A new PricewaterhouseCoopers assessment represents more than two years' worth of forensic accounting into the Ponzi scheme, which stretched over parts of two decades.
A whopping $36 billion flowed through the Petters Ponzi scheme during its existence over parts of two decades, according to a new report from PricewaterhouseCoopers (PwC).
While the ultimate losses in the scheme totaled $3.8 billion (a slightly higher number than the previous $3.65 billion estimate), the reports said some investors received "false profits," commissions and other cash payments totaling $1 billion.
The $36 billion represents the total amount that was invested with Petters over the years before any payouts.
"Funds received from investors were ultimately funneled to a single [corporate] bank account, and Tom Petters and other [Petters] personnel used such invested funds, not for their intended purpose, but to repay earlier investors," the report said. "As a result, investors were repaid solely with funds obtained from other investors."
The report represents more than two years' worth of forensic accounting by PwC. It was filed this week in U.S. Bankruptcy Court in St. Paul and in U.S. District Court in Minneapolis by attorneys for receiver and trustee Doug Kelley.
Kelley has filed more than 200 lawsuits seeking to claw back these contributions and false profits earned by early investors that total nearly $1 billion.
The highly detailed report reads like a road map through the Petters scheme in which he and his associates persuaded investors to provide funding for the purchase and resale of consumer electronic goods that never existed.
"The sheer complexity of the Petters Ponzi scheme is staggering, involving dozens of Petters entities [including two charitable foundations], hundreds of bank accounts and spanning more than 10 years," the report states.
PwC said it obtained financial data that would fill more than 560,000 bankers boxes. It said it found 87 accounts in 21 different banks that were part of the investment scheme.
The report also describes the machinations used by Petters to shift investors' funds into various financial accounts and companies he controlled in order to finance his acquisition of Polaroid in 2005 for $426 million and Sun Country Airlines in 2006 and 2007 for $27 million without telling investors.
Contributions to and donations by the John T. Petters and Thomas J. Petters foundations also were analyzed, as well as other charitable giving by Petters.
Contributions to the John T. Petters Foundation, named after the late son of Tom Petters, totaled $1.59 million in 2008, including $100,000 from the organization of embattled car dealer Denny Hecker. Expenditures totaled $1.4 million, including $301,000 for student scholarships.
Petters's personal giving totaled $10.5 million to a handful of educational institutions in Minnesota, Ohio and Florida. He also gave $4.66 million to a dozen charitable organizations, including nearly $1.8 million to Minnesota Teen Challenge.
The report also totaled political contributions by Petters and came up with $293,215 given to office seekers and their organizations.
Between 1997 and 2008, the report also found 534 bonus payments to 115 employees totaling $28.9 million. Special payments to "strategic partners" totaled an additional $49.4 million.
Petters was convicted on 20 counts of fraud, money laundering and conspiracy late last year and is serving a 50-year sentence at the federal prison in Leavenworth.
David Phelps • 612-673-7269