Tom Petters, the onetime stereo salesman whose ability to work a room helped make him a business mogul, sat with his chin on his hands and stared straight ahead Wednesday as a federal jury in St. Paul gave him the ultimate no-sale.

U.S. District Judge Richard Kyle went through each of the 20 counts against Petters by number, followed by the condemnation, "Guilty."

When the judge had finished, Petters dropped his head but remained outwardly calm to the fact that the business portfolio it took him more than a decade to build had just been officially ruled part of a $3.65 billion Ponzi scheme that left scores of investors wiped out.

Ralph Boelter, FBI special agent in charge of the Minnesota regional office, called the verdict "a very satisfying result to this case. ... It's difficult to comprehend the loss that was perpetrated on the community and the investors."

The conclusion to Petters' fraud and conspiracy trial came after 311/2 hours of deliberation by the jury and 18 days of dramatic testimony that was capped by Petters taking the stand in his own defense. He told the jurors that he had been too distracted by grief over the 2004 death of his son to effectively run his companies -- which included such well-known names as Sun Country Airlines and Polaroid -- and that he had been tricked by dishonest lieutenants.

They didn't buy it.

The jurors averted their eyes from Petters -- who wore a dark gray suit, white shirt and red tie -- as they entered the courtroom to deliver their judgment. Kyle began reading the verdict at 4:18 p.m., and 13 minutes later the sensational case was over.

While the verdict won't provide complete satisfaction to the people who lost money when Petters' scheme collapsed on itself, Boelter said, "I hope today's result provides at least some measure of satisfaction."

Petters will stand before Judge Kyle to receive his sentence early next year. The 52-year-old will probably spend the rest of his life in prison. Sentencing guidelines call for him to receive 30 years to life.

"We obviously consider this to be the most significant financial fraud to ever occur in Minnesota and we will seek a sentence commensurate with his offense," said Assistant U.S. Attorney Joe Dixon, who heads the financial crimes unit in Minnesota.

After court was dismissed, Petters shook hands with defense attorney Jon Hopeman, who then put an arm around Petters in consolation.

The defense team issued this statement: "Though we disagree with today's outcome, we respect the jury and its decision. As much as anything, the trial showed how much good Mr. Petters has done in the world. This, too, is worthy of reflection."

The once high-flying businessman saw his Twin Cities empire collapse ingloriously last year after a former lover and top lieutenant in his organization betrayed him and reported the fraud to federal authorities, then secretly recorded their conversations for the government.

The investigation came together in a frenzy, leaving Assistant U.S. Attorney John Marti bleary-eyed as the first co-conspirators began entering guilty pleas last fall. "Like the song says, 'I'll sleep when I'm dead,'" Marti said at the time, quoting rocker Warren Zevon.

Petters' co-conspirators pleaded guilty one after another. They include former executives with Petters Co. Inc., Deanna Coleman and Robert White; business associates Michael Catain of Shorewood and Larry Reynolds of Los Angeles; hedge fund manager Gregory Bell of suburban Chicago, and one of his accounting executives, Harold Alan Katz.

But Petters held fast to his claim of innocence, testifying that he had trusted some people too much to run his business affairs after his son John was fatally stabbed in Italy during a college study trip in 2004.

Most of the Petters business enterprise has since been dismantled. Polaroid Corp. was auctioned off for $85.9 million in a bankruptcy proceeding this year. Sun Country is no longer in his control, and what remains of Petters' business and personal property is being liquidated for disbursement to his many creditors, who will probably get pennies on the dollar.

Case is born of a betrayal

The case against him began Sept. 8, 2008, when Coleman -- a longtime employee and confidante -- went to federal authorities and gave them their first look at a massive investor fraud scheme.

The government wasted no time in getting to the bottom of the operation and immediately fitted Coleman with undercover recording devices. The government had her race back to corporate headquarters to begin recording hours of discussions between her, Petters and other intimates.

The government played 70 excerpts of those tapes for a total of 17 hours and 37 minutes. The tapes, and emails to and from Petters, constituted the core of the government's case.

"This is one big [expletive] fraud. That's what it is," Petters declares on one of the recordings.

Assistant U.S. Attorney Timothy Rank said after the trial that the tapes proved "extremely helpful" to the jury as it grappled with a complicated fraud scheme. "We did our best in trying the case to make it more understandable. Obviously, the jury went through everything. They did their job," he said.

Outside the courthouse, jury forewoman Jolyne Cross said that while the secret tapes helped convict Petters, the jury was even more persuaded to convict by "the e-mails going back -- dating earlier than that."

Cross, of Apple Valley, said Petters seemed trapped by a fraud of his own making. "I think he got into it and couldn't get out," she said. "It started out bad and he just kept feeding and feeding and feeding it."

Petters' world came crashing down on Sept. 24, 2008, when federal agents raided the headquarters of Petters Group Worldwide in Minnetonka and the residences of Petters and his accomplices.

From that point on, the case was a whirlwind of legal activity. Within 10 days, Petters was arrested and denied bail while his company, his personal assets and the personal assets of Frank Vennes Jr., who helped find investors for Petters, were put under the control of a court-appointed receiver. (Vennes was not charged in the case.)

Another bombshell was the unsealing of the FBI affidavit underlying the Sept. 24 search warrant, which outlined the details of the Ponzi scheme, for the first time putting a "billion" dollar figure on the potential losses.

Meanwhile, Petters was deemed a flight risk and remained incarcerated as his associates started pleading to a variety of conspiracy, fraud and money laundering charges.

Coleman, as the government's main cooperating witness, cut the best deal with a maximum of five years in prison on a conspiracy charge. She said in testimony during the trial that she would seek probation as a reward for her substantial cooperation. The sentencing of Coleman and the other defendants has been on hold pending their cooperation and testimony against Petters at trial.

More than 50 witnesses testified

The other co-conspirators who testified are White, Reynolds, Catain and Bell. Former Petters Group Worldwide accountant James Wehmhoff pleaded guilty to separate tax charges and also awaits sentencing.

The trial, which began Oct. 29, saw the government call 42 witnesses and the defense a dozen, highlighted by Petters' four-day appearance on the witness stand. He claimed in his testimony to have known nothing about the false purchase orders, invoices, financial wire transactions or bounced checks shown or described to the jury.

The government's case consisted of testimony from executives of the big-box retailers with which Petters Co. Inc. claimed to do business. Contrary to PCI's claims to investors, the executives said there were few, if any, multimillion-dollar transactions with PCI.

Rather, government evidence showed, investor funds went to support the money-losing businesses that operated under the Petters Group umbrella, as well as to fund the extravagant lifestyles of Petters and his cronies.

"The conspirators became wealthy off the conspiracy," said Marti, one of three federal prosecutors on the case, in the government's closing argument.

Petters, the government said, siphoned off $82 million between 2003 and 2008 for his personal accounts and $315 million for his companies. White, the government said, got $14.5 million in the same period and Coleman took home $14.4 million.

"The verdict speaks clear," Marti said outside the courthouse late Wednesday afternoon. "The Petters Company was a fraud and the company was Mr. Petters' company." • 612-673-7269 • 612-673-7709