Prosecutor: Bogus Orders at Heart of Ponzi Scheme

FILE - This undated booking file photo provided by the Sherburne County, Minn., sheriff's office via...

FILE - This undated booking file photo provided by the Sherburne County, Minn., sheriff's office via KSTP-TV, Minnesota businessman shows Tom Petters. On Wednesday, Oct. 28, 2009, prosecutors laid out for jurors how Minnesota businessman Tom Petters allegedly engineered a Ponzi scheme that bilked investors out of billions of dollars. (AP Photo/Sherburne County Jail via KSTP-TV, File)

(AP)

Businessman Tom Petters wanted to "live the life of a corporate tycoon," so he engineered a Ponzi scheme that bilked investors out of billions of dollars, prosecutors said at the start of his fraud trial Wednesday.

While Petters' holdings included well-known and legitimate companies such as Polaroid Corp. and Sun Country Airlines, prosecutors say the heart of his business was a fraud they say reached $3.65 billion.

"This case is about deceit, lies, falsified documents and an illusion of a corporate tycoon at the top of a fake corporate empire," Assistant U.S. Attorney Joe Dixon told jurors who were quickly selected Wednesday in U.S. District Court.

Petters didn't engineer the alleged scheme but was the victim of it, his defense countered, saying others charged in the case turned what had been a legitimate business into an actual Ponzi scheme. Jurors will learn when they see the evidence that Petters is innocent, said attorney Jon Hopeman.

"The government's witnesses are instruments of darkness and they are tellers of foul lies," Hopeman said.

Petters became distracted in the early part of this decade as he built his business empire, Hopeman told jurors. He said Petters was devastated by the slaying of his son in Italy in 2004.

"He never intended to hurt anyone, and he never intended to defraud anyone," Hopeman said.

In his opening statement, Dixon laid out how Petters allegedly engineered the scheme, saying he produced bogus purchase orders to trick investors into investing millions of dollars that he would then say he used to buy electronic goods for resale to large retailers such as Costco and Sam's Club.

"The evidence will show he stole billions and billions of dollars from investors so he could live the life of a corporate tycoon," Dixon said.

Petters has pleaded not guilty, and Hopeman contended that Petters was unaware of what his subordinates were doing — partly because of the stabbing death of his son and all the time Petters spent on charitable work. Testimony is scheduled to begin Thursday.