
It's a key claim for his defense because federal prosecutors allege PCI was at the heart of a massive Ponzi scheme that cost investors $3.65 billion.
Petters contends other PCI officers carried out the fraud without his knowledge.
Petters is in the second day of testifying in his own defense in federal court in St. Paul. He's charged with 20 counts of wire fraud, mail fraud, conspiracy and money-laundering.
Jurors may get the case by the end of the week.
The court was packed by 8:00 a.m. Wednesday morning as members of the public tried to get a seat to see in person Petters testify.
Petters is on trial for 20 counts of wire fraud, mail fraud, conspiracy and money-laundering. Federal prosecutors say Petters, who rose from merchandise liquidation deals to holdings in such well-known names as Polaroid and Sun Country Airlines, led a Ponzi scheme that cost investors $3.65 billion.
"I have a lot of regrets," Petters said. "I ran too fast. I trusted some people far too much. Sometimes I didn't double-check and recheck."
Asked by his attorney, Jon Hopeman, whether he was guilty of the charges, Petters said no.
"Did you participate in a fraud?" Hopeman asked.
"I guess I did. ... Definitely not knowingly," Petters answered.
Petters and his co-conspirators allegedly used falsified business documents to fool investors into thinking the money was being used to buy electronics that would be resold at a profit to big-box retailers such as Costco and Sam's Club. Instead, the money went mostly to pay other investors, though prosecutors presented evidence Monday that $83 million went into Petters' personal accounts and $315 million went to subsidize his other businesses.
Petters' attorneys have countered that the scheme was carried out by others in his Petters Co. Inc. subsidiary without his knowledge. They also claim Petters paid less attention to PCI because he was distracted after the murder of his son John, in Italy in 2005, and focused on his new acquisitions instead.
In his testimony Tuesday, Petters, 52, of Wayzata, said he wanted to apologize to his former employees and their families, to his own family, his mentors and to investors who lost money.
He also recounted his career in sales from setting up a stereo gear company while he was in high school in St. Cloud through his part in the 2002 acquisition of catalog and online retailer Fingerhut Companies. He was due to return to the stand on Wednesday.
Earlier Tuesday, an accountant for PCI testified it was a struggle to get information from Petters' top associates. The defense called Sandy Imdahl to buttress its claims that Petters had little involvement with PCI and that Deanna Coleman, Bob White and other defendants carried out the scheme behind Petters' back.
Imdahl said Coleman and White would not give her access to PCI's bank statements, which she said made her job difficult.
Coleman, PCI's vice president of operations, went to the FBI in fall 2008 to tell them of the fraud. She and White, PCI's chief financial officer, have admitted forging thousands of documents to fool investors. Both have pleaded guilty in hopes of receiving lighter sentences.
Petters faces up to life in prison if convicted.
(Copyright 2009 by KARE and The Associated Press. All Rights Reserved.)
