The Trial of Tom Petters Day 18

November 23, 2009

Day 18 of the trial of Tom Petters.

I arrived early to the courthouse today, but there was already a crowd of spectators lining up to watch the Government and the Tom Petters's attorneys give their final arguments.

Each side had ninety minutes with a short rebuttal for the Government.

First Assistant U.S Attorney John Marti said Petters's associates who had pled guilty and testified against Petters were, using defense attorney Jon Hopeman's words "instruments of darkness". But, Marti reminded the jury that Petters had admitted in his testimony that they were his instruments.

Marti played more tapes so the jury could again hear Petters admitting PCI was "one big fraud". Marti explained each of the twenty counts in the indictment and gave a summary of the evidence.

At the end, Marti reminded the jury of the small investors who testified about losing nearly all their money in the scheme and said the jury could "fix it" by convicting Tom Petters.

Petters's attorney Paul Enge talked about some of the evidence that could put a doubt in the Government's case, but there wasn't much. Enge filled up the rest of his statement with literary references from Samuel Becket to Gertrude Stein. Enge also mentioned Freud, Nietzsche, heuristics and cognitive dissonance.

Paul Enge's main point was that the jury should presume the defendant innocent until proven guilty as the Founding Fathers intended... Enge said that while jumping up and down for emphasis.

Assistant U.S. Attorney Tim Rank gave a twenty minute rebuttal in which he turned the jury's attention back to the tapes and Petters own words that the purchase orders were fake.

After lunch, Judge Kyle read the jury instructions. The fate of Tom Petters now rests with the jury.

Petters Trial Day 17

November 20, 2009

Day 17 of the trial of Tom Petters.

I was standing in the park overlooking the Missisippi river at Kellogg Avenue and Robert Street in Saint Paul reading a plaque commemorating the log church that Father Galtier built on this spot when the town was called Pig's Eye, named after Pierre "Pig's Eye" Parrant who owned a popular tavern here back in the pioneer days. The log church was named after Saint Paul and soon the new city changed it's moniker from Pig's Eye to the more respectable St. Paul.

A stone's throw from rock with the plaque is the Federal Courthouse where the Trial of Tom Petters continued today with the testimony of Tom Petters.

The gallery was filled with people in suits carrying legal pads.

Petters's attorney Jon Hopeman asked a few questions before turning over his client to the withering examination of Assistant U.S. Attorney Joe Dixon.

Dixon read quotes from emails and transcripts of taped conversations in which Petters admitted having knowledge of the fraud. Petters kept insisting that his statements were open to interpretation.

Petters insisted he was going to take care of the money problems at PCI and investigate the fraud. Petters said Deanna Coleman was "mentally ill" when she was wearing the wire and that she asked him "prefabricated questions that set me up".

Petters also said the raid on his business "made matters worse".

By ten o'clock, both the defense and the Government rested their cases.

The judge held a few sidebar conferences with the attorneys and announced that the trial would continue Monday with closing statements and jury instructions.

Petters Trial Day 16

November 19, 2009

Day 16 in the trial of Tom Petters.

Defense lawyer Jon Hopeman continued the direct examination of Tom Petters. Hopemen asked Petters to explain some of the incriminating remarks we heard on the recordings and testimony of witnesses in the trial.

Petters said the business was filled "with nonsensical excuses and stories".

Petters said that faked purchase orders was the way they did business at PCI.

He also admitted to having been prescribed Adderall and Klonopin for his ADD. He said the dosage was tripled and made him sound "like a maniac" on the tapes.

Petters got way emotional when Hopeman asked him about the day Petters resigned. He leaned back in his chair and choked back the tears.

Assistant U.S. Attorney Joe Dixon began the redirect examination by asking Petters about his tax returns that "year after year" showed "zero income".

Petters was evasive about the tax returns, blaming his accountant. He claimed he just signed the tax returns.

Dixon asked Petters whether he had sex with Deanna Coleman. At first, Petters refused to answer the question, but admitted he had a sexual relationship with her in Italy.

Dixon asked Petters if he had told his personal assistant, David Margolis that he had sex with Deanna Coleman in a gondola. Petters said yes.

Dixon hammered away at Petters on his business dealings and the statements he made on tape and in emails that indicated he knew PCI was a fraud. Dixon told Petters he had "Ponzied" his father-in-law. Petters denied knowing he was running a Ponzi scheme.

When Dixon asked Petters about his Bentleys, Petters replied that he was not a "Bentley guy" after Dixon showed a receipt for one of posh cars, Petters said, "okay, I'm a Bentley guy".

Petters lost his cool at times as Dixon pressed Petters to admit PCI was a fraud that kept his other companies afloat. Petters admitted PCI was "the cash cow for all my companies" and that he was "involved" in the scheme, however he still maintained that he was not responsible for the scheme.

