All language subtitles for American Greed s06e05 Generous With Other Peoples Money

In this episode of American Greed, in
Minnesota's Twin Cities, billionaire Tom

Petters is the face of business success.

He was a deal chaser and a deal maker,
you know. He was a mover and shaker. You

couldn't hold Tom down.

Eight million dollar house out in Lake
Minnetonka.

I think the one at Palm Beach was $15
million.

A local boy made good who never forgets
where he came from.

We are a very caring company. That's one
of our core values. This is a hometown

guy who cares about his hometown, who
cares about people losing their jobs.

guy is the real deal, nothing to worry
about. There seemed to be no reason at

all to suspect that something was awry.

Everything about Petters is blue -chip,
or so it seems.

His companies include iconic American
brand Polaroid, Sun Country Airlines,

retailer Fingerhut. But Tom Petters'
reputation is built on a foundation of

lies. His legitimate business is
purchased with dirty money.

Petters wasn't really that smart.

He wasn't really that good a
businessman.

But he was a damn good confidant. And
when his closest confidant turns on him,

the Tom Petters empire, all $3 .5
billion of it, begins to crumble.

This is one big fraud.

That's what it is, and that's how I deal
with it.

Las Vegas, September 24th, 2008.

The Bellagio Hotel is a favorite haunt
of billionaire CEO Tom Petters.

This morning, he has a 7 a .m. wake -up
call, but it's not housekeeping or room

service.

It's the FBI.

The head FBI agent, who was a woman,
knocked on his door.

Petters called lawyers and clammed up.

Back home in Minnesota, more than 50
federal agents are rating his company,

Petters Group Worldwide, on suspicions
of fraud.

It's a dramatic about -face for the well
-respected CEO.

For more than a decade, his high -flying
lifestyle takes him around the world,

wooing investors and selling the Petters
brand.

Tricia Volpe reports on Petters'
dealings for NBC affiliate KARE.

He was what many people would consider
the American dream come true.

And he built himself up to be the
consummate tycoon, corporate tycoon, to

owner, the president, the CEO of some of
the most recognizable companies in the

world. Petters employs 3 ,200 people,
has more than 50 offices around the

And in 2007, report $2 .3 billion in
revenue.

Our companies aspire to be the best.

But today, Tom Petters is under siege.

His public face hides a desperate man at
the end of his rope on the Las Vegas

Strip. And the FBI is catching it all on
tape.

The story begins in the small town of
St. Cloud, Minnesota.

The year is 1973.

And at just 16 years of age, young Tom
Petters is already showing a passion for

business.

He opens his own store called Ear
Electronics.

Petters' sister, Becky Randa, recalls
his humble beginnings.

It started in our basement, and then he
went to head a business downtown when he

was supposed to be in high school.

And he had an office with his secretary,
and he was guaranteeing the lowest

prices in the nation.

Petters even hires salespeople,
marketing his goods to college kids,

mother finds out.

She was listening to the radio, and they
were interviewing Tommy, and she

thought he was in school, but he was
not.

In the early 1980s, Petters marries,
starts a family, and heads west.

He manages a small chain of electronics
stores in Colorado and eventually buys

the company.

In 1990, Petters files for bankruptcy.

Authorities say he leaves a trail of
unpaid debt in his wake when he skips

and heads home to Minnesota, divorced,
jobless, and flat broke.

I think he was overwhelmed. He had, you
know, two little kids, and he was

extremely broke.

He essentially had nothing, and he was
looking for the next thing.

Tom Petters, always the businessman,
always the salesman, was looking for the

next sale.

With a loan from his brother, Petters
launches a new venture, the Petters

Company, Inc., or PCI.

It's a brokerage of opportunity goods,
odd lots of closeout or distressed

products that Petters buys up.

and resells to big -box stores.

Harold Simmons has worked as a salesman
with Petters for more than a decade.

If it was a $10 item, we could buy that
product for $5.

And if we could sell it for $7, we made
good margins.

In 1995, Petters decides to try his hand
at retail once again.

with a chain of stores called Pedder's
Warehouse Direct.

We were in the closeout business.

In this promotional video, employee
Deanna Coleman, who goes on to play a

role in Pedder's fraud scheme, describes
how it all started. Tom got a phone

call from Kmart about two trailer loads
of return merchandise.

