Tom Petters and the federal prosecutor seeking to jail him for life sparred like boxers Thursday as Petters' weeks-long fraud trial moved toward its climax.

The jury hearing the case in U.S. District Court in St. Paul could begin deciding as soon as today whether a knockout punch was thrown.

For Assistant U.S. Attorney Joe Dixon, the rare opportunity to directly cross-examine a defendant accused of running a $3.65 billion Ponzi scheme became a reality only this week, when Petters took the gamble of taking the stand in his own defense.

Dixon, head of the financial crimes section for the Minnesota U.S. attorney's office, carried himself like a man who wasn't about to pass up any drama. Facing the jurors as he asked his questions, Dixon aggressively turned toward Petters to await each response.

Petters, 52, once a boisterous wheeler-dealer, seemed intent on parrying the verbal blows with a courtroom version of Muhammad Ali's rope-a-dope. For several hours, he stayed subdued and contrite until a Dixon question about his "corporate tycoon" lifestyle seemed to draw blood and Petters bristled.

But first came a series of questions meant to fix Petters squarely in the heart of the fraud.

"You were the heart and soul of PCI?" Dixon asked, referring to Petters Co. Inc., which acted as the engine of the Petters business conglomerate.

"Yes," Petters replied.

"You signed promissory notes week after week to pay investors millions?" Dixon said.

"Yes," Petters answered.

"The reality is, you obtained millions [of dollars] from other Petters companies?" Dixon said, recalling testimony about Petters funding his lavish lifestyle from investor proceeds.

"Whatever the record shows, I'm not going to contest it," Petters answered.

"You were a corporate tycoon with enormous personal wealth," Dixon went on.

"I guess that's the way it was viewed," Petters said.

Petters acknowledged that without PCI, Petters Group Worldwide -- his Minnetonka holding company -- likely would not have existed.

"Without PCI, Tom Petters, captain of industry, wouldn't exist?" Dixon taunted him.

"That's speculation," Petters replied. "But you'd be right."

Dixon said Petters Group Worldwide lived high on the hog with virtually no revenue coming in year after year.

"PGW was living high, yes," Petters said.

Petters said he believed his former confidante, Deanna Coleman, and Robert White, PCI's former chief financial officer, "duped" him for 15 years and hid the massive fraud.

Dixon prodded: "Had real business people been running PCI, they would have discovered the fraud."

Said Petters: "That would have been good."

Dixon questioned Petters about becoming intimate with Coleman after she rose from receptionist to become one of his top executives.

"Were you more than just friends?" Dixon asked.

"A situation occurred," Petters said.

He acknowledged a tryst in Italy during the trial of his son's killer, but denied it lasted long.

Then Dixon moved to a line of questioning meant to show Petters used investors' money to support his other businesses and lifestyle.

Dixon asked about Petters' ownership of a Bentley, his use of corporate aircraft and homes on Lake Minnetonka and in Florida.

"You wanted the life of a corporate tycoon," Dixon said.

"No, others wanted me to have that life," Petters said, his voice rising. "I did not want the life of a corporate tycoon. Absolutely, I didn't want that."

Petters said his friend Dean Vlahos, a founder of the Champps and Redstone American Grill restaurant chains, bought him a Bentley as a gift.

"I didn't want a Bentley," he said. "I'm not a Bentley guy."

Earlier Thursday, when questioned by one of his own attorneys, Jon Hopeman, Petters said that he had a plan in the summer and fall of 2008, when debts were crushing his companies, that he hoped would generate at least $300 million to pay off creditors.

Petters said he planned to sell the licenses to the Polaroid name overseas, and planned to sell part of Sun Country Airlines. In addition, he said, he was hoping to get $350 million from a lawsuit against Hewlett-Packard in a dispute over Polaroid intellectual property rights. Petters said he also hoped to make $200 million with a deal with the now-defunct Circuit City.

And he said he was trying to work a deal with Fortress Investment Group of New York that called for it to pay 85 cents on the dollar for PCI's debt. Petters said the deal would have allowed him to repay hedge funds that had invested with him.

"It would have given us money for Sun Country, money for Polaroid," Petters testified. "Everybody would have survived, I believe."

Asked how he feels about Coleman now that he knows she told government agents he ran the Ponzi scheme and now that he knows she secretly wore recording devices when they talked prior to his arrest, Petters said: "I hadn't had that many conversations [with her] in 10 years that I had in three weeks."

Petters returns to the witness stand this morning and likely will be done testifying by noon. Closing arguments will follow. U.S. District Judge Richard Kyle hasn't said whether he would turn the case immediately over to the jury or wait until next week.

Petters, who has been jailed since his arrest in October 2008, is charged with conspiracy, fraud and money laundering.

David Phelps • 612-673-7269