Defense starts telling its side in federal fraud trial of Minn. businessman Tom Petters

Prosecution rests in Petters’ fraud trial

ST. PAUL, Minn. — The defense is telling its side in the fraud trial of Minnesota businessman Tom Petters.

One of the first defense witnesses Monday was Karl Petters, a cousin of the defendant. Karl Petters used to work at Petters Co. Inc., the company prosecutors say was at the heart of a $3.65 billion Ponzi scheme.

Prosecutors say nearly all of PCI’s merchandise deals were a sham. Karl Petters says he was involved in several deals from 1996 to 1998 that were not. In the largest one, he says PCI bought thousands of home entertainment systems from 3M, which was getting out of that business. Karl Petters, who is not a defendant, says PCI sold the majority of them to Sam’s Club for about $5 million.

Tom Petters’ attorneys have said he is innocent.