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Oct 8, 2008 5:52 pm US/Central
Petters Will Remain In Custody
ST. PAUL (WCCO) ―
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Tom Petters, 51, the founder of Petters Group Worldwide is charged with fraud in an alleged multimillion-dollar investment scheme that prosecutors say spanned 14 years. (File)
Sherburne County Jail
Twin Cities businessman Tom Petters will remain in custody until his trial begins, U.S. Magistrate Judge Jeffrey Keyes ruled Wednesday.
Keyes made his ruling after a nearly three-hours hearing on Tuesday.
Petters, who is the founder of Petters Group Worldwide, has been charged with fraud in an alleged multimillion-dollar investment scheme that prosecutors said spanned 14 years and could be the largest fraud case ever seen in Minnesota.
Petters, 51, was arrested Friday on federal charges of mail fraud, wire fraud, money laundering and obstruction of justice. Assistant U.S. Attorney John Marti argued Petters should remain in custody because he is a flight risk.
Two other people entered guilty pleas in federal court in connection with the fraud investigation.
Deanna Coleman, who was the vice president of operations at Petters Co. Inc., pleaded guilty to conspiracy to commit fraud. She went to authorities a month ago to blow the whistle on the alleged fraud.
Her attorney said Coleman was deeply troubled by her involvement in the scheme and decided to end it. She could face up to five years in prison.
Robert White, an associate of Petters', also pleaded guilty Wednesday morning. White was charged with mail fraud and illegal monetary transactions. Prosecutors accused White of creating a paper trail on phony retail transactions that people were then asked to invest in. White could face nearly 22 years in prison and has agreed to cooperate in the case against Petters.
According to authorities, Petters and some associates tricked investors by creating false purchase orders for merchandise from small vendors and more false documents indicating that merchandise had been sold to bigger retailers. The purchase orders were fictitious and no merchandise was bought or sold, authorities contend.
FBI Special Agent Brian Kinney testified Tuesday that the investigation began Sept. 8 when Coleman came forward with information about the scheme. Marti showed excerpts of a phone call between Petters and Coleman, in which Petters said that one investor didn't know the documents were fake. Also in that Sept. 8 phone call, Petters said, "The only thing that makes me think there is some divine intervention ... there is no possibility we could have got away with this for so long."
Kinney testified that FBI agents interviewed Petters in Las Vegas while his home and offices were being searched in Minnesota. At that time, Kinney said, Petters told the FBI he was perpetrating fraud.
Petters Group Worldwide had $2.3 billion in revenue in 2007. The company has investments in dozens of companies. Its holdings include Polaroid and Sun Country Airlines, which filed for Chapter 11 bankruptcy on Monday after it couldn't turn to its parent company for a short-term loan because of the federal investigation.
(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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