On December 2, a federal jury in Minneapolis convicted Tom Petters, 53, of carrying out a $3.65 billion Ponzi scheme. After a month-long trial, he was found guilty of ten counts of wire fraud, three counts of mail fraud, one count of conspiracy to commit mail and wire fraud, one count of conspiracy to commit money laundering, and five counts of money laundering.
As CEO and chairman of Petters Group Worldwide, LLC, he acquired other businesses to divert attention from the fraud, prosecutors said. He used false bank statements about the sale of nonexistent merchandise to obtain huge loans. The acquisitions included Polaroid Corp. and Sun Country Airlines. Petters had about 2,400 people working at his companies, but after the scam was exposed, nearly all of them lost their jobs.
Prosecutors say Petters defrauded investors to finance his "extravagant lifestyle" that included luxury homes in an upscale suburb of Minneapolis and gambling. The Associated Press reported he spent $10 million at one casino. He was also a major contributor to several charities.
Petters is currently awaiting sentencing and could get life in prison.
Size of Alleged Scheme: $1.2 Billion
Status: In Prison Awaiting Trial
In South Florida, federal authorities are say they're working the biggest fraud case in local history. Fort Lauderdale attorney Scott Rothstein once graced the society pages of local newspapers and gave big to Florida politicians, but in December he was arrested on federal fraud charges and accused of running a $1.2 billion Ponzi scheme.
Prosecutors say Rothstein swindled his own friends and clients, running the scam out of his 70-lawyer, Fort Lauderdale law firm, where he was CEO. The 47-year-old allegedly forged federal court documents, including judges' signatures, to make his investors believe the settlements they were buying into were legitimate. When the alleged fraud was exposed, Rothstein briefly fled to Morocco, but returned to Florida on a chartered jet.
Rothstein faces five counts of racketeering and fraud related to his alleged scheme. Rothstein has pleaded "not guilty" to all charges. If convicted he could be sentenced to up to 100 years in prison.
Size of scheme: $65 Billion
Status: Sentenced to 150 Years in Federal Prison
For sheer size, Madoff's Ponzi scheme may remain without peer for some time. A former chairman of NASDAQ, the investment advisor catered to high net-worth clients who expected -- and received – double-digit returns, up market or down. But Madoff may not have made any actual investments for 20 years. When his fraud was uncovered, he admitted to starting his scheme in the early 1990s, but investigators think it may have started earlier.
Madoff's thousands of victims include major worldwide banks, asset managers, private investors, pension funds and non-profits. Some had trusted him with billions. One list of his victims ran 162 pages. His scheme hit Jewish charities particularly hard. The scheme funded a lavish lifestyle that included multiple residences and yachts; his estate is now being auctioned off by the U.S. Marshals Service to recoup the losses of his investors.