The sentencing is over and barring a prison escape, there will likely be no more info about Tom Petters. Information about his whereabouts will likely be available at the Bureau of Prisons inmate locator.
I will keep the blog in mothballs for anyone doing research about the trial.
If you are interested in how I sketched the trial, read this excellent article by Beth Hawkins at MinnPost.
Thanks for dropping by.
For info about Frank Vennes go the Vennes Info blog.
April 8. 2010. Four months after Tom Petters was convicted for perpetrating the biggest fraud in Minnesota history, he stood before Judge Richard Kyle to find out if he was going to get the 335 year sentence the prosecutors requested or the four year sentence suggested by his lawyers or something in between.
The ex-CEO of Petters Group Worldwide that once owned Polaroid and Sun Country airlines wore a business suit and listened as his lawyer, Paul Enge challenged the sentencing guidelines. Enge said he thought the guidelines were "irrational" and wouldn't deter anyone from committing a similar white collar crime. Enge also said it was unfair that murderers got less time than Tom Petters. Enge said Petters was generous, that low level workers like janitors liked Petters. He also mentioned that Petters was cooperating with the receiver Doug Kelly.
Assistant U.S. Attorney Dixon told the judge the sentence should be based on Tom Petters, the crimes he committed and the harm he did to his victims. Dixon also said Petters did not cooperate until he was convicted and it was easy to be generous with other people's money.
Tom Petters got up and apologized to his family and said everyday his life was filled with pain. He thanked the receiver Doug Kelly and said the murder of his son was the worst thing that happened to him.
The judge said he was not passing a moral judgement on Petters and gave him 50 years with 41 months off for time served and what they used to call "good behavior". The judge also said Petters's trial testimony was "unbelievable".
After the sentencing, U.S. Attorney Todd B. Jones told reporters he hoped the severe sentence would help safeguard Minnesota's economy from similar scams.
The Bureau of Prisons will determine where Tom Petter goes after this.
Back in May, 2008, Pastor John Piper was all excited about a project in Minneapolis called Hope Commons:
The new place of ministry means moving the classes and library and offices to Hope Commons at 2300 Chicago Avenue South. This former hospital building will house Hope Academy (K-12), Minnesota Teen Challenge, TBI, and Desiring God and Children’s Desiring God. The building is free from a visionary donor. But the ministries must pay to build out the space. That is what we are praying toward now.
--snip--
I would like to be a part of this vision for the remainder of my life. I believe the church and the world need leaders shaped by this vision of God. I pray that you will find it compelling. If you would like to know more or to share in it, please contact Craig Howse, Director of Institutional Advance, Tim Tomlinson, Executive Director of TBI, or Tom Steller, Dean of TBI.
Now, here is the rest of the story (no longer on the ministry website, but cached here):
Important Building Update
Dear DG Friends,
We want to update you on some important, unexpected developments regarding the Hope Commons building, which is to house Desiring God’s new offices, and also to ask you to pray with us.
Hope Commons Construction Project Suspended
On October 7, five days after reaching our “Building Capacity” fundraising goal, we suspended construction in our leased space at Hope Commons until further notice. Our hope is that this suspension is temporary and we will resume the project soon.
We took this action after receiving information that the individual who purchased the building in 2006 was named at the end of September in the fraud investigation of Tom Petters and his associates conducted by the U.S. Attorney’s Office. Desiring God’s legal counsel reviewed the available facts and recommended we suspend construction until more is known.
Here is the essential information that prompted this action:
The anonymous donor (we do not make public the names of donors) who purchased Hope Commons and deeded it to a Christian nonprofit foundation is a close business associate of Mr. Tom Petters.
Mr. Petters has been charged with multiple serious crimes, including investor fraud, and is being sued by the United States government in civil court. Certain persons associated with Mr. Petters have already pleaded guilty to crimes involving fraud.
The purchaser of Hope Commons is named in the same civil action as Mr. Petters.