And, of course, Tom doesn't ever turn
down a deal.

So what did Tom decide to do? He decided
to open up Pedder's Warehouse Direct,

and he wanted it to open the day after
Thanksgiving.

This time, Petters finds success.

In a few years, he has 12 stores in
Minneapolis and North Dakota with annual

revenues of $20 million.

But Petters has bigger aspirations.

And with the rise of the Internet, he
jumps on opportunities to sell to the

masses, starting international sailor
RedTag .com and buying retail auction

YouBid .com.

Tom had a brilliant mind, still does.

Put together deals, he was the best I
ever saw.

But they couldn't hold his attention.

After he put them together, he was
pretty much through with them, and he

looking for the next deal.

The deal that really puts Petters on the
map is the purchase of Finger Hut in

2002.

The Minnesota -based catalog wholesaler
is in danger of being shuttered by

parent company Federated Department
Stores.

Until Tom Petters becomes the savior of
St. Cloud by teaming up with another

Minnesota businessman to purchase the
company.

This was certainly a good thing because
it saved jobs, and it also helped

contribute to his image. You know, this
is a hometown guy who cares about his

hometown, who cares about people losing
their jobs, and he wanted to do

something about it.

As Petters cashes in on his newfound
status as a hometown hero, his public

appears to be golden.

We are a very caring company. That's one
of our core values, caring about the

people you work with, caring about the
communities you live in, caring about

person that works next to you, caring
about families.

But investigator Randy Shane uncovers a
different story.

He's hired to check out Petter's
operation by a financial group looking

money into a hedge fund that invests
heavily with Petter's.

Shane's first tell is Petter's profile
on business information service Dun &

Bradstreet. And in that report, it said
that Mr. Petter's graduated from a

Minnesota college called St. Cloud
University.

We then sought to verify that, and it
turned out he attended for a semester,

which is pretty much as broad a gap as
you can get, right? I mean, not eight

semesters, not six, not five.

Shane asks himself, what else could
Petters be lying about? And he keeps

digging. What we started to see was a
number of, a great number of lawsuits

naming him and or his company over a
period of approximately 13 or 14 years

in which he was getting accused of
simply not paying money back or not

for products that he had purchased.

Worse, Shane discovers that Petters had
been convicted of check fraud in

Colorado in 1990 and had even become a
fugitive.

According to the records we saw, he was
extradited from Minnesota to Colorado to

go to jail.

Years later, Petters hires an attorney
to get the file sealed, and little more

is known about the incident.

Now, we never were able to get the final
records of how long he served and so

on, but from everything we saw, he
actually was reporting to jail in mid

Shane reports his findings, and his
clients decide not to invest.

But many others are lured in by Tom
Petter's big smile, his charisma, and

promises of huge returns.

Next on American Greed, Tom Petter's
empire appears to be rock solid.

But is it all an illusion?

It was, in fact, one of the biggest
frauds in Minnesota history and the

fraud in the nation's history before
Bernie Madoff came along.

In the early 2000s in Minnesota's Twin
Cities, entrepreneur Tom Petters is

making big moves.

He owns a successful local chain of
warehouse direct stores.

multiple Internet retail sites.

And his recent acquisition of catalog
retailer Fingerhut puts him among the

players in Minnesota business.

He was a deal chaser and a deal maker.
You know, he was a mover and shaker. You

couldn't hold Tom down.

I've learned when I get excited about
something, I've got to pull myself back.

And I've got to be able to look.

I've got to handle it.

And then they opened my mouth.

Because when I walk out of a meeting,
God knows, every executive or person in

this company that knows me, knows they
might hear me go, let's go on this

project. The deals were getting bigger
and Tom didn't have the financing to

bankroll the deals.

So therefore that brought on the
investors.

Petters begins trading on his
reputation, offering potential investors

of the dream.

Through his Petters Company Inc., or
PCI, a wholesale brokerage firm focusing

a niche business known as diverting.

Diverting is taking product, closeouts,
out -of -dates,

that would not sell to the big box
stores.

They would sell them to us. We would
divert them into another company that

divert them into that.

into the big -box stores. That's
diverting. That's the way it all came

Petters decides to offer promissory
notes, essentially IOUs with 60 - or 90

terms and stunningly high returns.

