Thomas Petters

Infobox Person
name = Thomas J. Petters


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birth_date = birth date and age|1957|07|11
birth_place = St. Cloud, Minnesota, U.S.
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occupation = Entrepreneur
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gender = Male
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children = One daughter, three sons
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Current person|date=October 2008

Thomas "Tom" J. Petters is an American businessman, philanthropist and the former the CEO and chairman of Petters Group Worldwide.Nicole Muehlhausen, [http://kstp.com/article/stories/s592708.shtml?cat=63 BIO: Tom Petters] , KSTP.com, September 24, 2008, Accessed October 8, 2008.] Petters resigned his position as CEO on September 29, 2008, amid mounting criminal investigations. [http://wcco.com/business/tom.petters.ceo.2.828534.html Tom Petters Resigns As Petters Group CEO] , WCCO.com, September 29, 2008, Accessed October 8, 2008.]

Early years

Petters' was raised with six siblings in St. Cloud, Minnesota. He worked at his family's tailor, fur and fabric shop that was founded by his great-grandfather and operated for over 100 years. In 1973, while still in high school, he started Ear Electronics, a mail-order stereo company aimed at college students. He graduated from Cathedral High School in 1975. Petters only completed one quarter of college before dropping out to pursue a career. In the early 1980s, Petters worked in Colorado as a regional manager at an electronics store chain; when that business went bankrupt he purchased five of locations in Colorado and Kansas.Kari Petrie, [http://www.sctimes.com/apps/pbcs.dll/article?AID=/20081003/BUSINESS/110030052/-1/RSSTOP The Petters File] , "St. Cloud Times", October 3, 2008, Accessed October 8, 2008.] Nicole Muehlhausen, [http://kstp.com/article/stories/s592708.shtml?cat=63 BIO: Tom Petters] , KSTP.com, September 24, 2008, Accessed October 8, 2008.]

Petters Group Worldwide

In 1988, Petters moved back to Minnesota and founded Amicus Trading, a wholesale brokerage; the name was later changed to The Petters Company, and it marketed consumer merchandise. In 1995 he started Petters Warehouse Direct to sell closeout, overstock and bankrupt company merchandise from a store in Minnetonka, Minnesota, additional locations follow in the Twin Cities and greater Minnesota. In 1998 he went online to sell discounted merchandise through redtag.com, operated by RedTag Inc; by 2000 he sold his Petters Warehouse Direct stores to focus on his online business, based in Eden Prairie, Minnesota. He teamed up with direct-mail merchandise company, Fingerhut Companies Inc., in 2001 to start a new online store, Redtagbiz.com, which reported sales of $1 billion per year at one point.Kari Petrie, [http://www.sctimes.com/apps/pbcs.dll/article?AID=/20081003/BUSINESS/110030052/-1/RSSTOP The Petters File] , "St. Cloud Times", October 3, 2008, Accessed October 8, 2008.] Nicole Muehlhausen, [http://kstp.com/article/stories/s592708.shtml?cat=63 BIO: Tom Petters] , KSTP.com, September 24, 2008, Accessed October 8, 2008.]

When Fingerhut's owner, Federated Department Stores, decided to sell or close the company in 2002, Petters, teaming with former Fingerhut chairman Ted Deikel, made an offer to buy the Fingerhut name, customer list, and buildings in St. Cloud, Minnetonka, Plymouth, Minnesota and Tennessee. The purchase was made in June 2002 and all of Petters' operations move into Fingerhut's former headquarters in Minnetonka. Deikel took over Fingerhut Direct Marketing Inc., which created the catalogs and Petters took over with Fingerhut Fulfillment, based at a St. Cloud distribution center; the new Fingerhut restarted with online and catalog sales in November 2002. In April 2003, The Petters Group, with two minority investors, purchased uBid. The same month, Fingerhut Direct Inc. announced it has obtained a $100 million line of credit to finance inventory and receivables. In 2003, Petters invested in former Minnesota State Senator Ted Mondale's Nazca Solutions. Deikel sold his interest in Fingerhut in 2004.Kari Petrie, [http://www.sctimes.com/apps/pbcs.dll/article?AID=/20081003/BUSINESS/110030052/-1/RSSTOP The Petters File] , "St. Cloud Times", October 3, 2008, Accessed October 8, 2008.] Nicole Muehlhausen, [http://kstp.com/article/stories/s592708.shtml?cat=63 BIO: Tom Petters] , KSTP.com, September 24, 2008, Accessed October 8, 2008.]

