Day 3 Petters Trial

More testimony about phony purchase orders for imaginary electronic stuff.

Also, the guy from Interlachen who lost $60 million.

Deanna Coleman will likely testify on Monday.

Petters Trial 2nd day

Today, there was testimony about a loan... sort of dull:

Reuters:

* U.S. introduces evidence it says shows forgery

* Petters accused of deceiving investors, retailers

* Defendant accused of running Ponzi scheme (Adds new testimony, defense strategy on cross-examination)

Pencil drawings from Wednesday.

AUSA Joseph Dixon gives the opening statement for the Government:



Hopeman for the defense:



Petters & attorney:

Petters Trial 1st Day

I was there.

Jury selection and opening statements.

Joe Dixon's opening argument was excellent. He outlined the scam without getting into too much detail. He played a few excerpts of recorded conversations with Tom Petters dropping the F-bomb in nearly every other sentence.

Hopeman previewed the defense argument; Petters was too busy to notice because he was a workaholic and distraught over the murder of his son.

Here's the Strib article.

I have some good drawings from opening day, I'll post them later.

This one I did a few days ago from photo reference:

Petters Trial Tomorrow

Last minute rulings... WCCO:

A judge has denied the defense's request to move Tom Petters' trial out of the Twin Cities, just a day before the trial is supposed to start.

The judge also ruled that incriminating recordings made by Deanna Coleman, the whistleblower in the case, can be played before the jury.

Petters also asked that he be moved from the Sherburne County Jail in Elk River to the Ramsey County Jail in St. Paul during his trial, but the judge said no to that too.

Jury selection in the case starts at 9 a.m. Wednesday.

Earlier this month, U.S. District Judge Richard Kyle denied Petters' bid to move his trial out of the state.

Petters Trail Delayed Another 2 Days

MPR:

Petters' trial in St. Paul had been scheduled to begin this week, but U.S. District Judge Richard Kyle delayed it until next Monday. On Friday, Kyle delayed the trial by another two days but did not give a reason for the delay.

Jury selection will begin Wednesday, and opening statements will likely come later in the week.

Petters Jury Selection Delayed Until Monday

Strib:

Jury selection had been scheduled to begin tomorrow, with the estimated six-week trial beginning Monday. U.S. District Judge Richard Kyle said today at a pre-trial hearing that the fraud trial would begin in his St. Paul courtroom as soon as the jury could be seated. That could come as soon as Monday afternoon, but likely would be Tuesday morning.

KSTP has more about pre-trial motions:

Wednesday attorneys defending Wayzata businessman Petters against charges of fraud filed 28 pretrial motions. In one they renewed their motion for a change of venue due to the possibility of pre-trial publicity tainting the jury pool.
Judge Richard Kyle denied the motion and said he would only reconsider his decision if something unusual comes up during jury selection, now scheduled to begin on Monday.

Kyle granted a defense motion to exclude details of Petters' lavish lifestyle and spending along with accusations of drug and prostitution use. The defense argued such evidence would become a side show and distract from the actual legal case.
The judge left open the possibility for the prosecution to ask for another ruling on the lifestyle issues.

The judge did not yet rule on a motion from the prosecution to disallow evidence of Petters' former charitable giving. However the judge did shoot down the defense argument that the evidence speaks to Petters' character. Judge Kyle compared the argument to a bank robber who gives the money he stole to the "Little Sisters of the Poor." He said it doesn't change the fact the money was stolen.

Also among the 28 defense motions was a request for more access to documents about defendant Larry Reynolds. Reynolds is the alleged co-conspirator who used to be in the Federal Witness Protection Program. The defense said proving he helped set up Petters is a big part of their defense. Prosecutors said the argument is just a "red herring" and that Petters attorneys want to turn this into a trial about the witness protection program. The judge took the motion under advisement and will issue a ruling later.

In another ruling, the judge agreed with the defense argument to exclude evidence of past allegations of criminal business dealings from Colorado in the late 1980s. The ruling will likely restrict the prosecution to Petters' dealings from 1994 through 2008. However, the judge decided to allow evidence of past tax and bank fraud.

The defense also made a motion to transfer Petters from the Sherburne County Jail to the Ramsey County Jail. The attorneys said it takes them an hour to get to the Sherburne jail to talk to their client. The judge said he will look into it, but said security issues, expense and available space might prevent a transfer.

PiPress Preview of Trial

PiPress:

Petters, 52, has pleaded not guilty to a 20-count indictment on fraud charges. The trial is expected to run a month or more.

Prosecutors call the evidence against Petters "overwhelming." They'll arrive in court having reviewed thousands of documents, Petters' company computer files and e-mail messages he sent to associates about the alleged scheme. Those same associates indicated at their plea hearings that they have the inside knowledge to tie the whole case together.

