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

Search for Jobs

Index Last Change % Change
Dow 18,145.71 -16.64 -0.09%
Nasdaq 5,257.40 15.57 0.30%
S&P 500 2,141.16 -0.18 -0.01%
Treasuries 1.74 -0.01 -0.40%
Data as of 5:03pm ET
Company Price Change % Change
Reynolds American In... 53.78 6.61 14.01%
Chesapeake Energy Co... 6.68 -0.23 -3.33%
AT&T Inc 37.49 -1.16 -3.00%
Microsoft Corp 59.66 2.41 4.21%
Bank of America Corp... 16.67 0.11 0.66%
Data as of Oct 21


The combo brings together AT&T's wireless and Internet business and DirecTV with Time Warner programming, including CNN, HBO and Warner Bros. More

Passes for the new National Museum of African-American History and Culture in Washington D.C. are 'sold out' through March 2017. More

A Chinese firm that makes components for surveillance video cameras admits their technology was used, in part, to carry out Friday's cyberattack More

The University of Illinois partnered with Coursera to launch one of the most affordable online MBA programs yet. More