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 17,719.92 -78.57 -0.44%
Nasdaq 5,108.67 -18.86 -0.37%
S&P 500 2,080.41 -9.70 -0.46%
Treasuries 2.22 -0.01 -0.31%
Data as of 5:47pm ET
Company Price Change % Change
General Electric Co 29.94 -0.42 -1.38%
Bank of America Corp... 17.43 -0.05 -0.29%
Microsoft Corp 54.35 0.42 0.78%
Pfizer Inc 32.77 -0.02 -0.06%
Apple Inc 118.30 0.49 0.42%
Data as of 4:01pm ET


The Federal Reserve adopted a rule on Monday from the Dodd-Frank Act that would limit its ability to lend to banks during emergency situations. More

The Federal Reserve adopted a rule on Monday from the Dodd-Frank Act that would limit its ability to lend to banks during emergency situations. More

There's a rumor going around that Apple might replace the standard 3.5-millimeter headphone jack in the iPhone 7. It's just a rumor, but it has the aura of plausibility. Here's why. More

Hive, a startup funded by the UN, is tasked with getting more Americans engaged with the refugee crisis. More