Petters remains firm in having no knowledge of fraud

Businessman Tom Petters tried to put his former business associates on trial Wednesday during his second day on the stand.

Petters is facing fraud and other charges that could put him away for life.

Petters has not disputed there was a huge fraud, but he testified that in recent years, he had little or nothing to do with Petters Company Inc., the entity at the heart of the scheme.

Petters said by 2005 he wasn't spending any time on PCI. He said Deanna Coleman was overseeing that company's operations and Coleman and others were responsible for whatever went on there.

Petters said he trusted Coleman completely. He said, "I always believed Deanna."

A year ago, Deanna Coleman revealed the fraud to authorities and secretly recorded conversations with Petters in which he appears to know the company was involved in a massive fraud. Coleman has pleaded guilty to taking part in the scheme. She hopes to get a reduced sentence for testifying against Petters.

Petters is charged with defrauding investors out of $3.5 billion. Investors thought they were funding deals to buy and sell TVs and other consumer electronics, but the goods only existed on paper. The deals weren't real.

Petters said he was not "good at numbers or financial statements." He said Coleman was the finance person within his organization and controlled its cash.

Petters said that as far as he knew, PCI was funding legitimate deals for companies. He said knew nothing about fake purchase orders and other false documents created to make sham deals look real.

Petters said he would have fired Coleman and another employee, Bob White, if he'd known the two of them had forged thousands of documents. Coleman and White admitted in court to the forgeries.

While Coleman ran PCI, Petters said he focused his attention on his other businesses and deals that took him around the world. In the years before his arrest, Petters drew headlines with his purchase of Polaroid Corporation and Sun Country Airlines.

In 2004, his son was murdered in Italy, and Petters testified he devoted a lot of effort to a charity founded in his son's memory.

Petters said he was shocked when federal agents raided his home and business in September of last year. Just the day before the raid, Petters said he had decided PCI needed a thorough audit. He said a lot of discrepancies had recently come to his attention and he wanted to resolve them. He said he was worried that something was really wrong at PCI.

He continues his testimony on the stand Thursday.