Our legal counsel is concerned that the ownership of and legal interests in Hope Commons could be adversely affected as a result of these developments, putting Desiring God’s occupancy and investment in Hope Commons at risk.
Please note that as of this time, it is our understanding that the purchaser of Hope Commons has NOT been charged with any crimes.
Again, we have NOT terminated our lease or the construction project. Suspending construction allows us to monitor the situation and research all of our options without continuing to spend donated resources on construction expenses in the event that a worse-case scenario unfolds. Our desire remains to move into Hope Commons as a tenant.
How Much Have We Invested in Hope Commons to Date?
At the time the project was halted, we were on schedule to move into the building in the second week of December. We have approximately $370,000 (37% of total project) invested in the project to date. Approximately 25% of the actual construction is completed. Because we may not be able to recoup these costs if the project is ultimately terminated, we intend to terminate the project only if there appears to be no other reasonable and viable option.
When Do We Expect to Know What Direction We Will Take?
We hope that in the next 30-60 days we will have enough information for the Desiring God Board of Directors to determine the best course of action. We will make a public announcement of our plans on the website and via other means at that time.
Please Pray With Us
Currently, the best course of action is not clear. Pray with us that the Lord will guide us and give us wisdom. And please join with us in praying that God will preserve Hope Commons as center for gospel-spreading ministry.
While this is a sobering and difficult situation, we are not anxious. We know that this does not take God by surprise. We trust him to provide for us and to use this to bring glory to his name. We are confident that:
“…he does according to his will among the host of heaven and among the inhabitants of the earth; and none can stay his hand or say to him, ‘What have you done?’” (Daniel 4:35)
In a court filing full of obscure literary allusions, defense attorney Paul Engh cites the 150-year sentence for disgraced New York financier Bernard Madoff for an even bigger fraud. If that case is used as a guide, Engh suggests, the math should work out to a sentence for Petters of just over four years.
UPDATE: No joke - They want Petters to serve only 4 years.
DEFENDANT S RESPONSE TO GOVERNMENT S POSITION WITH RESPECT TO SENTENCING FACTORS
Defendant Thomas Joseph Petters, by and through his undersigned attorneys and in accordance with D. Minn. L.R. 83.10, replies to the Government s absurd request for 335 years.
I. Government s Unreasoned Analysis
The Government s brief disappoints on a number of levels. In its name calling for starters, describing Mr. Petters conduct and argument shameless, and beyond comprehension and cynical. The victims and the Government join in same animus. Their argument for life in prison recalls Girard s theory of mimetic rivalry. Their agreed upon contagion is that Mr. Petters life become an object of scorn, with one version in competition for the other. See generally Rene Girard, Deceit, Desire and the Novel (Johns Hopkins University Press 1961) & Violence and the Sacred (Johns Hopkins University Press 1972). The 50-plus letters we submitted paint a far different picture, of a flawed but still virtuous human being. Mr. Petters has a family that loves him dearly. To say, as the Government does, that his grief for his son is insincere is heartless in a revealing way. Mr. Petters friends still support him. From the quantum of letters alone his life, Tolstoy would opine, has been a success. Moreover, the Government tellingly omits mention of Mr. Petters cooperation with the receiver, the kind of cooperation that, in the ordinary case, would result in a 5K1.1 motion which would be granted.
Mr. Petters should get hundreds of years, it is argued, because someone may have higher culpability in the future and there must be a record beyond and above Bernie Madoff s point total. [Docket No. 388 at 6.] If nothing else, the argument is dehumanizing. We are to imprison this man into the 24th Century so the Government will have a favorable citation for its sentencing briefs? So that one of their lawyers can stand up at a future CLE and announce the record? And who will serve all the time? Will it be Mr. Petters ghost? To go through each of the enhancements would be a silly exercise. The Government argues as if this Court has no choice but to follow their additive sense of what justice should be. As if the law has only singular voice, the Government proposes a casting aside of discretion. It is a position of arbitrary power that Judges Rakoff, Pratt, Block and many others (discussed below) have rejected.