In January 2005, Petters Group Worldwide purchased the Polariod brand for $426 million, with plans to use it on consumer electronics and new technologies. In 2006, Petters Group Worldwide acquires Sun Country Airlines.Kari Petrie, [http://www.sctimes.com/apps/pbcs.dll/article?AID=/20081003/BUSINESS/110030052/-1/RSSTOP The Petters File] , "St. Cloud Times", October 3, 2008, Accessed October 8, 2008.] Petters Group Worldwide became a diverse holding company with 3,200 employees and investments or full ownership in 60 companies, of which it actively managed 20; with offices in North America, South America, Asia, and Europe, it had $2.3 billion in revenue in 2007.Nicole Muehlhausen, [http://kstp.com/article/stories/s592708.shtml?cat=63 BIO: Tom Petters] , KSTP.com, September 24, 2008, Accessed October 8, 2008.] Liz Fedor, [http://www.startribune.com/business/30525884.html?elr=KArksLckD8EQDUoaEyqyP4O:DW3ckUiD3aPc:_Yyc:aULPQL7PQLanchO7DiUI Sun Country files for bankruptcy] , "Star Tribune", October 6, 2008, Accessed October 8, 2008.]

Legal troubles

The FBI put Petters under investigation for his alleged role in a fraud scheme involving more than $100 million in investments, with estimates ranging up to $3.5 billion.David Phelps and Dan Browning, [http://www.startribune.com/business/30622119.html Judge, citing flight risk, keeps Petters in jail] , "Star Tribune", October 8, 2008, Accessed October 8, 2008.] On September 24, 2008, federal investigators raided the Petters headquarters in Minnetonka and searched Tom Petters’ Wayzata home. Documents released by the FBI, IRS and other federal agents noted that they were seeking evidence of a scheme to lure investors into funding a company based on tens of millions of dollars in purchases and sales that never occurred. The documents noted that a witness associated with Petters and his company came forward with documents and other information, and later wore a wire and recorded several conversations involving Petters and others who allegedly carried out the fraud. The affidavit alleges Petters is caught on tape repeatedly admitting to the fraud scheme by providing false information to investors; in addition Petters allegedly admits to cheating on his taxes. On September 29, he resigned as the head of Petters Group Worldwide.Kari Petrie, [http://www.sctimes.com/apps/pbcs.dll/article?AID=/20081003/BUSINESS/110030052/-1/RSSTOP The Petters File] , "St. Cloud Times", October 3, 2008, Accessed October 8, 2008.] Martin Moylan, [http://minnesota.publicradio.org/display/web/2008/09/26/petters_fraud/?refid=0 Warrant alleges fraud by Petters] , Minnesota Public Radio, September 26, 2008, Accessed October 8, 2008.]

On October 3, he was arrested at gunpoint in his home. He was denied bail after prosecutors produced documents that alleged Petters had encouraged another person involved with the case to leave the country, that he regretted turning over his passport, and that he had previously spoken about fleeing the country if the fraud scheme was discovered. The U.S. Attorney's Office charged him with mail fraud, wire fraud, money laundering and obstruction of justice.James Walsh and Liz Fedor, [http://www.startribune.com/business/30271744.html Petters jailed; court papers say he planned to flee the country] , "Star Tribune", October 4, 2008, Accessed October 8, 2008.] Martin Moylan, [http://minnesota.publicradio.org/display/web/2008/09/26/petters_fraud/?refid=0 Warrant alleges fraud by Petters] , Minnesota Public Radio, September 26, 2008, Accessed October 8, 2008.] [ [http://minnesota.publicradio.org/features/2008/09/26_petters_warrant/Petters.PDF Application and Affidavit for Search Warrant] Copy of Warrant at Minnesota Public Radio] [Amy Forliti, [http://www.businessweek.com/ap/financialnews/D93LOCA01.htm Petters Group Worldwide founder due in fed court] , "Associated Press", October 7, 2008, Accessed October 8, 2008.] David Phelps and Dan Browning, [http://www.startribune.com/business/30622119.html Judge, citing flight risk, keeps Petters in jail] , "Star Tribune", October 8, 2008, Accessed October 8, 2008.]

The U.S. attorneys involved noted that the government knew nothing about the alleged scheme until Deanna Coleman, vice president of operations for Petters Co., approached them to confess and offered to help authorities investigate. This led to the prosecution of Robert Dean White, who admitted to being involved in creating of false bank statements and other documents that were used to trick investors in what he described as a Ponzi scheme. Both individuals made plea bargains with prosecutors in exchange for information on how the alleged scheme worked. They noted that, at the direction of Petters, Coleman and White would fabricate documents for Petters and others to use to obtain billions of dollars in loans. The phony records were used as proof that Petters Co. was buying merchandise, generally electronic goods, from two suppliers (who were named as co-defendants). Petters Co. would tell lenders that it was selling the goods through big-box stores and provided purchase orders to substantiate the deals; however the deals were phony and the documents were fakes. Most of the money lent to PCI was secured by promissory notes and sometimes security agreements; the lenders would wire the money to the two suppliers, which would pass it on to Petters Co., less a commission. As more lenders loaned to Petters Co., outstanding loans would be paid off or rolled into new loans from the same lender. Proceeds allegedly went to Petters Co. and to Petters himself, and were used to fun other Petters-owned companies, pay others collaborating in the scheme and for, according to court affidavits, "Petters' extravagant lifestyle."Dan Browning, [http://www.startribune.com/local/30631384.html Longtime executive blew whistle on Petters fraud] , "Star Tribune", October 8, 2008, Accessed October 8, 2008.]

