Frank Vennes Jr. was in the Sandstone Federal Correctional Institution on money-laundering, drug and firearm charges in 1987 when a prison volunteer suggested that he behave like the Apostle Paul and give thanks for his circumstances.

Vennes later said in an interview that the talk caused him to turn his life over to God.

Vennes, 50, went from being a former felon and owner of a pawnshop in Bismarck, N.D., to a multimillionaire philanthropist who runs numerous companies and has major land holdings in Minnesota and Florida. In his spare time, he gave inspirational talks to prisoners about how he'd left behind a life of crime to become a success.

But on Sept. 24, Vennes' Shorewood home was one of nine sites raided by federal agents investigating an alleged Ponzi scheme involving prominent businessman Tom Petters, who was arrested Friday at his Wayzata home.

The government is investigating allegations that Petters, Vennes and other associates raised funds from investors for the purchase and resale of electronic goods that actually didn't exist, then used the money for other purposes.

Vennes, who has not been charged, did not return calls seeking comment for this report.

An associate of Petters who has not yet been identified agreed to plead guilty to one count of conspiracy and began helping the government with the investigation in September. On Friday, Petters, 51, and Larry Reynolds, a 67-year-old business associate from Las Vegas, were charged by prosecutors with mail fraud, wire fraud, money-laundering and obstruction of justice. In a separate but related matter, Michael Catain, another Petters associate, was charged Friday with money-laundering conspiracy. Petters has said through an attorney that he is innocent, and has resigned as CEO of Petters Group Worldwide and its affiliated companies, Sun Country Airlines and Polaroid, among others.

According to a federal search warrant affidavit, Vennes was a facilitator who persuaded five major investors to invest $1.2 billion in companies controlled by Petters. The document says Vennes collected more than $28 million in commissions for his work.

The allegations surprised many who have done business with Vennes or know him through his charitable works.

"I'm in shock," said Cameron Kuhn, a Florida developer who has done several deals with Vennes. "I'm totally blown away."

Kuhn said he and Vennes invested in deals in downtown Orlando and Jacksonville, Fla. When the economy soured, Vennes sued Kuhn.

Kuhn countersued, saying Vennes had threatened to spread false rumors about the financing of those ventures if Kuhn didn't give him property in Jacksonville and Orlando. In an interview, Kuhn said he turned two properties over to Vennes in the settlement.

"He has a big house [in Jupiter, Fla.] and said he paid $5 million cash for it," said Kuhn. He said Vennes told him he was involved in financing deals with Wal-Mart.

"He was very reclusive," Kuhn said, and often did business through his Minneapolis attorney, G. Craig Howse.

Howse confirmed that Vennes owns numerous businesses and has significant real estate holdings, but declined to say much more.

"He's been, in my observation, very straight up," Howse said.

Public records indicate that Vennes is CEO of four Minnesota companies: Metro Gem Inc. (corporate finance), Metro Gold Inc. (rare coins), Metro Capital (commercial real estate) and Resort Ventures (residential real estate).

Vennes is also an officer for seven companies registered in Florida, including Metro Riverwatch, a proposed condominium and hotel tower, according to the Jacksonville Times-Union newspaper.

Property records show Ven-nes also has a $4 million home in Shorewood, and in recent years bought other properties in Minnesota, Florida and Arizona. He holds a $1 million property in Duluth, and is negotiating with the city of Jacksonville on a downtown parking garage.

It's a long way from where Vennes was two decades ago.

In 1986, an undercover IRS agent gave Vennes $370,000, which he helped place illegally in the Bahamas, the Isle of Man and Switzerland, according to U.S. Court of Appeals documents. Vennes' associates either lost or stole $100,000 of that money.

Vennes was later charged with illegally selling a firearm, using a phone to distribute cocaine and money laundering. He pleaded guilty to money laundering and no contest to the other charges.

Vennes turned around and sued the government, seeking $10 million in damages. He claimed he got involved in drugs and guns to recover the $100,000, but only because he thought the IRS agents were Chicago Mafia members. He said they had threatened to kill him and "dismember his children" if he did not get their money back. He said agents entrapped him into committing numerous crimes. He lost the case.

Vennes describes his religious conversion in prison in a Charis Prison Ministries newsletter. He said a volunteer had noticed that Vennes seemed different from other criminals.

"It was a good chance to explain how I'd been victimized," Vennes said.

Bob Olson, president of Charis, which does Christian outreach to inmates, said Vennes participated in weekend seminars and often talked to prisoners about how he emerged from jail and became a millionaire.

"He was a very humble servant and wanted the story of his life turning around to have an impact," Olson said.

Vennes provided funding for Charis and has been on various charitable boards and has raised or given millions of dollars for a variety of religious nonprofits, including Minnesota Teen Challenge, the Northwestern Foundation and the Fidelis Foundation.

"He made significant donations over the years," said John Miller, former director of the Minnesota Correctional Education Foundation, which assisted Minnesota inmates in obtaining schooling while incarcerated before it closed last year.

"He tried to get an education program sponsored by the board, but it was way too restricted because [Vennes] wanted too many religious ties," Miller said. "He was very religious, especially concerning kids on drugs."

Federal election records show Vennes gives liberally to conservative political organizations and candidates. In 2006, he and his family were the top contributors to U.S. Rep. Michele Bachmann. This year, he's given her campaign $4,600.

Bachmann chief of staff Michelle Marston acknowledged Friday that Bachmann was one of several political officials approached by Vennes for a recommendation for a pardon from President Bush for his 1986 crime. Bachmann wrote a letter in favor of consideration last year but withdrew it Thursday after learning of new allegations, Marston said.

Last week, agents with the FBI, IRS criminal investigative division and U.S. Postal Inspection Service seized scores of documents, computers and records from Vennes' home -- including checkbooks from one of the charities he had sponsored.

From a basement vault, agents took boxes and buckets of silver and gold coins, trays of jewelry, five stacks of $100 bills, boxes of gem stones, silver plates and Rolex watches. Agents also seized diamond rings and numerous paintings, including dozens with religious themes, such as the raising of Lazarus from the dead.

Jon Tevlin • 612-673-1702