One enhancement warrants special mention, though the proposed obstruction points for Mr. Petters testimony. [Docket No. 388 at 14-17.] The Government wishes to punish Mr. Petters not only for the verdict, but for engaging in the glorious process that is the law. We have trials so that the parties can voice their disagreement in a neutral setting. Mr. Petters had the right to testify, Rock v. Arkansas, 483 U.S. 44, 49-53 (1987), 69824.1 3 and the obstruction enhancement may not be used to punish a defendant for the exercise of a constitutional right. U.S.S.G. § 3C1.1, Application Note 2. United States v. Dunnigan, 507 U.S. 87, 98 (1993) holds the enhancement is far from automatic. Our case falls into one of the key exceptions outlined in that case: The defendant s testimony may be truthful, but the jury may nonetheless find the testimony insufficient to excuse criminal liability or prove lack of intent. Id. at 95. Mr. Petters agreed to the facts, but disagreed as to his mens rea. The Government does not cite Dunnigan. The defense read the case before trial and prepared Mr. Petters examination to fall under its protection. It applies.
--snip--
We have addressed the guidelines counting mechanism in opening briefs. The Commission has never explained its rationale, particularly in a case where the loss is high. Adelson, 441 F. Supp. 2d at 510. It s oddly joyful, the Government s love of counting beans of years here, beans of years there, beans of years everywhere. It s an approach that misconstrues the sentencing process as an avenue for sheer rage. But since the Government prefers simple math, we suggest the Court use multiplication and division. The technique is just as arbitrary, but yields a fairer result.
Madoff s paper loss was nearly $65 billion, the actual loss over $21 billion and counting. Diana B. Henriques, Court Denies Madoff Aide s Request for Bail, N.Y. Times (Oct. 28, 2009), available at 29madoff.html>. He received 150 years about two and one-third years for each billion in paper losses. The loss here, calculated by Pricewaterhouse Coopers, is $1.8 billion (not, as the Government contends over and over again, the $3.8 billion paper loss). Under this application, 1.8 times 2.33 years, Mr. Petters sentence should be just over four years. Which is near akin to the Greenwood sentence twenty years ago, a case involving a greater loss in real dollars. A judge down the hallway felt that amount of time right and fair. And who is to say now that it was not. Our multiplication result does not vary too far from the twelve year, seven month sentence imposed in United States v. Forbes, 249 Fed. Appx. 233 (2nd Cir. 2007), where there was over $3 billion in actual loss. These are ranges grounded in law, fact, and reason, not anger. A Latin phrase comes to mind, per freta hactenus negata, which means to have negotiated a strait the very existence of which has been denied by the Government here. The phrase is, simultaneously, an expression of fear and accomplishment, the cusp on which human life finds its richest expression. Lopez, Arctic Dreams, Imagination and Desire in a Northern Landscape at 406 (1986). The Government fears what this Court should accomplish, which is to approach the cusp of fairness and find what has always been the essence of criminal law preserving the dignity of the fallen and imperfect defendant in the face of a request for excessive punishment.
