Federal trial looms in alleged $3.65B Ponzi scheme

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Until the Bernard Madoff scandal broke, it was a Minnesota businessman who stood accused of orchestrating the largest Ponzi scheme authorities could ever recall.

Tom Petters, 52, who seemed to have a golden touch as he built a small merchandise liquidation company into a diversified empire that owned well-known businesses such as Polaroid, goes on trial this week. The size of his alleged fraud: $3.65 billion.

Petters' world began to unravel a year ago when his trusted lieutenant, Deanna Coleman, walked into the U.S. attorney's office with what prosecutors called a "staggering" allegation.

Coleman said for more than 10 years she had helped Petters run a multibillion dollar Ponzi scheme. She said they fabricated documents to trick investors into loaning money that Petters would claim to use to buy TVs and other electronic goods that he would purport to resell to big retailers like Costco and Sam's Club. Those goods never existed, prosecutors claim, saying most of the money really went to finance Petters' lifestyle and to pay off other investors.

Petters is charged with 20 counts, including wire fraud, mail fraud, money laundering and conspiracy, which could imprison him for life. He maintains his innocence, and remains jailed. The trial is expected to take about six weeks, with jury selection starting Wednesday.

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