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Tom Petters, the jailed entrepreneur identified by federal authorities as the ringleader of a multibillion fraud scheme, rubbed off on Deanna Coleman, the woman who brought about his arrest last month.
Like Petters, Coleman over the years learned to work hard, play hard and enjoy the finer things in life.
And largely because of Petters, this woman of a modest upbringing obtained the money to live in million-dollar homes in the western suburbs of the Twin Cities, jet off to Costa Rica for vacations in her luxury condos and fly down to Las Vegas, where she was such a good customer that she had standing lines of credit at some of the city's top casinos.
But that came crashing to an end in September. Coleman, apparently overwhelmed by the size of the alleged fraud and feeling guilty for her own role in it, walked into the sixth-floor suite of the U.S. Attorney's office in the Minneapolis federal building and agreed to become an informant against her mentor and employer of 15 years.
Coleman told authorities that Petters -- a fast-talking Twin Cities entrepreneur renowned for turning around struggling companies -- was running a Ponzi scheme of staggering proportions.
She said her boss had separated investors from billions of dollars by promising them high returns on short-term investments in expensive electronics gear that would be sold through retailers like Sam's Club and BJ's Wholesale Club.
In truth, Coleman told federal investigators, no such merchandise existed; Petters used the money for other businesses, to provide lulling payments to investors, and to fund his opulent lifestyle.
Until Coleman walked through the door, the government had no clue about the alleged scheme, which the government said started soon after Petters hired her in March 1993.
But with Coleman working secretly as an informant, authorities moved quickly to arrest Petters and several cronies who, like Coleman, already have pleaded guilty in the case. Petters maintains he is innocent.
Coleman faces up to five years for her role in the fraud, but it's unlikely she'll get that much time. Prosecutors are expected to argue for leniency because of the key role she played in the case. Petters, by contrast, faces up to life in prison and remains in federal custody without bail.
It's been a long, strange road for the 42-year-old Coleman.
After graduating from Elbow Lake-Wendell High School in 1984, she got a two-year degree in fashion merchandising, then went on to graduate from Moorhead State University in 1989 with a business degree. From there, she went to work for a collection agency before hiring on as an office manager supervising four employees for Tom Petters.
But Coleman was a millionaire when she pleaded guilty three weeks ago to a single count of conspiracy to commit mail fraud. She stifled tears and gave one-word answers to questions about the charges against her, and has yet to publicly state why or when she decided to confess and expose the alleged fraud.
Through her attorney, Allan Caplan, Coleman declined to be interviewed for this story, although he offered an explanation of her motivation to approach government officials and detail the operation.
"She was deeply troubled by the scale [of the investment scheme]. She felt it had gotten out of hand," Caplan said when asked about her motivation for stepping forward. "She lost her confidence in Petters' ability to ever pay back investors."
Piecing together a profile
Little is known about Coleman despite her apparently key role in Petters' investment operations. But the Star Tribune was able to compile a profile of Coleman's background and her rise in the Petters organization through the review of records and documents and interviews with people familiar with her.
In a brief written statement in response to a Star Tribune question about her background, Coleman described herself as a farm girl who graduated from high school "with average grades," got a college degree -- with help from an accounting tutor -- and started working for Petters. She married a longtime boyfriend, Allen Munson, in March 1996.
Coleman rose to become vice president of operations for Petters Company, Inc. (PCI), the finance arm through which the alleged investment scheme operated. In the end, records show that Petters was paying her $330,000 a year. And since 2002, she's been getting annual bonuses that reached seven figures. From 2004 until federal authorities stepped in, Coleman collected about $8 million in bonuses, the government says.
Like Petters, Coleman liked to gamble, but claimed she was not addicted to it. Records show she's been supplementing her income with gambling winnings every year since 2001. In 2006, for example, she reported $300,000 in winnings.
Coleman oversaw the daily activities of PCI and its affiliates; she managed PCI's checking account and handled its communications with hedge funds and investors, records show. Part of her job included helping to find funds to finance acquisitions for Petters or to aid his existing companies.
But according to an FBI affidavit filed to justify search warrants that were executed on Sept. 24, Coleman also created false purchase orders and invoices to prove to investors that their money was secured by electronic goods.
At one point before going to the FBI, Coleman described herself this way: "I've always been a very, loyal, dependable, hardworking employee ... I came from a hardworking family, and I was expected to be responsible and self-sufficient," she said. "I get along well with people, and I am very dedicated to my employer, who has recognized my contributions and efforts."