Dated: April 1, 2010 __s/ Paul C. Engh Paul C. Engh, MN #134685
The defendant’s pitch to the Court is that he is a victim, that the story of his life is a poetic tribute to what might be. The reality as demonstrated at trial, is the defendant’s life was a fraud, based on deceit and corruption. The defendant’s purported “unbending faith that tomorrow all will be well” is founded on a refusal to recognize that actions and words have consequences, for himself and others. As he plainly demonstrated during his testimony, for Tom Petters, the truth is irrelevant; tohim, words are simply tools to manipulate and to deceive
Far from voicing contrition, the defendant espouses pride in the “reality” he created with real companies with real employees. The evidence at trial, however, demonstrated that the defendant’s companies were not operated as self-sustaining businesses, but were sustained with millions and millions of dollars in fraud proceeds. Salaries, bonuses, operating expenses were paid by fraud. The businesses were simply props for the defendant’s fraud and his desire to be a capitalist tycoon. The defendant argues he should be rewarded for this reality. In his pleading with the Court, the defendant makes no effort to address the staggering and unprecedented size and impact of his fraud on victims and the community. Instead, he asks this Court to give credence to his contorted view of life in which he is the victim. The defendant defiantly rejects personal responsibility. He is unrepentant. For the defendant, his wealth and status render him impervious to laws, rules, and consequences. The Court should reject the defendant’s efforts to deflect the full consequences of his fraud.
As eloquently written by one of his many victims: The fact that so many people trusted Tom Petters because he portrayed himself to be a committed follower of God, and a supporter of charitable organizations is highly disconcerting. Does this man not have a conscience? Does he not care for anyone other than himself? Does he have any understanding of the words – trust, caring, commitment?
Tom Petters has hurt and personally devastated so many, many lives – elderly people, nursing home residents, young families, retired people like myself . . . How could Tom Petters so blatantly lie to so many, many people, and then when apprehended continue to lie and refuse to take responsibility for his actions by trying to play on the sympathy of the jury. Lying while facing people and under oath, even when some of his close associates confessed to their parts in the scandal is almost inconceivable. I repeat . . . Does this man not have a conscience? Does he not care for anyone else but only his own selfish, greedy motives?
With a crime of this magnitude of $3.5 billion, and the personal devastation he has caused to so many, many people’s lives, I believe that Tom Petters needs to be punished to the full extent of the law, especially when he takes no responsibility for his actions. Like Bernard Madoff, Tom Petters obviously does not care for anyone other than himself and his own extremely selfish, selfcentered, greedy motives. Our society, unfortunately, is becoming plagued with too many people like this, and like Bernard Madoff. Tom Petters needs to learn that there are severe consequences for his incomprehensible behavior.
--snip--
Of course, compared to most economic crime cases, the gravity of this case is staggering. The impact of the fraud extended far beyond a simple financial loss (and financial ruin in many cases). Tom Petters betrayed friends, family, employees, business associates and numerous other people and organizations (including charitable organizations) who entrusted the defendant with so much. The defendant’s conduct throughout the years of his fraud, his subversion of charitable organizations and real corporate assets to promote his fraud, and his unrepentant, calculated perjury at trial sets him apart, even in the context of the most significant financial fraud cases. There are hundreds of victims. By way of example, one victim wrote the following:
We had our entire savings including the full equity of the mortgage on our house invested with Petters. This was 57 years of savings! I knew Tom Petters personally and he knew we had our entire life’s savings invested with him. . . . I think it would be horrible if he received anything less than a life sentence. He needs to be held responsible for the thousands of lives he has destroyed. . .. Tom Petters also stole millions from Christian ministries, pastors and good non-profits. Many of these ministries give their lives to help the needy. This is as low as one can go. Another of the defendant’s victims addressed the impact of the fraud in this way: I raised five children as a single mother, pay all the bills on time, and was looking forward to retirement and more time with my children and grandchildren. . . . I don’t know when I’ll be able to quit working now, I have no home to retire in (I currently rent a room in someone’s home). . . What have I lost? My ability to choose, hope for my own little retirement home to putter around in, and the resources to see my out-of-state children and grandchildren.
Yet another describes his loss in this fashion:
I gave up the fun things in life, such as boats, snow machines, a bigger and nicer home and worked at the same job for 38 years to save for my retirement. I invested my money with Tom Petters and he has taken my dreams and retirement from me.
