Two business leaders take stand in Petters trialby Martin Moylan, Minnesota Public Radio
St. Paul, Minn. — Jurors in the fraud trial of Tom Petters heard damaging testimony Friday from two prominent business leaders who did business with Petters.
Irwin Jacobs, a prominent Twin cities business leader for decades, told jurors Petters once asked him to inflate the value of an invoice. Jacobs said Petters was hoping to convince lenders or investors to give Petters more money. Jacobs refused , saying he wasn't going to become a crook. Jacobs said Petters described himself as broke when he was late in paying for some retail stores Jacobs sold to Petters in the late '90s, but Jacobs was eventually paid.
Petters' role in helping to rescue the catalog retailer Fingerhut, which at one time employed 4,700 workers in Minnesota, helped catapult him to prominence in Minnesota. Fingerhut was slated for closure by its parent company in 2002.
Petters teamed up with former Fingerhut CEO Ted Deikel to take over the operation and try to revive it.
On the stand Friday, Deikel said he once had great trust in Petters.
"He was a good friend," Deikel said.
But that was before Deikel lost $7.5 million in Petters' alleged scheme.
Petters defense attorney Paul Engh noted that Deikel was expecting a very fat return on the money he invested with Petters. Petter was to pay Deikel 10 percent interest over two months. Engh noted that was an annualized interest rate of 60 percent.
An IRS agent said there was a clear pattern of investors' money being diverted to Petters and his companies. She reviewed bank statements to show how new investor money was used to pay off prior investors.
Petters is accused of leading a Ponzi scheme that ripped off investors for about $3.5 billion.
Investors thought they were financing the buying and selling of consumer electronics. But federal prosecutors say the goods didn't exist and the money went to pay off other investors and help fund Petters' lavish lifestyle.
Federal prosecutors are expected to wrap up their case Monday.
Petters' defense attorneys say no decision has yet been made about Petters taking the stand in his own defense.