With a wave and a kiss blown to family members, Tom Petters departed a federal courtroom in St. Paul on Thursday, likely to spend the rest of his discredited life behind bars.
Petters had just listened stoically, his hands crossed at his waist, as U.S. District Judge Richard Kyle told the packed room that he was sentencing the onetime stereo salesman turned multibillion-dollar Ponzi scheme mastermind to 50 years in prison, with no possibility of release until 2051, when Petters would be 93.
"This was a massive fraud and the defendant's involvement was front and center," Kyle told the hushed crowd..
Moments earlier, Petters, dressed in a gray suit, white shirt and patterned tie, apologized to his family, friends and former employees, more than 50 of whom wrote letters to the judge urging mercy. He apologized to his grown daughter, two young sons and their two mothers.
"I won't have enough time in my lifetime to thank them enough," Petters said.
His voice breaking, Petters said, "Every day I feel pain and anguish. I will work the balance of my life to repair and replace what was lost."
He recalled the murder of his son in Italy in 2004 and said it was "the worst event in my life," but added, "my life has been truly blessed." Then he thanked the judge for allowing him to speak.
For Petters, the sentencing hearing was an 80-minute roller coaster as his attorneys sought leniency, prosecutors wanted the book thrown at him and he offered to help recover assets for victims. "I'm truly grieved for all ... the victims," he said.
With credit for good behavior and time already served, Petters would be eligible for parole in 41 years.
"He will not be released before then," Kyle said. "I don't take any joy in imposing this sentence, but the sentence is fully supported by the evidence."
U.S. Attorney B. Todd Jones said that the sentence is, in effect, a life term and that the government is satisfied, though it had sought a sentence of 335 years.
Judge: Crime destroyed lives
Kyle said Petters, a onetime larger-than-life Wayzata businessman whose $3.67 billion Ponzi scheme trailed only Bernie Madoff's in size, deserved the long sentence because his crimes destroyed the lives of many investors and damaged the underpinnings of the financial system.
Others were involved, the judge added, but "this would not have happened but for his direction and his concurrence with it." Kyle said he didn't believe Petters' testimony at the trial. "I am not satisfied that he would not re-offend," Kyle added.
After the hearing, family members declined to comment, and some were distraught.
Petters asserted that he tried to cooperate with the government all along, a claim rejected as false by Assistant U.S. Attorney Joe Dixon.
"This is the largest fraud in Minnesota history. Its effects, its devastation cannot be overstated," said Dixon, chief of the financial crimes division in the U.S. attorney's office for Minnesota. "Mr. Petters made a daily choice to engage in fraud and deceit. His victims came from all walks of life. They are all picking up the pieces because of decisions by Tom Petters."
Legal experts thought Kyle's sentence was appropriate.
"No question. Petters was in life-sentence to begin with and then you throw in aggravating factors like the complexity of the crime, the number of victims and his leadership role and the crime is off the guidelines chart," said Don Lewis, dean of Hamline University School of Law and a former federal prosecutor.
Ted Sampsell-Jones said a 50-year sentence versus a 335-year sentence sought by the government makes it less likely that Petters could successfully appeal on grounds the sentence is too strict.
"It seems a fair and reasonable sentence. If you're 52 years old, it doesn't make much of a difference if the sentence is 50 years or 350 years," said Sampsell-Jones, a professor of criminal law at William Mitchell College of Law.
Petters was convicted in December on 20 counts of fraud, conspiracy and money laundering. He and his associates offered investors high returns on supposed loans to finance purchase of electronics and other goods for sale to major retailers. But the government offered evidence at trial that purchase orders were faked and the merchandise didn't exist.
In jail since October 2008
He has been held in Sherburne County jail since October 2008, after his business empire collapsed and the government argued there was a risk he would flee. He now will be sent to a federal correctional facility to be determined by the Bureau of Prisons.
Attorneys for Petters asked that he be sent to the government's medical facility in Rochester, where he could receive treatment for a pituitary gland tumor. Kyle said he would recommend that Petters at least be kept in Minnesota.
Paul Engh, one of Petters' attorneys, described him as a "flawed but benevolent individual" and argued for mercy, citing letters from janitors, secretaries and others who supported him. He called the federal sentencing guidelines unjust and irrational, and reminded the judge that they are no longer mandatory.
"There is no evidence that high-time sentences will deter anyone from committing a crime," argued Engh, who in court pleadings had asked for a four- to 12-year sentence. "These high-time sentences are politically driven."
In a statement after the sentencing, the defense team said: "We are saddened by the verdict and sentence. There is no victory for anyone when a vibrant young man is placed into a prison cell for the balance of his days and nights."
Victims wrote to judge
Prosecutors said more than 500 investors are believed to have lost money, and many wrote to the judge about their devastated lives and financial ruin.
Petters is the first of eight people charged in connection with the fraud to be sentenced.
Three of the 12 jurors from Petters' trial attended the sentencing. One, Michelle Entsminger of South St. Paul, said Petters got a fair sentence. "He wasn't believable," she said. "When you make your own bed, you've got to lie in it."
Juror Chris Harbaugh of Big Lake said that while the sentence could have been longer, it seemed reasonable considering Petters' age. He and Entsminger said they attended the sentencing seeking closure.
An attorney representing some investors, mostly clergy members, said Petters got a just sentence. "Unfortunately, the sentence provides little closure for the victims of his crimes, many of whom lost their life savings," said Brian Gudmundson of the firm Zimmerman Reed.
Jones, addressing reporters outside the U.S. Courthouse, called the sentence fair and just.
"Tom Petters was a fraud who built his life on deceit and lies and today the check came due," Jones said.