Continued: Businessman Tom Petters: Thief or victim?

Contrary to his public persona, Tom Petters was not the successful businessman he seemed to be as he boldly acquired Sun Country Airlines and Polaroid Corp. and gave generously to charities, Assistant U.S. Attorney Joe Dixon told 16 jurors in a packed St. Paul courtroom Wednesday.

The second day of the trial is scheduled to begin shortly with a number of witnesses expected to testify, The trial is expected to last up to six weeks and may include testimony from the likes of Twin Cities entrepreneurs Irwin Jacobs, Ted Deikel and Dean Vlahos, whose names were on a potential witness list released by the court.

Dixon said Wednesday that Petters' trial on conspiracy, fraud and money-laundering charges would be "about deceit, lies, falsified documents and the illusion of a corporate tycoon" who bilked more than $3.5 billion from investors for himself and the many companies he owned.

Petters could face up to life in prison if convicted.

His attorney, Jon Hopeman, told jurors the alleged scheme took place at a time when Petters was grieving the loss of his son, who was stabbed to death during a study-abroad trip to Italy in 2004. Hopeman blamed Petters' associates for devising the fraud without his knowledge as he acquired and struggled to turn around the fortunes of Sun Country and Polaroid along with St. Cloud-based Fingerhut.

"It's true this is a big fraud, but it's a fraud committed by the government witnesses [Petters' former associates]," said Hopeman. "Mr. Petters had nothing to do with it, and he denies the charges."

About 50 people were in the seventh-floor courtroom of U.S. District Judge Richard Kyle, including some Petters family members who aren't on the potential witness list. To accommodate the intense interest in the trial, the court piped live video of the proceedings into a courtroom on another floor.

Among those attending the opening statements was Doug Kelley, the trustee overseeing the liquidation of Petters' assets, and several attorneys who have clients who may testify on behalf of the government later in the trial.

'This is one big ... fraud'

Dixon, chief of the U.S. attorney's economic crimes section in Minnesota, played several audio clips from secretly recorded conversations made by Deanna Coleman, a close confidante of Petters who first reported the alleged Ponzi scheme to authorities in September 2008, and e-mails between the two.

In one snippet played for the jury, Petters said, "This is one big [expletive deleted] fraud."

Dixon used organizational charts to show the relationships between Petters, his partners and the companies involved in the alleged scam. Dixon told the jury of 10 women and six men (including four alternates) that other participants in the alleged Ponzi scheme would likely testify, either as cooperating witnesses or because they hope to influence the judges who will ultimately sentence them for their own crimes.

'I'm not convinced'

Dixon's opener didn't convince Jim Bartikoski of Oakdale, a friend of Petters who has known him for six years.

"All they've really done is get people to throw him under the bus," Bartikoski said in the hall after the prosecution's opening statement. "I'm not convinced that he's guilty."

Bartikoski said that he's been corresponding with Petters and that he sounded " really upbeat."

Hopeman said the facts would show Petters was taken advantage of by Coleman, Robert White, Michael Catain and Larry Reynolds, a Los Angeles-based businessman who has been in the federal witness protection program for past crimes.

"Mr. Petters would have had nothing to do with this guy [Reynolds] had he known of his background," Hopeman added.

'Thousands of lies'

Hopeman said Coleman evolved from an office assistant who could balance the checkbook at Petters Co. Inc. to a vice president who eventually signed Petters' name to phony promissory notes. "She told tens of thousands of lies over the years," by drafting false purchase orders for electronic goods, Hopeman said.

Hopeman called White "a man of 10,000 excuses" who was a master forger, and said Petters had little contact with Catain, whose Excelsior car wash was a front for bankrolling the alleged Ponzi scheme.

Jacobs, a veteran deal-maker, owned Genmar Holdings Inc., the nation's second-largest builder of consumer boats, which filed for Chapter 11 bankruptcy this year.

Deikel previously bought Fingerhut Cos. Inc. with Petters, then sold it. Court records indicate Petters owes him $10 million.

Vlahos is a restaurateur who founded Champps and later Redstone American Grill. He recently left Redstone to pursue other ventures. Vlahos and his estranged wife, Michelle, are two of the biggest creditors in the Tom Petters fraud case, owed nearly $16 million.

Also on the witness list are:

• Joe Schmit, a former television sports anchor who's now spokesman for Sun Country Airlines and president of the John T. Petters Foundation, named after Petters' dead son.

• Jamie Hagen, Petters' ex-wife and mother of the late John Petters.

• Several members of the Petters family and Tracy Mixon, Petters' girlfriend and the mother of two of his children.

Kyle seated the jury Wednesday just after 1 p.m. and then excused them for lunch. Despite defense concerns about pretrial publicity, the jurors, selected from a pool of about 80, told Kyle during preliminary questioning that they had no reservations about being on the panel and would be able to keep an open mind as they listened to the evidence.

Staff writer Jennifer Bjorhus contributed to this story. David Phelps • 612-673-7269