Defendant’s claim that he has not committed one of the most serious offenses does not pass muster. Simply put, the defendant’s fraud has devastated lives. The sentence imposed in this case should be sufficiently significant that it will provide fair warning to potential future fraudsters, young and old, that committing fraud is simply not worth the risk. History and Characteristics of the Defendant As demonstrated at trial, the defendant’s life history as a businessman is a history of fraudulent conduct, culminating in one of the most substantial frauds in history.
The defendant now argues that he is not likely to re-offend. (Def.’s Position at 12 & 14 (“For Mr. Petters, perhaps unlike Mr. Gall, the deterrent value of the case has already reached fruition. Adverse media coverage has ruined his reputation and name.”) How can he seriously contend he will not re-offend when he has not even admitted he has committed a crime? How can he argue that his reputation has been wrongly ruined by factual reporting regarding the evidence of the defendant’s conduct and statements? The argument is less than frivolous.
Purported “Cooperation”
The defendant even claims he has been cooperating with the authorities from the “get go” and should be rewarded for his efforts. The defendant miscasts the facts. By November 2008, the government had already obtained overwhelming evidence against the defendant, including recordings, email, and cooperator testimony. Although not required to do so, prior to indictment, the government provided the defendant and his defense counsel with access to the evidence. The government hoped to avoid the unnecessary expense of a long investigation and trial, to start paying restitution to the victims as quickly as possible, and to avoid a substantial delay in the recovery efforts resulting from the fraud. As noted in his pleading, on November 24, 2008, after seeing the evidence amassed against him, the defendant sent his attorney to negotiate a cooperation agreement with the government. The government declined to enter into a cooperation agreement with the defendant (his perjurious testimony validates that decision). Importantly, however, the government offered the defendant an opportunity: if the defendant agreed to plead guilty and accept responsibility for his conduct, the government promised it would inform the Court of any assistance the defendant provided to law enforcement. The defendant rejected the offer, which the government thereafter confirmed in correspondence with defense counsel. Instead, the defendant determined to go to trial, deliberately gambling that he could overcome the overwhelming evidence and avoid his accountability for his crimes by deceiving the jury. Tom Petters did not care about the consequences of this decision on his victims or others. Notably, the government made the same offer to Larry Reynolds. Reynolds quickly accepted the offer, pleaded guilty, and accepted his responsibility for the fraud. The government also made the same offer to Greg Bell. Bell also quickly accepted the offer, pleaded guilty, and accepted his responsibility for his own fraud. The defendant remains uniquely unrepentant.
The defendant now claims he is now working hard to assist the receiver recover assets. Even now, defendant misrepresents his cooperation with the receiver, advising the Court that he “provided a listing of his assets and assisted in the location of the same.” (Def.’s Position at 19.) Defendant apparently forgets his effort to conceal assets from the receiver following his arrest. See Special Report of the Receiver dated Jan. 22, 2009, Civ. No. 08- 5348 (reporting defendant diverted $50,000 in corporate assets and concealed them with a family member while using the funds). The defendant touts his recent meetings with the receiver, but they began only after the defendant was convicted, sixteen months after the receiver began his efforts to restore to victims the proceeds of the fraud. Once again, the defendant has demonstrated that in his world, his interests come first. He will offer assistance when it is of benefit to him.
Charitable Contributions
The defendant also points to his charitable donations as a reason for a more lenient sentence. First and foremost, the defendant deserves no credit for the charitable donations he made with other people’s money. The defendant’s charitable donations are traceable to the proceeds of his fraud. In fact, the defendant caused these charitable organizations harm through these donations of fraud proceeds as these same organizations are now required to return the money. Moreover, the defendant purposely used his persona as a charitable philanthropist to further the fraud. The receiver has reported that the foundation established by the defendant in the name of his murdered son – the organization on which the defendant purportedly spent most of his time and effort – was used largely to fund gala events featuring the defendant and to support the defendant’s company, Petters Group Worldwide. The receiver’s accountants have determined that approximately twenty percent of donations went to student scholarships. Indeed the evidence at trial proved the defendant used the charitable events to entice new investors. See Gov’t Ex. 280 (Petters: “John would want me to make deals and raise money for his foundation at the same time.”) The defendant’s true civic character was also made plain by his tax returns, which revealed the defendant paid almost no taxes despite hundreds of millions of dollars in income and remarkably extravagant personal expenditures. He was recorded laughingly admitting that he cheated on his taxes.
