Ponzi Schemer Tom Petters' 50-Year Sentence Upheld
Minnesotan Tom Petters may have been able to scheme dozens of people out of $3.7 billion, but he wasn’t able to convince the Eighth Circuit Court of Appeals to overturn his 50-year sentence.
Petters was sentenced to prison after his 2009 conviction on 20 counts of wire fraud, mail fraud, money laundering and conspiracy for his billion-dollar Ponzi scheme. The charges were connected to allegations that Petters, under the guise of Petters Co. Inc., tricked investors into thinking he was using their money to purchase electronics that he would resell to discount retailers.
After his hefty sentence, Petters claimed he wasn’t given a fair trial due to faulty jury instructions, faulty venue, and sentencing hearing and his inability to fully question key prosecution witness Larry Reynolds, a business association from California who provided assistance in the fraud.
Reynolds, who sounds like he came straight out of a John Grisham novel, is a convicted felon who, as a young attorney, allegedly defrauded insurance companies and then fled to Europe to avoid prosecution before being extradited back to the United States. If you ever wondered what could get attorneys who are widely ridiculed for being morally bankrupt disbarred, that will do it.
Since Reynolds was in the United States Marshals Service's Witness Security Program, the lower court would not allow his file to be introduced into evidence or used to impeach his testimony. However, Petters was allowed to cross-examine him on the contents of his file.
The Court of Appeal upheld the district court's decision to withhold the file, finding the information "collateral to the crimes" and possibly confusing to the jury. In addition, Petters' ability to cross-examine Reynolds was sufficient for a complete defense and satisfied his right of confrontation.
The Court of Appeal also found the jury instructions to be appropriate, the venue proper due to a lack of "media frenzy" that Petters claimed, and the sentencing hearing thorough and fair.
- Petters Conviction Upheld by Federal Appeals Court (msnbc.com)
- Mail and Wire Fraud Conviction Affirmed (FindLaw's D.C. Circuit blog)
- Disbarred Fla. Attorney Scott Rothstein's Guilty Plea in Ponzi Scheme (FindLaw's Courtside)