bloomberg.com | 11/18/09 | suspect: Tom Petters
Petters Group Worldwide LLC founder Tom Petters, charged with being the mastermind of a $3.5 billion Ponzi scheme, began testifying in his own defense at a federal fraud trial in St. Paul, Minnesota.
“I ran too fast,” Petters told jurors. “I trusted some people far too much. I didn’t check and double-check.”
Petters spent more than an hour yesterday on the witness stand in the second day of defense testimony in the case. Petters told jurors about his background and his start in the business, buying consumer goods from companies that had overstocked or were in liquidation.
“When I started, I had no money,” Petters said. “You have to learn by getting your knees skinned and getting beaten up,” he told jurors, referring to difficulties with investors, banks and vendors.
Petters testified that in the early 1990s, he began buying consumer goods that were diverted from their normal sales channels, selling to discounters including Costco Wholesale Corp. Petters said he would provide the sellers with phony purchase orders to disguise the fact they were reselling goods intended for sale to institutions or other large-scale consumers. The sales often violated agreements between the sellers and manufacturers, he testified.
Asked yesterday by his attorney, Jon Hopeman, if he had participated in a fraud, Petters answered: “Most certainly, but not knowingly.”
"I have the most regret and want to apologize first of all to my employees, to all those people who worked so hard,” Petters said. “To those people who invested in my businesses, my apologies.”
In a taped conversation on Sept. 15, 2008, days after Coleman went to the FBI, she is heard discussing with White what they thought Petters knew about the fraud.
“I’m pretty sure you know, I’m pretty sure I know,” White says on the tape played for jurors on Nov. 4. “I can’t say for sure whether Tom knows. He lives in this fantasy world once in a while.”
“He knows. He just doesn’t want to think about it,” Coleman replies on the tape. “I think Tom believes these are real deals half the time.”
Coleman testified that White was joking when he questioned whether Petters knew. Both Coleman and White are heard laughing on the tape.
Karl Petters, the defendant’s cousin, was among the first defense witnesses. He testified to handling several transactions in which Petters bought and sold overstocked goods, including high-end TVs. Even though Karl Petters did well on the deals, he testified, he was unhappy working in the diverting business.
“It’s a horrible business,” he said. “I did it for three years. You’re basically an undertaker.”
Petters’s attorneys have attempted to elicit testimony from numerous witnesses that Petters, after the death of his son in 2004, was too grief-stricken to have any idea what was going on with his businesses. Petters’s son, John T. Petters, was stabbed to death during a spring break trip to Italy.
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