Nov 5, 2009 6:08 pm US/Central
CFO, Close Friend Of Petters Take The Stand
(WCCO)
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Vlahos choked up as he testified about how Petters had betrayed his trust.
CBS
Tom Petters' former best friend, restaurateur Dean Vlahos, and his CFO Bob White took the stand on Thursday.
Vlahos choked up as he testified about how Petters had betrayed his trust. He testified that he originally invested $16 million with Petters and that at a 36 percent interest rate return he made $42 million over eight years on that investment.
In the end, Vlahos said he lost the $16 million principal investment plus another $10 million he borrowed to enter into a deal to purchase Circuit City merchandise.
Also on the stand was Petters' Chief Financial Officer Bob White. He said that he became part of the fraud in 1999 when he got a phone call from Petters who said, "I'm in big trouble."
When he later arrived at Petters' office, he found Petters crying. Petters told him, "I'm ruined if you can't help me."
White said together, he and Petters came up with phony bank statements to make it look like Petters had "spent the money the way he said it had been spent." White said Petters told him the problem would be corrected in two months.
However, White said Petters kept coming to him for more phony documents. In nine years, White said he created more than 10,000 bogus documents designed to keep the fraud afloat and con investors into investing with Petters.
White said he, Petters and Coleman were terrified when the accounting firm Arthur Anderson audited the company in 2003. White said he fabricated more documents for the audit. The audit found nothing wrong and White testified he remembered being extremely relieved.
(© MMX, CBS Broadcasting Inc. All Rights Reserved.)
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