The Buddhists weren't thinking about Tom Petters when they identified the three poisons -- greed, hatred and delusion -- but at least two of those toxins help explain the collapse of the local entrepreneur's empire.

The role greed played is pretty obvious. Petters, who came from a modest middle-class St. Cloud family, enjoyed the trappings of wealth. He was a talented, persuasive salesman who surrounded himself with popular celebrities and powerful politicians. The business associates who invested with him were lured by unusually high rates of return. With delusions of acumen, they often neglected basic due diligence.

It all came crashing down when an associate told federal authorities that Petters was running a multibillion-dollar Ponzi scheme. He's now in Sherburne County jail facing federal charges of fraud, money laundering and obstruction of justice. He maintains he's innocent, but his former employees and investors say otherwise. They're left to pick through the debris created by one of the biggest business-fraud schemes in history.

The Petters case, which came to light just as the malfeasance on Wall Street threatened to take down the U.S. economy, is a major embarrassment for a business community that once had a relatively dependable moral compass. The victims include nonprofits, banks and hedge funds, all of which should have known better.

Sadly, as the Star Tribune news staff pointed out in an excellent series on Petters that concluded last week, other victims include people like Charles Kleinsteuber, a Sun Country flight attendant who told staff writer Curt Brown: "When the FBI takes away the person who signs your paychecks, throwing a wrench in your finances, it stresses things out a lot -- not a little." And Sun Country is just one of the dozens of firms that must deal with the fallout from the Petters nightmare.

The huge house of cards that was Petters Group Worldwide was built over more than a decade. Why no one discovered it sooner will be discussed in courtrooms, boardrooms and business schools for years to come. For the short answer, we turned to Richard Bookbinder of Bookbinder Capital Management, a New York investment firm.

Bookbinder was approached about making an investment in a deal involving Petters in 2002. As part of the routine due diligence process, Bookbinder hired First Advantage Investigative Services, which quickly determined that Petters had lied about earning a degree from St. Cloud State University. He actually attended the school for one semester.

That was enough to chase away Bookbinder. Other clients of First Advantage also steered clear of Petters after they became aware of how much litigation he had been involved in during the 1990s. But back home in Minnesota, the legend of the native son and seemingly successful entrepreneur kept growing.

He bought Polaroid and Sun Country. He was a keynote speaker at the Carlson School of Management, where he told attendees, "Without trust, you really can't do anything." He gave away millions of dollars to charitable organizations and started his own foundation. Then, at age 51, Petters saw everything he had built start crashing down around him.

Bookbinder says people placed blind faith in Petters, even though the returns he promised seemed too good to be true and a simple background check would have raised thickets of red flags. That may have been because Minnesotans, quick to question outsiders, hesitate to suspect their own. Or maybe Petters was a once-in-a-lifetime salesman who inspired confidence.

Whatever the reason, it appears that Tom Petters was right to tout the value of trust. What he didn't disclose, according to the charges against him, was that his business plan depended just as much on delusion and greed.