I recall the interest rates being 20%,
maybe a little more than that.

Doug Van Dyke is recently retired from a
30 -year career as an engineer.

He and his wife learn about the deal
through a mutual friend of Tom Petter's.

Before jumping in, Van Dyke does his due
diligence.

Everybody came back with, this guy is
the real deal, nothing to worry about,

this is good.

And so there seemed to be no reason at
all to suspect that something

was awry.

For more than six years, he leaves his
entire nest egg, several hundred

dollars, in what he thinks are good
hands.

And the Van Dykes are able to live
comfortably off their returns.

There was literally hundreds of
thousands of dollars that were earned as

They fund their favorite Christian
charities, purchase a spacious lakeside

retirement home in northern Michigan,
and a winter condo in south Florida.

I'm a heavy -duty water skier, believe
it or not, and so it was something that

allowed me to be able to water ski year
-round. We had our boats up at...

the home on Lake Leelanau in the
summertime.

Petters' steady returns even attract the
attention of hedge fund managers around

the country who begin feeding him
hundreds of millions of dollars.

And Tom Petters is becoming filthy rich.

So rich, his Petters Group Worldwide is
able to start acquiring dozens more

companies. In one of his most high
-profile moves in early 2005, Petters

Worldwide purchases the iconic brand
Polaroid.

For $426 million.

Then from there, he started, you know,
taking the

Polaroid name and putting it on TVs,
which had never been, DVDs.

He exposed the Polaroid name.

They were losing money big time when he
bought them.

But he bought it for the name.

A year later, the CEO starts Petters
Aviation and buys a controlling 50 %

in Minneapolis -based Sun Country
Airlines.

It suddenly puts Petters worldwide on a
national and an international stage.

And according to Petters' sister, Becky
Randa, the small -town Minnesota boy has

truly arrived.

Well, it definitely changed.

We went to a family reunion. They picked
us up in a Learjet and took us there.

It was fun.

By 2008, Tom Petters gains entry into
the Billionaires Club, enjoying all the

toys and trappings that come with
membership.

$8 million house out in Lake Minnetonka.
I think the one at Palm Beach was $15

million that he bought it for.

And each one of those places usually had
a Bentley.

You would have a boat. Rolex watches
were important to him.

Petters also trades in the Learjet for a
private customized Boeing 727 that

flies him around the world, where he
likes to wine and dine potential

But Petters' public image isn't all
about the glitz.

He's just as well known for giving back.

He's a major political contributor.

And he donates millions of dollars to
dozens of charities and universities in

the area, including $3 million to his
mother's alma mater, the College of St.

Benedict, and a $10 million pledge to
Miami of Ohio University, where his son

attended, for a proposed Center on
Leadership and Ethics.

This is a guy that had a tremendous
impact on this community.

He gave money away. He was involved in
community organizations.

I mean, he, everyone knew him. Everyone
loved him.

Next on American Greed, is Tom Petters
an entrepreneurial philanthropist or a

self -serving criminal?

It's easy to be charitable when you're
giving away other people's money.

At the start of 2008, Tom Petters is one
of the Twin Cities' richest

businessmen. In less than 15 years,
Petters has gone from flat broke to

and CEO of Petters Group Worldwide, with
a personal net worth of $1 billion.

I mean, Tom Petters was a local Horatio
Alger story.

He acquired an interest in the Fingerhut
Corporation. He bought Polaroid.

He purchased Fun Country Airlines.

His rise was meteoric.

Our core values tie into our
entrepreneurial spirit.

But it hasn't been all triumph for the
billionaire CEO.

In 2004, amidst some of the biggest
business deals of his life, the dream is

tragically interrupted when his 21 -year
-old son, John T. Petters, known as JT,

takes a spring break trip to Florence,
Italy.

in what has been deemed a horrible
misunderstanding.

J .T. was in a private garden with a
friend late at night when he was stabbed

a local man who thought he was a
burglar.

He bled to death before medics could
save him.

Tom Petters is devastated.

He was horrified. I mean, he loved J .T.
so much.

He just fell apart, absolutely fell
apart.

He was depressed.

He was down.

He started drinking. He started abusing
prescription drugs.

Tom Petters had this enormous business
empire to run. So when he started to

of lose sight of things and started to
become withdrawn and very sad and

depressed about his son, that no doubt
had an effect on the business.