Dixon asked Petters if his former associates were "instruments of darkness", borrowing the phrase Jon Hopeman used in his opening statement. Petters said, "yes, they were my instruments".

Dixon said Petters former associates had made millions of dollars and Petters took $400 million. Petters said, that's what got put in my companies".

There will be more testimony from Tom Petters and very likely closing statements tomorrow.

Day 14 -Tom Petters Trial

November 17, 2008

In the morning, Steve Ratliff, former President of Red Tag testified about working for Tom Petters. He testified that Tom Petters was loved by his employees and gave lots of money to charity. On redirect, Assistant U.S. Attorney John Marti asked Ratliff about Tom Petters's posh homes, cars and showed pictures of the PCI corporate jet. Ratliff said Petters used the jet for business and pleasure.

A few more people testified; A shipping manger, an accountant who wasn't allowed to look at bank statements, Tom Petters's speechwriter and the human resource manager at Petters Worldwide... but everyone, including Tracy Mixon, Tom Petters's fiancee was waiting for the main event - the testimony of Tom Petters.

Tom Petters took the stand at four o'clock and talked about growing up in Saint Cloud and his start in the merchandise diverting business. Petters said the merchandise diverting business had a lot of people who did nasty stuff like bounce checks. He admitted he bounced checks too.

Petters said he said he was not guilty. He admitted participating in the fraud, but blamed others he said he trusted too much.

Tom Petters will testify again tomorrow.

The Trial of Tom Petters Day 13

Monday, November 16, 2008

Day 13 in the trial of Tom Petters.

The Government wrapped up their case today with the testimony of IRS Special Agent Kathy Klug. Documents relating to the 20 charges against Tom Petters were entered as evidence. There were all sorts of big spending on casinos and fancy cars.

The Government rested their case at 11:40.

The lawyers for Tom Petters called their first witness, a former employee at Circuit City who testified that Tom Petters was "a very bright fellow, but management wasn't his strong suit.

The next witness was Karl Petters, a cousin of Tom Petters who testified about working for Petters. He said most of the people in the business, "you wouldn't want over for dinner". He said he left the company because the business Petters was in was "horrible" and he did not like working for his cousin. Karl Petters said he "loved the man, but hated the boss".

Karl Petters also testified that Larry Reynolds threatened to kill him.

The next witness said he knew Petters when he was selling hangover pills and lip balm. He testified that Peters was not a micromanager.

The next witness was John Hagen, Tom Petters's father-in-law who said Tom Petters "buried himself in his work" after the murder of John Petters.

George Danko testified about working for Tom Petters. He testified that Bob White was a "totally unreliable person".

The defense resumes tomorrow.

Petters Trial Day 12

Friday, November 13, 2009

Day 12 in the Trial of Tom Petters.

Today we heard from more businessmen about documents forged and deals gone bad.

An assistant buyer who used to work at Circuit City. He testified he didn't sign one of the documents Tom Petters used to borrow money.

Next, businessman Irwin Jacobs was called to testify about a deal that didn't go very well with Petters back in the 1990's.

Greg Bell returned in his white sweater. On direct and indirect examination, Bell talked about what he did when he learned in 2008 that Petters was in deep trouble. He moved millions offshore to trusts in islands all over the world.

Businessman Ted Deikel took the stand next and talked about the deal he had made with Petters in June, 2008. As we have heard from other withnesses, Deikel had a difficult time getting Petters to repay the loan. Petters bounced checks on Deikel and and made a lot of crazy excuses. Deikel received partial payment of the loan but he lost seven and a half million dollars.

The next witness was Petter's nanny Jennifer Wolter who testified that she had not signed one of the documents Petters had used to buy time on his loans.

The next witness was Ray Ross, a retiree living in Arizona. Ross was involved with Charis MInistries when he met Frank Vennes in jail. Ross invested his $491,000 nest egg with Vennes and Vennes invested it in Petters and now it's all gone and Ross and his wife have to live on Social Security.

The final witness of the day was Special Agent Kathy Klug. Assistant U.S. Attorney Joe Dixon asked Kathy Klug to connect each of the counts in the indictment to documents. That part of the Government's case will be finished on Monday and then we will hear the attorneys for Tom Petters make their case.

Defense attorney Jon Hopeman told reporters that no decision has been made about Tom Petters testifying, but that decision is entirely up to Tom Petters.

Tom Petters Trial Day 11

November 12th 2009

Day 11 of the Trial of Tom Petters.

The Government continued to build its case against Tom Petters with more testimony from businessmen. Michael Liss, an investor described Petter's stalling tactics when Petters couldn't repay a loan. Liss said Petters made all kinds of excuses while he continued to live like a "big-time wheeler-dealer"... like a "swashbuckling industrialist" with his "Blackberry abuzz".