Blaming the Victims
Throughout the trial, the defendant chose the unseemly trial tactic of blaming his victims, referring to them as “giant loan sharks” and other names. He continues that tack even now – notwithstanding the testimony of his friends and associates and people like Janet Leck and Ray Ross – arguing that he should not be punished for his fraud and his deceit, because the victims chose to invest based on his promises of substantial rates of returns. The evidence demonstrated that the investors, including unsophisticated “little old ladies,” all took the defendant at his word. Now, he argues they deserved what they got. His argument makes plain that the defendant would repeat the offense if given the opportunity. He should be incarcerated to protect the public. The defendant spent most of his career obtaining money from investor/victims through deceit and fabrications. The defendant took money from individuals without a second thought, saying whatever he needed. If there came a time when he was required to repay an investor, for example the Breckners or GE Capital, the defendant simply worked his remarkable talent, calling new and old potential investors and tricking them into giving him more money. If Petters indeed had an “unbending faith in tomorrow,” it was his faith that he was always capable of separating new victims from their money. The recordings adduced at trial reflected this mentality, the defendant’s race to beat the clock and his confidence that he could do so. But for the government’s investigation in September 2008, who can really say how many tens of millions of dollars more would have been lost. The defendant now also blames the regulatory system for its failure to capture him sooner. (Def.’s Position at 19.) This is an odd argument. The defendant blames the government for not stopping his fraud earlier, but then asks this Court to release him sooner. According to the defendant’s logic, were the Court to impose a sentence permitting the defendant to leave prison, any subsequent frauds perpetrated by the defendant would then be the government’s fault, as it could have prevented them.
Long-Term Medical Prognosis
Finally, desperate for any argument, the defendant points to his medical condition – a pituitary tumor – as a ground for leniency. Notably, in October, the government requested access to the defendant’s doctor. Through counsel, the defendant denied the government’s request. Based on what is publicly known of his condition, there is substantial question whether the defendant’s pituitary tumor represents a significant medical problem. See Dr. Craig Bowron, “Tom Petters’ pituitary-gland tumor: reason for leniency or just another fraud?”, MinnPost.com (March 10, 2010) (noting that 10 percent of population have pituitary adenomas without symptoms). More to the point, the defendant’s medical condition is irrelevant to a determination of his proper sentence. The defendant, by his conduct, has earned for himself a life sentence, whatever that might be.
CONCLUSION
The defendant argues that he is “worthy for the nod of mercy.” (Def.’s Position at 23.) The defendant has done nothing to merit this Court’s mercy. A life sentence is just punishment for the defendant. Dated: April 1, 2010 Respectfully Submitted,
B. TODD JONES United States Attorney
s/ Joseph T. Dixon III
BY: JOSEPH T. DIXON III Attorney ID No. 0283903 JOHN R. MARTI TIMOTHY C. RANK Assistant U.S. Attorneys
St. Paul, Minn. — A U.S. District Court judge said Friday businessman Tom Petters will be held personally responsible for losses his investors suffered from a multi-billion-dollar fraud scheme.
U.S. District Court Judge Richard Kyle says a judgment in the amount of about $3,522,880,614.10 will be entered against Petters. That's a result of Petters' conviction last December on fraud and money laundering charges.
Forfeiture will be part of the sentence scheduled for April 8.
A federal judge ordered the forfeiture Wednesday of several pieces of property owned by convicted businessman Tom Petters, including his former primary residence in Wayzata and the Plymouth home where his girlfriend and his two young children currently live.
