ST. PAUL, Minn. -- A jury delivered a sweeping verdict against Minnesota businessman Tom Petters on Wednesday, finding him guilty of all 20 counts in what prosecutors said was a $3.5 billion Ponzi scheme.
Petters, who claimed that subordinates carried out the fraud without his knowledge, sat glumly as U.S. District Judge Richard Kyle read the verdicts in quick succession. Petters was convicted of wire fraud, mail fraud, conspiracy and money laundering by jurors who deliberated for parts of five days.
Kyle did not immediately set a sentencing date. Prosecutors said sentencing guidelines called for a range of 30 years to life in prison.
The verdicts completed a stunning fall for the 52-year-old Petters, who before his arrest a year ago was seen as one of the state's most successful businessmen. From early deals disposing of liquidated goods, Petters built a diversified company that held well-known names such as Polaroid, Sun Country Airlines and Fingerhut. He also was a philanthropist known for charitable work.
But prosecutors convinced jurors that Petters' empire was a sham, with evidence that included secret tape recordings and testimony from company officers who had earlier pleaded guilty.
Petters' attorney, Jon Hopeman, was ready for the verdict, handing reporters a printed statement.
"Though we disagree with today's outcome, we respect the jury and its decision," the statement said. "As much as anything, the trial showed how much good Mr. Petters has done in the world. This too is worthy of reflection."
Hopeman declined to comment further.
Assistant U.S. Attorney John Marti said: "The jury's verdict speaks clearly: Mr. Petters' company was a fraud and Mr. Petters was his company."
Petters testified in his own defense, but didn't convince the jury. The forewoman, Jolyne Cross, said jurors were keenly aware of Petters' background as a salesman.
"I don't think it was ever his intention from the very beginning to do this, but he got caught up in it. He still did it," she said.
Petters' scheme began to unravel in September 2008, when a company vice president, Deanna Coleman, went to federal authorities. Coleman would soon return to the company's headquarters wearing a wire to help prosecutors build their case.
But Cross said e-mails from Petters to others that showed the company's dealings before investigators got involved turned out to be more convincing to jurors than the recordings.
Prosecutors said the scheme used fraudulent documents such as purchase orders and bank statements forged by Coleman and Bob White, another Petters officer, to trick investors into thinking they were financing purchases of TVs and other electronic goods that would be resold to discount retailers such as Sam's Club, Costco and BJ's Wholesale Club.
The government said two other defendants -- Larry Reynolds and Michael Catain -- helped launder billions of dollars by allowing PCI to run the money through their own businesses' accounts to make it look like their companies were the source of the nonexistent merchandise.
Defense attorney Paul Engh agreed there had been a large fraud at PCI. But he said Petters was an innocent victim, and that Coleman, White, Reynolds and Catain carried it out behind Petters' back. Engh said there was ample reason for jurors to distrust them: All four reached plea deals, then testified against Petters in hopes of getting lighter sentences.
Two other defendants also pleaded guilty. Sentencing hearings for the six have not been scheduled.
Marti told jurors that evidence showed most of the investors' money went to pay off other investors, but that some $400 million went to PCI, where he said Petters used it to buy Fingerhut, Polaroid and Sun Country or subsidize money-losing companies in his Petters Group Worldwide empire. He said the $400 million total also included $82 million that flowed into Petters' personal accounts, and that Petters used it to "live the life of a corporate tycoon."
(Copyright 2009 by The Associated Press. All Rights Reserved.)