But in March of 2004, Tom Petters
decides to turn his personal tragedy

opportunity.

He starts the John T. Petters Foundation
to provide scholarships to college

students for foreign travel.

We created a foundation, so now we're
raising money.

His daughter, Jenny, is the chairman.

Petters spends upwards of $400 ,000 on
lavish annual fundraising galas,

attracting the likes of Michael Strahan,
Kevin Nealon, David Spade, and the

who's who of Minnesota politicians,
including Governor Tim Pawlenty.

The way Petters publicly handles his
personal tragedy makes him even more of

respected figure in the Twin Cities.

Everyone, it seems, trusts Tom Petters
and wants to invest with him.

We're doing a $2 billion fund called
Petters Strategy Growth Fund.

It'll include some investment banks.
It'll include some lenders. It'll

some hedge funds.

People were drawn to him.

The grandiose parties, the lavish
lifestyle, as well as the success in

and giving his money away to charity, it
was because of that that people looked

at Tom Petters and said, this is a
legitimate man.

I'm going to give him some of my money.

Or a lot of it.

In the booming financial climate of the
mid -2000s, Petters has no problem

securing hundreds of millions of dollars
time and again, mainly from high

-rolling hedge funds.

Petters is promising 15 to 20 percent
returns through his Petters Company,

or PCI, which handles financing for his
diverting deals.

Dave Phelps is a reporter for the
Minneapolis Star Tribune.

Investors were led to believe that
Petters Company, Inc. was buying

electronic goods, consumer electronic
goods, at a discount and selling them

to... big box retailers like Costco or
Sam's Club.

Although Petters has more than 3 ,000
employees,

PCI is made up of just a few people who
have been with him for years, namely

Deanna Coleman, Petters' one -time
secretary turned operations manager, and

White, PCI's treasurer.

And they've been keeping an incredible
secret for more than 10 years.

The deals that Petters sells to his
investors...

involving electronics manufacturers,
retailers, and warehouses are all fake.

There is no merchandise being bought or
sold.

And there are no profits.

In fact, it's all a fraud.

So Petters would go out and he'd solicit
money.

He'd bring it into his fraud machine,
which was called Petters Company, Inc.

And then in that machine, then, wherever
the money needed to go, it would go

out. There was over $41 billion worth of
inter -corporate transfers.

Keeping track of who needs to get paid
and when is a monumental task.

It falls to Deanna Coleman, Petter's
longtime employee and trusted confidant.

Deanna Coleman was really Tom Petter's
right -hand woman. She ran the

She was the brains and the guts of the
whole thing.

Rounding out the three -person fraud
unit is Bob White.

Technically a consultant for PCI, he's a
one -man forgery department.

Turning out a mind -boggling number of
phony purchase orders, bank statements,

and other documents in order to keep the
scheme going.

He would spend hours, sometimes days at
a time, with scissors, glue,

cutting, and pasting.

so that he could create an invoice or
some sort of document that looked

legitimate to investors.

Bob White tells his son Chris that at
its peak, the amount of money running

through the scheme is staggering.

There was new money that they had to
come up with every month just to pay the

interest on the debt.

Not running businesses, not anything
else, but just paying the interest on

debt. The new money that was needed was
$115 million a month.

No one is sure when the fraud started
exactly.

But Bob White says he became unwittingly
involved as far back as 1999.

In this telephone interview, White tells
American Greed that Petters sought his

help getting out of a deal that went
south.

He was crying, help me get through this.
And I did. We made up some documents

that looked like the money was arriving
and he hadn't spent it properly.

According to White, a month later,
Petters tells him it's all taken care

as a thank you, drops off $15 ,000.

The following year, Petters hires Bob
White to work at PCI, and White says

not long after that that Deanna Coleman
tells him the truth about Petters'

promissory notes.

Something about the notes didn't seem
right, and I asked Deanna.

I said that, you know... something's not
right about them and what's going on,

and she said they're all fake. She told
me they were all fake. It added up to

about $100 million of fake notes, and I
had made up several documents, and

so I felt I was in the midst of a big

Ponzi scheme, and that's when I figured
it out. I confronted Tom, and

he was pretty...

Calm about it, and so is Deanna.

Deanna was saying that Tom will figure a
way out of it.

