From a key place in the scam, Deanna Coleman brought it down.
In the end, Deanna Coleman's crime was too overwhelming to ignore.
The 44-year-old Plymouth woman had hoped her whistleblower status would keep her from having to serve time behind bars for assisting former Wayzata businessman Tom Petters in a $3.65 billion Ponzi scheme over more than a decade.
"Actions speak louder than words," Coleman said softly as she choked back tears. "I've spent the last couple of years trying to make up for what I've done," she said. "I came forward and did everything I could to help ... stop the fraud and help the victims."
But her hopes were dashed Thursday when U.S. District Judge Richard Kyle, while praising her cooperation with government investigators, said Coleman's criminal involvement merited a prison sentence of one year and a day.
"I saw her testify. Everything I saw was truthful, complete and reliable," Kyle told a packed St. Paul courtroom. "But offsetting that is the fact that she was involved for a substantial period. She was not a minor player. She was the No. 1 assistant. I don't think that can be underplayed."
Kyle explained that by sentencing her to a day over one year, it makes her eligible for a 15 percent "good time" reduction in her prison term, meaning she could be released in just over 10 months. She then must serve three years on supervised release. And although her attorney, Allan Caplan, said she is now penniless, a $3 billion-plus restitution order hangs over her head.
Coleman cried when she read a statement apologizing to victims, their families and her family for her actions. She remained stoic as Kyle imposed the sentence.
Caplan said later that she was bracing for a prison sentence.
"She was hoping for no prison time, but what she got was the next best thing," Caplan told reporters outside the federal courthouse. "She's not happy, but in the general scheme of things she feels fortunate."
Kyle sentenced Petters in April to 50 years in prison for masterminding the fraud, which collapsed in September 2008 after Coleman went to authorities with detailed information about the operation, then wore a wire for several weeks to record the comments of her boss and their co-conspirators.
Assistant U.S. Attorney Joe Dixon called Coleman "a rare breed" whose evidence "made the case" that resulted in the conviction of Petters and guilty pleas by six others.
After the sentencing, Dixon said Coleman got "a fair sentence that reflected her participation in a massive fraud but also reflects that she brought the fraud to a stop."
Some thought Coleman got off easy.
"She got a huge break," said Ted Sampsell-Jones, a professor of criminal law at William Mitchell College of Law who closely followed the Petters case. "You want to give an incentive for people to come forward, but how much do you need to give? You can send that same message with three years in prison."
Petters' brother John attended the sentencing and said afterward that he doesn't wish Coleman any ill will. But he said the use of plea bargains and "snitches" and the relatively light prison term Coleman got in comparison with his brother's raised "issues of fairness" in his mind.
Coleman's sentencing comes at the end of a two-year legal odyssey that began in August 2008 when Caplan said she came to him seeking help. On Sept. 8, they visited the U.S. Attorney's Office, where Coleman stunned prosecutors with evidence of a huge Ponzi scheme operating out of the Petters corporate campus in Wayzata.
What began with a 5-inch-thick stack of incriminating documents morphed into 437 hours of interviews and assistance to government investigators, highlighted by three grueling days on the witness stand during the trial of Petters, who was found guilty in December of all 20 counts of fraud and money laundering. Caplan said Coleman has clocked additional hours since then helping victims and a court-appointed receiver to unravel Petters' complex business records.
Coleman came from tiny Elbow Lake, Minn., to became Petters' office assistant in 1993. She rose to vice president of Petters Cos. Inc. (PCI) and played a central role in the deception of investors that kept the fraud afloat for 13 years.
At the height of the fraud, Coleman lived high on the hog, with a $1 million home in Minnetrista, courtside season tickets for the Timberwolves, condos in Costa Rica and frequent gambling jaunts to Las Vegas.
She is the first of seven Petters' co-defendants to be sentenced.
Coleman and Caplan argued for a sentence that excluded prison based on the degree of her cooperation in a case that had sailed under the government's radar for years and probably would have gone on longer without her help. Caplan said Coleman could have taken her considerable proceeds from the fraud and fled the country, but did not.
Dixon lauded Coleman's cooperation but said she presented "something of a mixed bag." He asked Kyle to give her less than the five-year maximum she faced on a single conspiracy charge. But he explained that the government wasn't urging a probationary sentence because she had served as Petters' "trusted aide" for so long, noting that her participation in the fraud began "almost the day she walked in the door when she was 26 years old."
Coleman, through her attorney, asked that her sentence be served at the federal minimum-security prison camp in Pekin, Ill.
Kyle agreed and gave Coleman six weeks to report to the U.S. Marshal's office to begin her sentence.
"I know this is a tough day for you," said Kyle. "It wasn't an easy day for me, either. What you have done was extraordinary. I do appreciate what you did for the government. Good luck to you."
David Phelps • 612-673-7269 Dan Browning • 612-673-4493