But it wasn't just banks and hedge funds that lost money with Tom Petters. Little people were wiped out too. A widow, Janet Leck testified that Frank Vennes Jr. persuaded her to invest nearly everything she owned... now she faces foreclosure on the home she lived in for thirty years.

Another Petters associate, Michael Catain took the stand next. A few years before he was arrested for his role in the Petters fraud, Michael Catain got into trouble with his neighbors. According to a 2006 police report, Michael Catain was observed screaming at a neighbor, "You wanna come after my wife? I'll fucking kill you."

Even after Petters was busted and Catain's property was put in receivership, Catain couldn't stay out of trouble. A report of an investigation by receiver Doug Kelly in January, 2009 said Michael Catain skimmed nearly $14,000 in proceeds from the Bay Car Wash he owned in Excelsior and removed several items from his home "including expensive chandeliers".

Catain testified today about his role in the scam, laundering of twelve billion dollars for Tom Petters and other stuff. He used code words like cabbage to signal when he would wire money.

After Catain, Greg Bell took the stand. Bell is being held in Anoka County jail. Bell testified about how he started the Lancelot hedge fund which was invested almost entirely in PCI.

Tomorrow, more Greg Bell testimony.

Petters Trial Day 10

The prosecution played the rest of the September 17, 2008 recording of a meeting in Tom Petters office. The recording was made with a wire planted on Deanna Coleman.

Tom Petters, Deanna Coleman, Jim Wehmhoff and Bob White were attempting to brainstorm about how they would handle some frustrated investors who were sending auditors to Minnesota

Coleman said she couldn't take the lying anymore. She said she "couldn't stomach it anymore"

Wehmhoff said they needed an excuse to keep Coleman away from the auditors.

Bob White agreed and said she should pretend to get sick. White added that he thought they could "buffalo their way through it".

Tom Petters also said he couldn't lie anymore and cried and cried... Coleman said she had to go.

After the recording ended, two investors testified about losing lots of money after PCI was raided in September 2008.

After the investors, Petter's accountant Jim Wehmhoff took the stand. He looked like an old grandpa and it was pathetic to hear how he participated in the fraud, moving money around and filing fraudulent tax returns.

Tomorrow is Veterans Day, so the trial won't continue until Thursday when the prosecution has Michael Catain and Greg Bell scheduled to testify.

Petters Trial Day 9

November 9, 2009

Day 9 of the trial of Tom Petters.

The prosecution started off with some people who worked for companies like Walmart and 3M testifying. Most of the testimony was about the phony purchase orders alleged to have been used to get big loans that fueled the Petters Ponzi scheme, or as Bob White put it, "feed the demon".

At 10:00, Larry Reynolds took the stand. Judge Kyle read his plea agreement and Assistant U.S. Attorney John Marti questioned Reynolds about his criminal activity years ago before Larry Reynolds, then Larry Reservitz ended up in the Witness Protection Program (WitSec).

Marti asked Reynolds if he was a member of La Cosa Nostra. Reynolds said, "The last time I checked, they don't accept members of the Jewish faith."

Reynolds testified about his business dealings with Tom Petters, the phony invoices, the fake warehouses, and the money laundering.

Reynolds talked about visiting Tom Petters in his suite at the Bellagio in Las Vegas and how Petters considered making Deanna Coleman the fall gal for the scheme.

When Reynolds visited Minnesota in October of 2008, Petters drove him to the airport. As he drove, Petters told Reynolds that Bob White would flee the country and suggested Reynolds flee also. Reynolds was arrested after he arrived home in Los Angeles.

Defense attorney Paul Enge challenged the witness's credibility in redirect examination., referring to Reynold's criminal history again and again. The prosecution objected often and Judge Kyle sustained most of the objections. After a few more minutes, Judge Kyle called the attorneys to the bench.

Paul Enge was done questioning Larry Reynolds and the prosecution proceeded to play another recorded conversation from the wire Deanna Coleman wore to a meeting in September, 2008.

Frank Vennes called to warn Tom Petters about auditors from the Palm Beach hedge fund heading to PCI to check the books.

Petters tells Coleman and White, "This is one big fucking fraud and I'm dealing with it."

Around 4:30, the tape was stopped and the jury filed out. Paul Enge complained to the judge that his client was being denied his right to a public trial guaranteed by the sixth amendment to the Constitution because he thought the public needed to know what was in Larry Reynold's WitSec file. Enge called for a mistrial.

Judge Kyle denied the motion.

Tomorrow, Michael Catain is scheduled to testify.

Petters Trial Day 8

Petters Trial Day 7

Petters Trial Day 6

Petters Trial Day 5

Petters Trial Video - Day 4

Deanna Coleman's first testimony:

Video: Tom Petters Trail - First Week