Companies get to breaking points. That's
how they get better.

Over the next 13 years, Petters goes on
to build a corporate powerhouse, funded

in large part by his investors'
principal, which he tells them is safe

locked account.

He pays fat returns on time, and few
investors are asking any tough

As the scheme grows, he, White, and
Coleman are bound ever tighter in a web

lies. Tom was saying to people, I've got
this fantastic deal you can share

in the profits and you'll make high
interest rates on your money.

And so the debt would grow.

Next on American Greed, law enforcement
has no idea what PCI is up to.

Until Petters' girl, Friday, decides to
save herself and take her boss down.

And she just lost faith in his ability
to make things good.

Minnesota businessman Tom Petters
appears to be at the top of his game.

Founder, CEO, and sole owner of Petters
Group Worldwide, which reports $2 .3

billion in revenue in 2007.

He boasts ownership of 150 companies,
including Polaroid and Sun Country

Airlines, and is a man whose sterling
reputation helps bring in billions of

investment dollars from people around
the world.

Tom Petters was...

He was charming.

He was very, very smart.

And he knew a lot of these people.

Some of the people who invested with him
were family.

They were friends.

They were investment companies and other
investors who he had done business with

before. And I think he was just a
really, really good salesman.

What Petters is selling to investors are
promissory notes through his company

PCI, Petters Company, Inc.

guaranteeing high returns on deals
involving the sale of discount

merchandise. But at some point more than
10 years ago, there stopped being any

real merchandise.

Petters and a small cadre of employees
began forging documents and making up

deals. It's all a Ponzi scheme.

Petters knew that if you just paid
people and paid them well and made them

good about it, They wouldn't ask a lot
of questions, and they wouldn't go off

doing a lot of due diligence.

Good evening. Between Friday and today,
the Dow Jones Industrial Average has

swung up and down almost 1 ,300 points.
That is until late 2007, when the U .S.

financial industry begins to collapse.

New money sources are drying up. On top
of that, many investors want their

principal back.

Petters is not able to bring in the $115
million a month he needs to keep the

scheme going, and PCI cannot keep up
with their payments.

People needed their money to pay off
their creditors, and so they squeezed

Petters. Petters squeezed Deanna Coleman
and White and the others to say, we've

got to get this money, we've got to get
it in and do that.

A hedge fund named Acorn Capital has
$273 million invested with Petters.

When they failed to receive a $10
million payment in August of 2008, Acorn

claiming they'd been defrauded.

Another hedge fund in for more than $1
billion demands an audit of PCI's books.

But there was definitely concern going
on within the confines of PCI at that

time. They had no books to audit, and
they were afraid that that would just

bring down the curtain.

Totally on the operation that the
auditors got in from this big hedge

A fearful Deanna Coleman begins planning
her exit strategy.

Coleman has made more than $14 million
in bonuses over the past eight years and

is a key player in the fraud.

In August 2008, she walks into her
attorney Alan Kaplan's office and lays

on the table.

What she did was begin to explain the
fact that she was involved

in a $3 .6 billion scheme.

I realized immediately that this may
well have been, at that time, the

largest Ponzi scheme ever in the history
of the United States.

Kaplan contacts the U .S. Attorney's
Office and tells them he has the

case of a lifetime.

But before he gives it up, he wants a
deal for his client.

The deal was this, that they agreed that
she would, under no

circumstances, be exposed to a prison
sentence of more than five years if

she were to cooperate.

And she was fine with that. And shortly
thereafter, she came in with a stack of

documents.

And explained the whole scam.

But federal prosecutors need more
evidence.

And they need Coleman to get it.

They ask her to wear a hidden wire and
go back to work the next day.

Business as usual.

And she agreed to do that. That was done
both with the use of a wire.

And they have recording devices that
essentially look like car key fobs that

capable of clearly recording up to eight
hours of conversation.

Next, hear how a desperate Tom Petter's
own words seal his fate.

I'm trying to figure out a way out
because living the lie is worse than

anything.

Listen to more secret recordings of Tom
Petters at AmericanGreed .CNBC .com.

We'll be right back.

On the morning of September 8, 2008, Tom
Petters is about to have a meeting that

he hopes will save his life.

The CEO's $3 .5 billion empire is on the
verge of collapse.

His decade -long Ponzi scheme about to
be uncovered.

