Deanna Coleman Takes the Stand: A Blue Monday for Tom Petters?

[WSJ_law_blog]

Monday might have been the high-point for the prosecution in the trial of Thomas Petters, the Minnesota businessman charged with masterminding a $3.5 billion Ponzi scheme.

On the stand: Deanna Coleman, Petters’s secretary and office manager. She’s been heralded as the the “star-witness” for the prosecution, based partly on the fact that after she tipped off the FBI to what was allegedly going on with Petters, she went undercover and nabbed recordings of Petters making allegedly damning statements.

Prosecutors have alleged that Petters duped hedge funds into funding fictitious shipments of consumer electronics for more than a decade. On Monday, Coleman backed the allegations, according to accounts from Bloomberg and the Minneapolis Star-Tribune. Click here for previous LB coverage of the Petters situation.

“We didn’t have any real deals at Petters” that would generate revenue to repay investors, Coleman told jurors in federal court in St. Paul, Minnesota. Coleman said Petters’s staff made up fake purchase orders for shipments of electronic goods and fake wire-transfer receipts to trick investors into thinking that Petters’s deals were legitimate.

Petters has pleaded not guilty to a 20-count indictment accusing him of mail and wire fraud, money laundering and conspiracy. Coleman has pleaded guilty in the scheme.

On the stand today, Coleman told jurors today she had two recording devices on her when she walked into Petters’s office on Sept. 8, 2008, after meeting with prosecutors.

She recorded Petters telling her that he had a plan to get “out of the crime.” On the recording, Petters added that, if “worst came to worst, you wouldn’t go to jail. I would.”

According to the Star-Tribune story, a forensic accountant took the stand and read from a letter she’d found on Coleman’s computer. The letter to Petters, dated October 2004, said that Coleman was worried about the stability of Petters Co. Inc. At first, according to the letter, Coleman had worried about having to go to prison for a couple of months. “You always promised we’d find a way out. And yes, I believed you,” her letter says. “Now it’s nonstop that I worry about going to prison. I’ve lost trust in you. All I see is a black hole at the end of the tunnel.”

A home run piece of evidence? Maybe not entirely. On cross-examination, according to the Star-Trib, Decker acknowledged that she couldn’t say whether the letter was ever sent to Petters.