Robert White, the wizard of false documents in the Tom Petters Ponzi scheme who said he was on the verge of turning himself in two years ago, was sentenced Wednesday to five years in prison.
U.S. District Judge Richard Kyle rejected White's request for the same 366-day sentence received by Petters whistleblower Deanna Coleman, but he acknowledged that White's cooperation in the investigation entitled him to a sentence significantly less than the 210 to 240 months he faced.
"His testimony built up the government's case in a major way," said Kyle. "He was straightforward [and] made no excuses. That made an impression."
With time off for good behavior and successful completion of a dependency program, White, 69, could be out of prison in three years, said his attorney, Joe Friedberg.
In court, White apologized "from the depths of my soul'' to family, friends and victims of the $3.65 billion fraud.
More than a dozen supporters in the courtroom watched as White slumped slightly and hung his head after the sentence was announced. Afterward, he exchanged hugs with many of them.
During the sentencing hearing, White took the witness stand and testified that he and Coleman had discussed turning themselves in multiple times over the years. He said they were making plans to meet with a defense attorney together when Coleman went to authorities on her own and cut a deal for a reduced sentence.
But federal prosecutors said simply talking about turning himself in was insufficient motive for White to get the same sentence as Coleman.
"Deanna Coleman did not stop Bob White from coming to law enforcement. He chose not to," Assistant U.S. Attorney John Marti said.
But Friedberg argued that federal prosecutors impeded White's ability to become a government witness and cut a deal while instructing Coleman to remain quiet about her informant status.
"He was ready, willing and able to do the same thing as Ms. Coleman," Friedberg said, asserting that the government didn't want two informants "for tactical reasons."
Cutting and pasting
In his testimony, White said he initially believed Petters would someday have sufficient assets to pay off investors. He cited the purchase of an interest in catalog retailer Fingerhut and ownership of Polaroid. But the payoffs never happened, and the fraud got deeper and deeper into debt, White said.
White's nine-year role in the operation was that of document creator. White would cut and paste bills and orders to create the impression that large purchases and sales of consumer electronic goods were transpiring with the goal of convincing investors, lenders and others that Petters ran a profitable operation.
By 2007, White said he was convinced it was time that he and Coleman go to authorities and turn themselves in and bring the fraud to an end. "Once a month we talked about it," White said.
By 2008 they were still talking. When asked by Friedberg why he didn't turn himself in alone, White replied, "I didn't feel I should betray her."
Eventually, White believed he had convinced Coleman to go to Cleveland where they wouldn't be recognized to meet with a defense attorney and set up the process for contacting law enforcement.
But unbeknownst to White, Coleman had initiated her own deal with a defense attorney in Minneapolis and was in the process of cutting a deal.
"He felt a loyalty to her and she felt a loyalty to him and she breached it," Friedberg told reporters after the hearing.
Friedberg called the sentence fair for the fraud and money-laundering charges to which White pleaded guilty nearly two years ago.
"We would have preferred less [time in prison], but in the scheme of things it is a fair sentence. Mr. White knows he has to go to prison," Friedberg said.
David Phelps • 612-673-7269 • email@example.com