The article by John Welbes has this timeline:

AN EMPIRE FALLS

Sept. 24, 2008: Federal agents raid the Minnetonka headquarters of Petters Group Worldwide and the home of its chief executive, targeting a little-known financial division called Petters Co. Inc.

Sept. 29, 2008: Tom Petters resigns as CEO of Petters Group Worldwide. Minneapolis attorney Doug Kelley takes over.

Oct. 3, 2008: Tom Petters is arrested at his Wayzata home and held without bail. Larry Reynolds is arrested the same day in Las Vegas. Both are charged with mail fraud, wire fraud, money laundering and obstruction of justice.

Oct. 6, 2008: Mendota Heights-based Sun Country Airlines files for Chapter 11 bankruptcy protection. U.S. District Judge Ann Montgomery puts the other Petters Group companies into receivership under Kelley and freezes their assets.

Oct. 8, 2008: U.S. Magistrate Jeffrey Keyes denies Petters bail, calling him a flight risk. Petters' associates Robert White, Deanna Coleman and Michael Catain plead guilty of mail fraud, money laundering and conspiracy.

Oct. 11, 2008: Petters Group Worldwide files for Chapter 11. Among the creditors: Illinois hedge fund company Lancelot Investment Management, which says it is owed $1.5 billion.

Oct. 23, 2008: Larry Reynolds pleads guilty of money laundering.

Oct. 31, 2008: U.S. District Judge Michael Davis denies Petters' second request for bail.

Dec. 1, 2008: A federal grand jury in St. Paul indicts Petters, charging him with two counts of conspiracy and 18 counts of mail fraud, wire fraud and money laundering. He pleads not guilty the next day.

Dec. 18, 2008: Polaroid Corp., owned by Petters since 2005, files for Chapter 11. The company later is sold to liquidators for $88 million in a contested auction.

Dec. 19, 2008: James Wehmhoff, an accountant for Tom Petters and Petters Group Worldwide, pleads guilty of filing false tax returns.

Jan. 2009: Trial is postponed from February to June.

March 2009: Petters' lawyers ask to withdraw, saying they're worried about getting paid. The motion is denied.

July 2009: Petters' defense attorneys say their client was duped by Larry Reynolds, who they say has an extensive criminal history and was in the federal witness-protection program. Petters' trial is delayed again, to Oct. 26.

Oct. 7, 2009: Hedge fund founder Gregory Bell pleads guilty of wire fraud for feeding more than $2 billion of client assets to Petters' alleged Ponzi scheme.

Tom Petters, 52, has pleaded not guilty to a 20-count indictment on fraud charges.

DOJ Outline of Case - Petters Bounced Checks Worth $38.5 million in 2000

Strib:

According to the government's timeline, the Petters operation faced one of its toughest tests in 2000 when General Electric Credit Corporation (GECC) became concerned over late payments by PCI on promissory notes that were supposed to fund transactions with Costco.

GECC contacted Costco about the transactions and learned that Petters had supplied the lender with copies of bogus purchase orders. Costco then contacted Petters, who apologized and said the person responsible had been fired, the government says. Petters then "angrily" confronted GECC about contacting "his" retailer instead of working through PCI.

Petters tried to resolve the dispute by paying GECC $38.5 million with eight checks, but they bounced. Eventually, using investor funds, Petters was able to repay the notes and GECC closed down the line of credit, the government says.

Petters Lawyers Ask for Change of Venue

KSTP:

Attorneys defending Wayzata businessman Tom Petters against charges he ran a Ponzi scheme have renewed a request for a change of venue.
In February, Petters' lawyers asked for the trial to be moved out of Minnesota to either Wisconsin or Iowa.
The attorneys argued it would be impossible for Petters to get a fair trial in Minnesota because of publicity that "has been extensive, disdainful, relentless."

Gregory Bell Pleads Guilty

Strib:

Bell acknowledged that he helped engineer multiple financial transactions between his hedge fund and Petters Co. Inc. to create the appearance that Petters Co. Inc. was repaying investments made by Bell's funds.

Bell faces a maximum of 20 years in prison and a $250,000 fine.

Two Strib Stories About Petters Trial ( October 26)

It's been a long year for Tom Petters' many victims.

.... and....

Faith community counts losses in Petters investments:

....Vennes is the common tie among Anderson's clients, Teen Challenge and Fidelis. Vennes is a felon turned Christian who had a 14-year relationship with Petters and steered investments of $1.2 billion his way, according to federal documents. Vennes told authorities that he earned $38 million in commissions in 2007 alone from the Petters operation. Although his assets were put in receivership a year ago and he is identified in an FBI search warrant as a participant with Petters and others in conversations about the crumbling operation, Vennes has not been charged with a crime in the case.

"His status hasn't changed. He has not be charged," said Vennes' attorney, James Volling. "I'm waiting just like everyone else to see what happens."