The financial climate was changing, and
things were starting to fall apart on

Wall Street. And for his investors, they
started to ask questions. And that was

something that had never really happened
before.

But because of the uncertainty of what
was happening in the worldwide and

national financial world, these
investors wanted to know where their

And things were starting to unravel.

Ever the optimist, Petters believes if
he can close a deal with the hedge fund

Fortress Capital by getting it to invest
$100 million immediately, he can hold

off Judgment Day.

It's what he's been doing for years.

But this time, his right hand and co
-conspirator Deanna Coleman is no longer

Petters' side. This time, she's working
with the feds and wearing a wire.

And I went in your office and I looked
at your calendar.

Oh, it's just a meeting. I think I just
put meeting out there.

Within the first few hours of recorded
conversations, the wire reveals a CEO

drowning in self -delusion, who thinks
he's even got the man upstairs working

for him.

See, the only thing that makes me
believe that there is, like, some divine

intervention.

Seriously.

There's no possibility we could have got
away with this for so long.

During the meeting with Fortress
Capital, Petters details a proposal to

firm's money to purchase electronics and
resell them to big box retailers like

Walmart and Costco, who have supposedly
already provided purchase orders, or

POs, for the goods.

But the deal is entirely made up.

Does Fortress know that all these POs
are fake?

No, they don't know they're fake.

They're not going to be looking at our
POs. They're only looking at one thing.

That one thing? The 30 % or more in
returns Petters is promising.

Coleman tells the FBI that she and
Petters had been making similar

for at least 13 years.

And for 13 years, no one has figured it
out.

But now, Petters is feeling the heat
like never before.

He's spending an increasing amount of
time in Las Vegas, racking up an

gambling debt estimated at $10 million.

And according to close sources, he has a
drinking and drug problem.

Undercover FBI recordings reveal a man
on the brink.

After two weeks of undercover operations

with Coleman, the U .S. attorney decides
they have enough on Petters. And they

move in.

Petters was in Las Vegas.

And the head FBI agent, who was a woman
from here in Minneapolis, knocked on his

door at the Bellagio at 6 o 'clock in
the morning and talked to him and

tried to get him to confess.

Back in Minnesota, dozens of federal
agents are executing an early morning

on the headquarters of Petters Group
Worldwide.

They had Deanna's road map.

She told them where to go, what records
to look for, and so they hauled out box

after box after box, bank records,
accounting records, all kinds of things.

News of the Petters' raid spreads fast.

When individual investor Doug Van Dyke
finds out, he's stunned.

I guess the one word that would
characterize how I felt was panic,

sheer panic.

Over the next couple of weeks, Van Dyke
learns that all of his money, several

hundred thousand dollars that he had
saved over his 30 -year career for

retirement, is gone.

I didn't know if I was going to be able
to survive.

To try to absorb the enormity of this
amount of money

that we had invested that was gone was
incomprehensible to me. I

couldn't even begin to process it.

Meanwhile, in the days after the raid,
Tom Petters returns to Minnesota and

holes up in his mansion on the lake.

He is not under arrest, but expects to
be any day.

And begins talking about ways to ditch
the feds with co -conspirator Bob White.

What Petters doesn't know is that the
FBI is listening.

Petters is referencing the commodities
trader who skipped the country after

being charged with insider trading and
was later pardoned by President Bill

Clinton. Another core value in this
company is humility.

Next on American Green, the FBI is
closing in on Petters and believes he is

making plans to escape.

Will agents catch him before he pleads?
The plan was that Tom was going to...

Give me a bunch of money and I was
supposed to sail his boat down to meet

later in the Caribbean On

October 3rd

2008 the FBI moves in on Minnesota
businessman Tom Petters Suspected of

a Ponzi scheme for 13 years agents have
recorded Petters talking about fugitive

financier Mark Rich.

The reference to Rich suggested to
federal authorities that Petters himself

considering leaving the country.

Petters also discusses an escape to a
Caribbean island with his co

but it wasn't meant to be.

Because he's deemed a flight risk,
Petters is taken into custody at his $8

million Lake Minnetonka mansion and held
without bail.

A year later, the trial of Tom Petters
opens at the St. Paul Federal

He faces 20 counts of wire and mail
fraud, conspiracy, and money laundering.