Petters' legal troubles led to Sun Country Airlines filing for bankruptcy; the airline had been relying on an operating loan from Petters, who owns all the voting shares of Sun Country, to help the low-fare carrier pay its bills during the months of October and November. However with the legal troubles surrounding Petters, the airline opted to file for bankruptcy to exempt itself from the legal entanglements of Petters Group Worldwide.Liz Fedor, [http://www.startribune.com/business/30525884.html?elr=KArksLckD8EQDUoaEyqyP4O:DW3ckUiD3aPc:_Yyc:aULPQL7PQLanchO7DiUI Sun Country files for bankruptcy] , "Star Tribune", October 6, 2008, Accessed October 8, 2008.]

Philanthropy

Petters was appointed to the board of trustees for the College of St. Benedict in 2002; his mother had attended the school; in 2006 he gave $2 million for improvements to St. Johns’ Abbey on the campus of adjacent Saint John's University. In October 2007, he made a $5.3 million gift to the College of St. Benedict to create the Thomas J. Petters Center for Global Education. In 2006, he served as a co-chairman for a capital campaign at his high school, Cathedral High School, and offered to match donations up to $750,000.Kari Petrie, [http://www.sctimes.com/apps/pbcs.dll/article?AID=/20081003/BUSINESS/110030052/-1/RSSTOP The Petters File] , "St. Cloud Times", October 3, 2008, Accessed October 8, 2008.]

In March 2004, his son, John Thomas Petters, was murdered during a study abroad program in Florence, Italy. The student inadvertently wandered onto private property where the owner, Alfio Raugei, mistook him for an intruder and stabbed him to death. Raugei was convicted of manslaughter, sentenced to three years in prison and ordered to pay fines, court fees and damages to the Petters family. Tom Petters noted: "Despite the ruling, we believe there are no winners in this outcome." [http://wcco.com/topstories/John.Petters.Thomas.2.347734.html Manslaughter Conviction In John Petters Slaying] , WCCO.com, July 1, 2005, Accessed October 8, 2008.] In response, Petters formed the John T. Petters Foundation to provide gifts and endowments at select universities to benefit future college students.Nicole Muehlhausen, [http://kstp.com/article/stories/s592708.shtml?cat=63 BIO: Tom Petters] , KSTP.com, September 24, 2008, Accessed October 8, 2008.]

In September 2004, Tom Petters donated $10 million to his late son's college, Miami University of Ohio. [http://twincities.bizjournals.com/twincities/stories/2004/09/13/daily43.html Tom Petters donates $10 million to his late son's college] , "Minneapolis / St. Paul Business Journal", September 17, 2004, Accessed October 8, 2008.] He donated an additional $4 million and the John T. Petters Center for Leadership, Ethics and Skills Development set to open as part of the new Farmer School of Business in fall 2009.Dave Matthews, [http://media.www.miamistudent.net/media/storage/paper776/news/2008/10/03/FrontPage/Fbi-Raids.Mu.Donors.Home.Office-3468764.shtml?xmlsyn=1 FBI raids MU donor's home, office] , "Miami Student", October 3, 2008, Accessed October 8, 2008.] Petters is on the Business Advisory Council and Board of Visitors for Miami University; he is also on the Board of Trustees at Rollins College in Winter Park, Florida, where he donated $12 million to create two new faculty chairs in International Business.Nicole Muehlhausen, [http://kstp.com/article/stories/s592708.shtml?cat=63 BIO: Tom Petters] , KSTP.com, September 24, 2008, Accessed October 8, 2008.]

Awards

Petters was awarded "Corporate Leader of the Year" in 2001 by the Juvenile Diabetes Research Foundation, Distinguished Humanitarian Award in 2003 by B'nai B'rith, and noted in the Big Brothers Big Sisters Odyssey Awards 2005.Nicole Muehlhausen, [http://kstp.com/article/stories/s592708.shtml?cat=63 BIO: Tom Petters] , KSTP.com, September 24, 2008, Accessed October 8, 2008.]

References


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