Thursday, 25 August 2016
Last updated 36 min ago
Mar 9 2010 | 3:45am ET
When it comes to convicted fraudster Thomas Petters, “lock him up and throw away the key” hardly does justice to the prosecution’s sentencing recommendation.
In a memorandum filed in St. Paul, Minn., federal court yesterday, prosecutors asked for a sentence of 335 years for Petters, who was convicted in December of running a $3.65 billion Ponzi scheme. Bernard Madoff, who pleaded guilty to running a fraud nearly 20 times as large, received less than half that sentence for his crimes.
“The defendant’s fraud is staggering and unprecedented in size and impact on victims and the community,” prosecutors argued.
Petters’ lawyers, unsurprisingly, see things somewhat differently.
“Petters is imperfect, yes, but not evil,” Paul Engh wrote in his own sentencing memorandum. He suggested a sentence of less than 13 years.
Petters is to be sentenced by U.S. District Judge Richard Kyle on April 8.
Petter’s fraud, which came to light just months before the much larger Ponzi scheme orchestrated by Bernard Madoff collapsed, involved selling bogus notes linked to consumer electronics sales which prosecutors say never actually happened. Investors in Petters Co. were told they were buying bulk electronics which were being resold to big-box retailers.
At least 20 hedge funds were the chief victims of the scheme, according to the complaint, and at least one allegedly helped Petters cover up his scam. In October, Lancelot Investment Management founder Gregory Bell pleaded guilty to mail fraud, admitting he co-engineered a series of bogus “roundtrip” transactions with Petters designed to hide losses and keep the Ponzi scheme afloat.
Petters, whose business empire once also included Polaroid Corp. and Sun Country Airlines, claimed the fraud was orchestrated by his underlings without his knowledge.