Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Tom Petters gets 50 years for Ponzi scheme

By Annalyn Censky, staff writer


ST. PAUL, Minn.(CNNMoney.com) -- Twin Cities businessman Tom Petters will likely spend the rest of his life in prison for orchestrating a $3.65 billion Ponzi scheme -- one of the largest in U.S. history second only to Bernie Madoff.

Judge Richard Kyle sentenced Petters to 50 years in prison on Thursday, noting that he wasn't convinced that if given a more lenient sentence, Petters wouldn't commit further crimes. For Petters, who is 52-years-old, the sentence likely means he will live out the rest of his life behind bars.

The sentence is the longest term of imprisonment ever ordered in a financial fraud case in Minnesota history.

Petters and his business partners at Petters Company, Inc. defrauded billions of dollars and property by convincing investors to give the company money to purchase electronics to be sold to big-box retailers, such as Costco and Sam's Club. Instead, Petters diverted the funds to make payments to other investors, fund his other businesses and finance his extravagant lifestyle.

Many of Petter's co-conspirators have pleaded guilty for their roles in the scheme, but have yet to be sentenced.

The FBI and IRS began investigating Petters in December 2008 after co-conspirator Deanna Coleman reported that she had been aiding Petters in a multi-billion-dollar Ponzi scheme for ten years.

In December 2009, a federal jury convicted Petters of orchestrating a $3.65 billion Ponzi scheme. The judge found him guilty on 20 counts including wire fraud, mail fraud, money laundering and conspiracies to commit further fraud.

Speaking for about 40 minutes, Petters' attorney Paul Engh argued Thursday that justice could be done with a lesser sentence of 4 to 12 years. The law has always differentiated between crimes that take away life, and those that take away money, he said.

Meanwhile, federal prosecutors argued for a prison sentence of 335 years. U.S. Assistant Attorney Joseph Dixon said Petters' crimes "devastated lives" and "strike at the heart of this economic system." The government expects more than 500 victims were affected by the scheme.

In Petters' last remarks before receiving the sentence, he said was truly regretful for all who have been hurt, and he plans to work the "balance of my life" to repay them.

CNNMoney.com's Poppy Harlow contributed to this report. To top of page

Index Last Change % Change
Dow 16,102.38 -272.38 -1.66%
Nasdaq 4,683.92 -49.58 -1.05%
S&P 500 1,921.22 -29.91 -1.53%
Treasuries 2.13 -0.04 -1.85%
Data as of 2:07am ET
Company Price Change % Change
Bank of America Corp... 15.65 -0.29 -1.82%
Apple Inc 109.27 -1.10 -1.00%
Alcoa Inc 9.49 -0.08 -0.84%
Microsoft Corp 42.61 -0.89 -2.05%
General Electric Co 24.00 -0.51 -2.08%
Data as of Sep 4
Sponsors

Sections

Jessica Alba's Honest Company has been sued by a customer who claims the company is making false claims in its marketing and labeling. More

Harlem's Hot Bread Kitchen teaches kitchen skills to low-income immigrant so they can find employment. More

Google has released Chrome 45, which claims to make your browser faster and give your laptop battery extra life. More

Harlem's Hot Bread Kitchen teaches kitchen skills to low-income immigrant so they can find employment. More

Pimco's famous fund once managed by star manager Bill Gross has less than $100 billion in management for the first time since 2007. More