Tom Petters wants trial moved to another state

Accused swindler Tom Petters not only wants out of jail, he wants his trial moved to another state.

With a flurry of court pleadings Wednesday, Petters' attorneys filed a motion to move the scheduled June trial, perhaps to Iowa or Wisconsin, citing what they describe as scandalous pretrial publicity in the Twin Cities and government misbehavior.

"This case began as a secret federal investigation but morphed, quickly, into public spectacle," the lawyers wrote in a 17-page memorandum accompanying the motion.

After news broke Sept. 24 that federal authorities had descended on Petters Group Worldwide headquarters in Minnetonka and his house in Wayzata, they wrote, Petters' name was "transfixed to sell advertising."

But then, two days later, "the government did the inexplicable, an unsealing," said the motion by lawyers Jon Hopeman, Eric Riensche, Jessica Marsh and Paul Engh. "Unlike any other case in recent memory, the search warrant affidavit was released to the public, this even though the investigation was in its infancy."

The U.S. attorney's office said Wednesday that it would respond to Petters' motions at a later date. A March 9 hearing is scheduled before U.S. Magistrate Judge Arthur Boylan on a number of pretrial matters.

In somewhat heated language, the memorandum cites a flood of negative coverage about Petters and several colleagues, five of whom have entered guilty pleas resulting from the investigation. It notes that the story about Petters, who is charged with running what the government has described as a $3.5 billion Ponzi scheme, has been called the business story of the year by several local media outlets. And it notes that the Star Tribune's website has segregated its articles about the investigation under the heading, "Special Report: The Tom Petters Fraud Case."

The coverage has spawned "inflammatory, outrageous" commentaries by columnists, bloggers and the public, the lawyers said. They cite the comments submitted by readers on articles posted on StarTribune.com, as well as columns by Star Tribune columnist James Lileks and editor Nancy Barnes, as indicators that Petters cannot get a fair trial in Minnesota.

"The court may say, well, there is such a thing as a First Amendment. But that question masks fault. The government is mostly to blame," the lawyers wrote. "It has issued inflammatory press releases, soon devoured by the news media."

The lawyers are seeking disclosure of government "contacts and leaks to the news media and other third parties" as part of their motion to move the trial.

Barnes defended the newspaper's coverage. "From the day this story broke, the allegations in the Petters case have suggested that we are dealing with one of the largest frauds ever to surface in Minnesota," she said. "The ramifications have been swift and painful for many individual investors, major local businesses and their employees, and local charities. We have covered this story aggressively, as any responsible media organization would."

As for public comments on the Star Tribune's website, Barnes said: "We allow commenting on our website on a wide variety of stories so that readers can share their opinions on stories in the news."

And they want the government to disclose any internal documents it may have about the hedge funds that invested with Petters or his companies. "One potential defense to the government's charges is the hedge funds were not victims in the least," they wrote.

Attorneys for Petters also asked for an order compelling prosecutors to speed up production of trial documents. "Needless to say, trial preparation is unwieldy," they wrote.

Petters' attorneys also filed a motion complaining about Petters' treatment in the Sherburne County jail, where he has been held without bail since early October. He has tried unsuccessfully several times to get released on bond, but each time, he was deemed a risk to flee.

Petters' attorneys said in their new motion that he is being held in "administrative segregation," confined to a pod with high-level sex offenders. He is handcuffed and chained whenever he leaves his cell, they wrote, even during video visits with his children and during interview sessions with his attorneys.

The attorneys seek changes in the restrictions Petters faces, and an inquiry "as to why he is held under restrictive conditions that have not been shared by anyone else in his circumstances, ever."