Is Minnesota businessman Tom Petters himself the victim of fraud?

Petters, awaiting trial on charges he ran a $3.5 billion Ponzi scheme, is now trying to get his case dismissed, claiming that during its investigation of him, the government hid the true identity of Larry Reynolds, an alleged co-conspirator who has pleaded guilty to money laundering in the case.

Attorneys for Petters apparently filed the motion earlier under seal, and refiled it Friday in U.S. District Court in St. Paul with the names blackened out. But the series of documents clearly appears to be about Reynolds, a key figure in the Petters investigation who was identified in earlier court filings as being in the U.S. Justice Department's witness security program.

The filing argues "information tends to show [name redacted] secretly led the scheme without Mr. Petters' knowledge."

Petters' attorneys argue that the government concealed the true identity of Larry Reynolds and his long criminal history during their investigation of Petters and that the secrecy violated Petters' Sixth Amendment right to a public trial. They're also seeking unspecified financial sanctions against the government for failing to disclose information considered vital to Petters' defense.

"The deep irony here is that the government helped supervise the fraud they have now indicted," Petters' attorneys Jon Hopeman and Paul Engh said in a 16-page affidavit supporting the motion.

Hopeman declined to discuss Petters' motion.

Frederic Bruno, the criminal defense attorney for Larry Reynolds, said he hadn't seen the filing and couldn't comment.

Government attorneys called Petters' motion baseless now, as was a previous motion to dismiss that the court denied. In their filing Friday, prosecutors said Petters' objections "rehash complaints previously decided by the court, and again have no merit."

But Petters' attorneys argue that the public's and Petters' right to know the facts "far outweigh the government's effort to protect a lifelong scalawag."

Reynolds, the scalawag, allegedly has a résumé fit for a role in a Quentin Tarantino film.

According to the new filing, he is not Larry Reynolds but a disbarred attorney by another name. He was the mastermind of a 1970s insurance fraud scheme involving staging automobile accidents, making insurance claims and splitting money with co-conspirators, according to court documents. He was eventually caught, convicted and sentenced to 18 months in prison by a state court.

He was also charged with a variety of other crimes, including possessing counterfeit money, trying to purchase several thousand pounds of marijuana, conspiring in a $12 million check fraud scheme and leading a check forgery scheme involving trying to deposit a check for as much as $2 million drawn from the account of L. Ron Hubbard, founder of the Church of Scientology.

Reynolds eventually became a government informant and wore a recording device to implicate a Mafia figure in the Scientology scheme. He was then admitted to the witness protection program, where he has remained, because a Mafia member was planning to execute him, the filing claims.

Reynolds' fraud and drug cases were consolidated, and he ultimately served 13 months of an 18-month sentence, according to the court filings. He was relocated under the witness protection program. It's not clear how he met up with Petters.

Reynolds "has a history of concocting and leading grandiose fraudulent schemes, and then making secret deals with law enforcement once backed into a corner," Petters' attorneys said in the filings.

Petters' attorneys said they were tipped off when they discovered Reynolds' Social Security number was issued in the mid-1980s from a state where he and his family apparently never lived and that didn't match his accent.

Jennifer Bjorhus • 612-673-4683 David Phelps • 612-673-7269