Petters whistleblower receives 1-year prison sentence

Leaving the courthouse
Attorney Allan Caplan leaves the courthouse in St. Paul, Minn. after his client, Deanna Coleman, was sentenced 12 months and one day in prison for her role in the Petters scheme Thursday, Sept. 2, 2010.
MPR Photo/Jeffrey Thompson

The woman who helped disgraced business tycoon Tom Petters carry out a $3.5 billion fraud scheme was sentenced Thursday to a year and a day in prison.

Deanna Coleman could have faced some 50 years in prison if she hadn't revealed the fraud to federal prosecutors -- and helped them put Petters behind bars.

Coleman arrived for sentencing at the federal courthouse in St. Paul hoping she'd avoid prison altogether. Her attorney, Allan Caplan, had argued in court filings that the help Coleman gave prosecutors warranted such a break.

"But what she got was the next best thing," Caplan said after the hearing.

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With a sentence a day longer than one year, Coleman could qualify for a reduction of time served with good behavior. She could be out of jail after serving just 10 months.

Caplan said Coleman has no regrets about cooperating with authorities.

"She realizes that she participated in a massive Ponzi scheme and she's accepting of the consequences," said Caplan.

Talking with the media
Tom Petters' brother Jon Petters talks with the media in St. Paul, Minn. after Deanna Coleman was sentenced to 12 months and one day in prison for her role in the Petters fraud scheme Thursday, Sept. 2, 2010.
MPR Photo/Jeffrey Thompson

Investors in the fraud thought they were financing deals involving consumer electronics. But the goods didn't exist. The deals existed only on paper, in forged documents.

Two years ago, as the scam was unraveling and participants started worrying about going to jail, Coleman went to federal prosecutors to expose it. She cut a deal with the feds, getting a promise of leniency in exchange for helping nail Petters in court.

At one point, prosecutors held out the prospect they might recommend Coleman spend no time in jail. In the end, they stopped short of that.

Prosecutors declined to speak to reporters after the hearing, but in a statement assistant U.S. attorney Joe Dixon praised Coleman as a "rare breed." He said no one had ever helped prosecutors find such a large fraud and prosecute its leaders.

Coleman, 44, choked up and fought back tears as she spoke to judge Richard Kyle in the courtroom Thursday.

"There's no excuse for what I did. I apologize for my actions. I'm sorry," Coleman said.

Talking with the media
Attorney Allan Caplan talks to the media in St. Paul, Minn. after his client, Deanna Coleman, was sentenced to 12 months and one day in prison for her role in the Petters fraud scheme Thursday, Sept. 2, 2010.
MPR Photo/Jeffrey Thompson

Judge Kyle said Coleman deserved a break, but he said she also deserved a sentence that reflected her major role in the Petters' fraud. Kyle said Coleman was the face of the operation, and her criminal activity was extensive.

Coleman faced a maximum of five years on the one count of fraud to which she had pleaded guilty. Kyle noted that single count actually reflected a tremendous break Coleman had already received from prosecutors.

Coleman could have faced many more additional charges, for money laundering and other crimes. If convicted for all of them, her lawyer said she could have been looking at 50 years in prison, just like Petters.

One of the observers in the courtroom was Tom Petters' brother, Jon. Afterward, Jon Petters was asked about his reaction to Coleman's sentence. He responded by saying his brother was treated unjustly.

"Obviously, I have strong feelings about my brother," said Jon Petters. "He doesn't deserve 50 years by any means. He's a very good person."

Jon Petters said there are a lot of troubling issues about his brother's trial, including the testimony of people who reached plea deals with prosecutors.

That includes Coleman and most others convicted in the case, who are collectively required to pay $3.5 billion in restitution to fraud victims. But Coleman's attorney, Allan Caplan, doesn't see her making much progress paying it off.

"The problem is that now she's a convicted felon," said Caplan. "What kind of job is she going to be able to get, and how much income will she be able to generate?"

Caplan added that Coleman is broke.

"She's given up every cent she had. She's penniless. She's given up, I think, $4.5 million," he said.

In coming weeks, more of Coleman's fellow conspirators will be sentenced. Some face up to 17 years in prison.

A federal jury in December convicted Petters of 20 counts related to orchestrating the scheme and sentenced him to 50 years in prison, which he is appealing.