Tom Petters entered the courtroom yesterday in
handcuffs. He looked annoyed, even angry. He smiled at relatives in the front
row, mouthing "I love you" to his daughter. The hearing was to determine
whether Petters will be released pending trial, or whether he will continue to
spend his days in an orange jumpsuit at the Sherburne Co. jail.
The testimony from FBI agent Brian Kinney was jaw
dropping. On September 24th, FBI agents raided Petters home and his
business. Petters was at the Bellagio Hotel in Las Vegas. Court documents say he had run up $10
million in gambling debts there. An FBI agent confronted Petters that morning
at the Bellagio. Agent Kinney says Petters admitted to him that his business was a fraud. Kinney then
testified that in the coming days Petters frantically called co-conspirators
trying to get them to change their stories. Prosecutors played a tape between
Petters and Robert White, a consultant who will plead guilty in the case. It
was a scratchy recording, hard to make out. But you could hear Petters talking
to White about "sailing away" on White's boat. They also talk about
getting false identification papers on the Internet. And Petters tells White to google Mark Rich. Rich was convicted in
1983 of tax evasion and illegal trading with Iran. He fled to Switzerland
where he lived for nearly 20 years. He was pardoned in 2001 as President Bill Clinton left office. Rich's socialite
wife Denise had made large donations to the Democratic Party and the Clinton Library.
Clinton to this
day continues to be criticized for the pardon and has denied that it was bought
by Denise Rich's donations. In the phone conversation, Petters and White can be
heard joking about how White's wife Robin could spend the night at the White
House, in an apparent attempt to secure a pardon for them.
Agent Kinney also testified that Petters was
emotionally erratic and that at one point Petters told one of his colleagues, "I
would rather drink, gamble and die." Kinney also testified that Petters is
on Adderall for attention deficit disorder, and Klonopin for severe anxiety.
Kinney
also testified that Petters' arrest at his Wayzata home last Friday was not, as
has been widely reported, without incident. Kinney said that agents coming up
to the house could see Petters through the window running through the
home. Petters then ran upstairs. Agents cornered Petters at the top of the
stairs and demanded he put his hands up, but Petters did not. He kept his hands
in his pockets. As agents drew their weapons Petters pulled one hand out, and
then finally pulled his other hand out. Kinney testified agents found a .22
caliber revolver in Petters' upstairs bedroom.
Kinney also offered
a tantalizing clue to Petters' past. In 1990, Petters was living in Colorado. Kinney
testified that Petters was arrested and jailed for fraud there. Defense
attorney John Hopeman indicated Petters was never convicted and the case was
sealed. Shortly after that Petters moved back to Minnesota. What was this case all about?
Right now we don't know. But expect the government to move to have the case
unsealed.
Jennifer Petters, Petters'
24-year-old daughter, also testified. She said Petters was "devoted to his
family." Asked if he would leave the country, she replied "Absolutely
not." Jennifer Petters testified her Dad was suffering from anxiety. She said in recent months he had considered checking himself
into the Promises rehab facility in Malibu.
Petters said her dad decided against it because Promises insisted on a four-week
stay and he only wanted to stay for one or two weeks. Jennifer testified that
her Dad's girlfriend was in Hazelden. Tom Petters and his girlfriend have two
sons, ages 1 and 3. With their Dad in jail and their mother in rehab the boys
are being cared for by a nanny at Petters'
Wayzata home. The defense argued that Petters should be released so he can care
for the children. Defense attorney John Hopeman also argued Petters might not
have any money to pay the nanny because all of his assets are frozen.
Among the details that was most stunning is that
this entire investigation is just 30 days old. It was on Sept. 8 that
Petters' longtime assistant walked into an FBI office and described the scheme.
She wore a wire and in the next few days made a series of recordings. Court
documents say the recordings capture Petters and his co-defendants admitting to
what they describe as a $2 billion fraud. In court Agent Kinney estimated the
fraud at $3 billion. The assistant who wore the wire, the one who single-handedly brought this scheme crashing
down, will plead guilty today in federal court. Two other associates will also
plead guilty today. All have agreed to testify against Petters.
The judge will rule later today if Petters can be
released pending his trial. Defense attorney Hopeman said if the Magistrate
releases Petters he will agree to wear an ankle bracelet, he will not use his
cell phone, he will not text message, he will not use the Internet, he will
undergo an alcohol dependency evaluation and get his medication checked.
Tom Petters found out about this investigation two
weeks ago today, when his home and business were raided, and he was confronted
by the FBI at the Bellagio.
How his life has changed.
