Founded Petters Group Worldwide, the Minneapolis private equity and venture capital group. Federal prosecutors charged Petters in December 2008 with tricking investors into providing capital for Ponzi scheme. Prosecutors estimate losses at $3.5 billion.
Mr. Petters was convicted of 20 counts of fraud, money-laundering and conspiracy for a scheme that cost investors approximately $3.7 billion through the Petters Companies, which owned several legitimate business that were pushed into bankruptcy when the fraud came to light. Victims ranged from large hedge funds that loaned millions of dollars to his company to individual investors, including pastors and charities.
The government recommended the maximum sentence for the various offenses, totaling 335 years in prison. Mr. Petters sought a much shorter sentence, in the range of four years, arguing in a sentencing memorandum that “the victims’ conduct contributed to the loss” and that he was “a pawn of the hedge fund industry.” It is unlikely that either side thought the judge would accept its recommendation in full, so each took an extreme position in the hope of influencing a more favorable outcome in the end.
Mr. Petters is 52, so it is unlikely he will live long enough to serve out his term, which calls for his release in a little over 40 years once credit is given for the time he has already served in jail before trial and credit for participation in a drug abuse program while in prison.more » « less