Defense attorneys: Have mercy, Petters has tumor

Federal prosecutors on Monday said Wayzata businessman Tom Petters deserves 335 years in prison for his "staggering and unprecedented" investment fraud.

"A life sentence is wholly deserved and justified given the defendant's corrupting influence on individuals and institutions, and his strident refusal to accept any responsibility for the offenses and his conduct," the government said in a sentencing memorandum.

But Petters' defense attorneys pleaded for leniency and mercy, saying their client suffers from a tumor on his pituitary gland.

"The long-term prognosis for Mr. Petters' condition is bleak; he faces the risk of blindness," said defense attorney Paul Engh in court documents. "The tumor is not growing at the moment but cannot be ignored."

In December, Petters was convicted in U.S. District Court of 20 counts of fraud, money laundering and conspiracy for his role in running a $3.65 billion Ponzi scheme that collapsed when one of his most trusted associates went to the government and confessed. His sentencing is scheduled for April 8.

The government based its 335-year life-sentence request on the number of victims, the fraud's effect on financial institutions, his role as organizer, the abuse of trust involved and obstruction of justice.

"The defendant's fraud is staggering and unprecedented in size and impact on victims and the community," prosecutors said. "Criminal abuse of power and wealth, such as that perpetrated in this case, must be met with the most significant punishment available."

The government asked U.S. District Judge Richard Kyle to use Petters' sentence as a message to future criminals.

Prosecutors said victims included retirees, clergy and friends, as well as hedge funds that invested on behalf of clients. The government said it has identified 340 victims to date and expects that number to rise.

Many fell victim to the fraud because Petters created a public persona to keep the scheme going for more than a decade, prosecutors said.

"Throughout, the defendant carefully crafted and manipulated his image as a charitable and religious philanthropist to fool business, political and religious leaders, who in turn lent credibility to the defendant further facilitating and concealing the fraud," prosecutors said.

Attorneys for Petters described him as a hard-working businessman with "the unbending faith that tomorrow all will be well" and who cared about people.

Engh likened Petters to a downhill skier who lost his line and an athlete who wants one last shot to score.

"It is the mantra of American success -- start with nothing, get up every day, work hard and you'll get somewhere but only if you keep going," Engh wrote.

Engh's sentencing memorandum quotes a number of letters written on behalf of Petters by friends, family members and ex-employees. A sister-in-law wrote that Petters helped her beat alcoholism. A brother wrote that Petters saved their sister from an abusive relationship. A physician wrote about Petters' "tremendous empathy and concern" for dealing with people in crisis.

"For Mr. Petters, a life sentence would say to him, it's all meaningless now, what you've done will not be measured, your good deeds don't matter and never have," Engh concluded.

But the government countered that life in prison was warranted because of Petters' "long history of engaging in this fraud and other criminal conduct, his cynical and contemptuous conduct at trial and refusal to accept any responsibility for his conduct."