business

Attorneys for Tom Petters and the U.S. government square off Wednesday in a battle of pretrial motions that may determine which witnesses testify, which evidence is admitted and whether the most anticipated Minnesota trial in recent years plays out in Milwaukee or Des Moines next summer instead of St. Paul.

With a June trial date looming, time is of the essence for Petters, 51, who faces a maximum sentence of life in prison if convicted on the conspiracy, fraud and money laundering he faces.

Matters before U.S. Magistrate Judge Arthur Boylan later this week range from the validity of the government's initial search warrants that started the investigation in late September 2008, to the admissibility of what Petters said to an FBI agent when confronted in a Las Vegas hotel room as the searches progressed at his Minnetonka business headquarters and his Wayzata home.

But the motion that might get the most attention is the request by the defense team to move the trial out of state. Petters' attorneys, led by Jon Hopeman and Paul Engh, assert that the volume of news coverage on this case has made it impossible to find an impartial jury in Minnesota.

Moving the trial out of town -- Milwaukee and Des Moines have been suggested -- is seldom done. But the Petters case is unique in the size of the alleged scheme -- $3.5 billion -- the high profile that Petters previously cut in the area's business and philanthropic communities and the intense news coverage about the case.

"The venue motion may have a chance," said criminal defense attorney Ron Meshbesher. "Folks in Wisconsin or Iowa likely don't know a lot about the case. It may have a shot, but it's rare."

Alternatively, rather than granting a change of venue before the trial begins, presiding Judge Richard Kyle could wait until jury selection begins to determine if the jury pool is biased against Petters or whether an impartial jury can be empaneled.

"The best way to find if the jury pool is tainted is to call them in," said Ted Sampsell-Jones, a criminal law professor at the William Mitchell College of Law.

As far as the scheduled June start for the trial, the defense contends it is overwhelmed with documents taken during the raids on the Petters businesses and the other individuals who have already pleaded guilty in the alleged fraud scheme. It has dropped broad hints that a June 9 trial start is unrealistic.

Huge volume of evidence

C. Tom Fisher, a retired IRS agent who is a member of the Petters defense team, said in an affidavit late last month that it will take months to sort through documents to locate material critical to Petters' defense, and months more to analyze those documents.

"I have never conducted an investigation that included anywhere near the volume of documents, recordings and photographs that so far have been presented by the government," Fisher said in his affidavit.

Petters' attorneys also raise questions about witnesses who are likely to testify against Petters, including one of his former executives, Deanna Coleman, and business associates Michael Catain and Larry Reynolds. Coleman tipped authorities to the alleged scheme in September. Catain and Reynolds testified that they helped Petters launder investor money and helped him fool investors into believing that his business of buying and selling consumer electronic goods was legitimate rather than the sham alleged by the government.

"The government's case is built upon a foundation of witnesses who were active participants in the acts alleged in the indictment and who are now cooperating," states a motion to impeach the witnesses if any promises or rewards for their testimony exist. "These witnesses have strong motives to falsely lay blame on Mr. Petters."

Sampsell-Jones said pretrial defense motions serve a variety of needs, including educating the judge on the intricacies of the case, learning some of the prosecution's strategies and building a case to challenge the motives of the prosecution.

"It's important to know what evidence will be allowed in and what evidence won't. You try to exclude as much as you can," Sampsell-Jones said. "You're trying to figure out just what the playing field is and trying to tilt it in your favor."

Purported confession

One of the motions that defense attorneys want tossed out is a purported confession by Petters to an FBI agent the day that authorities raided his businesses and his home. According to previously filed government documents, Petters "admitted culpability" to an agent who interviewed Petters at the Bellagio Hotel where he was staying in Las Vegas that late September day.

"Mr. Petters was not advised of his Miranda rights before the interview took place," his attorneys wrote, noting that the agent also "ignored" Petters' legal representation by his company's attorneys.

Jail conditions

A subplot that has existed throughout the Petters investigation has involved complaints by defense attorneys that Petters' confinement in the Sherburne County Jail has made it difficult to prepare his defense.

Prepping a client for trial while in jail does present challenges.

"It's an unnatural setting," said St. Paul attorney Ron Rosenbaum. "You're always concerned about surveillance and eavesdropping. And there are all kinds of problems in terms of logistics."

Petters' attorneys have expressed concerns about Petters' status within the jail -- having to remain in cuffs when out of his cell conferring with his attorneys, and sharing quarters with a group of sex offenders.

The attorneys want Magistrate Judge Boylan to ask authorities why they have ratcheted up Petters' restrictions in the jail since his confinement in early October.

"The source of the change in his incarceration ... is rooted somewhere, determined by someone, and this court, in its supervisory authority, should at least find out," the attorneys wrote.

David Phelps • 612-673-7269