Star witness in Petters fraud case sentenced to 1 year

Star witness in Petters case sentenced to 1 year

ST. PAUL, Minn. — A judge sentenced the woman who blew the whistle on Tom Petters’ $3.7 billion Ponzi scheme to one year in prison Thursday, even as he praised her cooperation with federal prosecutors.

In front of a packed St. Paul, Minn. federal courtroom, Judge Richard Kyle told Deanna Coleman he had to balance her assistance in the prosecution’s case against the seriousness of the crimes she helped abet. Coleman was involved in Petters’ criminal scheme for more than a decade before the day in September 2008 when she walked into the U.S. Attorney’s office in Minneapolis and reported them.

“She was involved in this offense for a substantial period of time,” Kyle said. “She was not a minor player. She was the face of the operation in the company itself. Her criminal activity was extensive while she was there, and I don’t think that can be underplayed.”

Coleman, who had been vice president of operations at Petters Co. Inc, a financing unit within Petters Group, pleaded guilty to one count of conspiracy to commit mail fraud. Assistant U.S. Attorney Joe Dixon called her Petters’ “loyal aide.”

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

Coleman’s attorney, Allan Caplan, asked that she not be sentenced to prison. Prosecutors said potential whistle-blowers would be encouraged if Coleman was recognized for her actions, and asked that she be sentenced to less than the maximum five years. Kyle noted they did not specifically ask for her to not be locked up.

Caplan said Coleman had no plans to appeal her sentence.

Choking back tears, Coleman apologized for her actions and told Kyle that Petters had convinced her his investment schemes would become financially sustainable.

“When I no longer believed him, I went to the government,” Coleman said.

Coleman wore a wire in meetings with Petters and other company officials, provided documents to prosecutors and was the chief trial witness against Petters.

Dixon said Coleman deserved credit and that her sentence was fair.

“Deanna Coleman brought the Petters fraud to a stop. That’s the truth,” he said.

Caplan said Coleman has no regrets about her decision to blow the whistle. He said she believed the crimes were going to be uncovered eventually, in which case she would have ended up with a longer prison term.

“She’s not happy — no one’s happy about going to prison — but in the scheme of things, it could have been infinitely worse,” Caplan said.

Coleman has until Oct. 13 to surrender to U.S. marshals.

Coleman is also under a “money judgement” from the court that make future earnings and assets subject to restitution demands from Petters’ victims. Caplan said he doubted Coleman would have much to give.

“She’s penniless,” he said.

Among the spectators in the courtroom was Tom Petters’ brother, Jon Petters. Minnesota Public Radio reported he was asked afterward about his reaction to Coleman’s sentence, and that he responded by saying his brother was treated unjustly. He said he was troubled by many issues in his brother’s trial, including testimony from people like Coleman who had plea deals.

“Obviously, I have strong feelings about my brother,” Jon Petters told MPR. “He doesn’t deserve 50 years by any means. He’s a very good person.”