One investment fund manager described Coleman as "laid-back."
"She reminded me of a soccer mom. She was personable. There was no flaunting of money," said the manager, who has since gone out of business and did not want to be identified.
But Coleman also lived the high life.
In Las Vegas, she had lines of credit for gambling at the Bellagio, MGM Grand, New York New York and Wynn Casino. She'd buy expensive items for her homes and vacation properties, including a $5,000 picture and $10,000 statue, both acquired in Las Vegas.
Coleman and her now ex-husband paid $1.6 million for two luxury condos in Costa Rica, and she'd charge most of their travel expenses to her Petters company American Express card. She'd also bring him along to Las Vegas or to West Palm Beach, where Petters Group Worldwide had an office.
In Minnesota, she belonged to the exclusive Lafayette Country Club on Lake Minnetonka and once received a fancy Gem golf cart from Petters as a gift. Records show that Coleman drove around in a 2008 Lexus 330 SUV, which cost her $47,000, or a leased 2006 Lexus convertible. She spent several thousand dollars a month on clothing and accessories.
And until they separated in 2007, Coleman and Munson shared a $1 million home in Minnetrista while they made plans -- never fulfilled -- to build a dream home on their $3 million Lake Minnetonka lot.
Some of Coleman's expenditures, including a $1.65 million payment on a home in 2004, were financed with loans from the company, according to documents reviewed by the Star Tribune. In recent years, Coleman was spending about $800 a month more than her monthly net income of $15,000.
When Coleman separated from Munson, he stayed in the Minnetrista home and she moved to another million-dollar home she bought in Plymouth. Their divorce was finalized this summer.
Through his Minneapolis attorney, John Warchol, Munson declined to comment for this article. Warchol said Munson, a 51-year-old carpenter, knew nothing about Coleman's fraudulent activities.
Key witness will lose everything
Caplan, Coleman's defense attorney, said all of his client's assets will go to the government for restitution to investors, a fact that will likely leave her penniless for life.
"I hope that by bringing this fraudulent scheme forward, I can begin with a new chapter in my life," Coleman said in a prepared statement for this article. "I realize that I must suffer the consequences for my actions, and will do what I can to help those who have been impacted. My life, as well as the lives of others, will be forever changed by the events of my past, and for that I am truly remorseful."
Friends of Coleman remain at her side and believe that her remorse is genuine.
Steve McGee, a friend from near Elbow Lake, has talked to Coleman since her plea about why she eventually turned on Petters. "She just woke up one morning and said, 'Enough is enough,'" McGee said. "That's what she said, and I believe her.
"Deanna has a conscience, she always has," McGee said. "I think she just got sucked into a whirlwind."
McGee blames Petters for Coleman's crimes. "I think she was definitely brainwashed, if you want my opinion," he said. "I've known the [Coleman] family for years and they are honest, hardworking people. This totally goes against her character."
Coleman was a bridesmaid at the wedding of Tim and Brenda Nisbet in 2002. Brenda Nisbet and Coleman have been friends since school days back in Elbow Lake. Tim Nisbet said they were stunned by her guilty plea.
"It surprises me that it ever happened to her, but it doesn't surprise me that she would step up to the plate and say: 'This just isn't right,'" Nisbet said.
Coleman's friends say she didn't talk much about work, or exactly what she did. They believed she was an executive assistant or perhaps managed the office. Occasionally when they were out, Petters would call for information, they said.
"They live a different lifestyle that was much more above mine," Nisbet said. "It was never a topic of discussion between us. The money was there -- and it was impressive -- but it wasn't throw it in your face like, look what I've got."
Nisbet said his wife went to Vegas once with Coleman, and a couple of years ago, she took them to a Minnesota casino for an hour or so, then to Canterbury Park in Shakopee. But he doesn't recall her betting a lot.
McGee said he'd gamble "nickel-dime stuff" with her sometimes at Mystic Lake, and he and his wife went with her to Las Vegas last year, where they played nickel slots together.
Coleman didn't shower friends with expensive gifts, though she occasionally picked up nice meals, McGee said. "I just thought she was very successful, and good for her," he said.
McGee said he thinks her friends will stick by her despite her guilty plea. "She's very remorseful," he said. "She'll get through this with a lot of prayers and close friends."
David Phelps • 612-673-7269 | Jon Tevlin 612-673-1702