It wasn't just charges of fraud, money
laundering, and conspiracy.

The amount of money that was involved, I
think, floored everyone.

Three and a half billion dollars.

That's billion with a B.

Petters' former secretary turned
operations manager Deanna Coleman blew

whistle on the operation after
participating in the fraud.

She had cut a deal with the feds in
order to net the big fish, Tom Petters.

Now, the once high -rolling CEO could
face life in prison.

It was not easy for her, but in spite of
that, she was ready, willing, and able

to...

continue her cooperation with the
government.

Prosecutors played the tapes Coleman
recorded of conversations with Petters

September 2008, in the days before the
FBI raided his operation.

We're going to come up with some f***ing
story. I'm trying as hard as I can to

figure out how to get out of this.

In testimony that stunned the courtroom,
former PCI officer Bob White testifies.

that he forged more than 10 ,000
documents over a nine -year period to

scheme going.

He was the wow witness.

Wow in the sense of, that's really how
it happened? That's really how we came

have a $3 .5 billion Ponzi scheme?

Cut and paste.

Petters' attorney, John Hopeman,
acknowledges the fraud, but tells jurors

the alleged scheme took place at a time
when Petters was grieving the loss of

his son, who was stabbed to death during
a study abroad trip to Italy in 2004,

and that Deanna Coleman and Bob White
were the ones responsible for the fraud.

This was the guy who let things...

get away from him. And he trusted the
people around him to do things properly

and to make them work, and they failed
him.

But the government says that the fraud
far predates John T. Petter's death, and

that it's Tom Petter's own words that
are perhaps the most damaging evidence.

This is one big fraud that there is, and
that's how I'm dealing with it.

On December 2, 2009, after five days of
deliberations, the jury finds Petters

guilty on all 20 counts.

Four months later, a judge sentences him
to 50 years in federal prison.

Deanna Coleman serves a one -year
sentence and is released from prison in

2011. Bob White is sentenced to five
years.

At least eight other Petters associates
have been convicted of money laundering

and fraud, including... five hedge fund
managers.

But not everyone is happy with the
outcome.

Tom Petters' friend and former salesman,
Harold Simmons, believes that Petters

is innocent and his sentence of 50 years
is unfair.

Deanna Coleman gets a year.

Bob White gets five years.

Where's the justice in this?

It's just not there.

Tom's got a heart as big as Alabama.

I'm not saying Tom didn't do some shady
deals over the years to keep companies

up and going and running. But Tom didn't
do this. I'm just telling you.

A judge appoints attorney Doug Kelly as
receiver for the case.

He's selling off assets, trying to
recoup losses.

And he's recovered more than $200
million so far, including more than $8

from Deanna Coleman and Bob White.

But the big money, according to Kelly,
is tied up in what's known as clawback.

The recovery of some $2 billion from
people who are considered net winners in

their dealings with petters.

One of the harder parts of my job has
been...

charitable contributions.

So I've had to call all these presidents
of these colleges and schools and other

things and say, I'm really sorry to do
this, but this money was not Mr.

Petter's money to give.

It was all stolen money that he stole
from other people. I hope you'll send me

check back.

And most of them did.

For Doug Van Dyke, who lost all of his
retirement savings,

the Petters scam has been life
-altering.

After being retired for seven years, he
is forced to go to his former company

and ask for his job back.

The thing you need to know is that I
have flunked retirement 101, and I need

come back to work if you'll have me. If
not, then I've got to go somewhere else.

And fortunately, they wanted me back.

He and his wife now live in this small
apartment near his office.

They sold their Florida condo at a big
loss.

And they're struggling to hold on to
their lakeside dream home where they

that one day they might possibly be able
to retire for good.

Meanwhile, Tom Petters is serving his
time at Leavenworth Prison in Kansas.

He is appealing his conviction and
maintains his innocence.

Petters' story is a little...

insight into our own psyche.

There are a lot of folks here who turned
their backs on questions they should

have asked, turned their backs on people
they should have pushed for due

diligence. And the reason they turned
their backs was because they were making

so much money. And I think that's really
sad because Petters wasn't really that

smart. He wasn't really that good a
businessman, but he was a damn good con

They have everything money can buy.

Dirty money taken from the riches of
their poor nation.

Filthy Rich proves tomorrow on CNBC.