The man responsible for the third-largest Ponzi scheme in
filed papers seeking to have his fifty-year sentence overturned, claiming
that his former attorney failed to disclose that prosecutors had previously
offered a 30-year sentence in plea negotiations. Thomas Petters, 56, chose to
stand trial in 2009 on allegations that he masterminded a $3.7 billion Ponzi
scheme, even taking the witness stand to profess his innocence. However, the
strategy backfired, and Petters was sentenced to a fifty-year term after a
federal jury found him guilty of all charges. Petters' previous efforts to
challenge the sentence have failed, and he is currently scheduled to be
released in 2052 - just shy of his 95th birthday.
Petters was arrested on October 3, 2008 after prosecutors
alleged that his company, Petters Company, Inc., was not operating a
successful and highly-profitable re-sale business as he claimed, but rather a
massive Ponzi scheme that had taken in billions of dollars from investors. According
to Petters' motion, Petters' then-attorney, Jon Hopeman, spoke several days later
with an assistant U.S. attorney, who allegedly informed Hopeman that the
government would agree not to recommend a sentence of more than 30 years in
exchange for Petters' guilty plea. Petters was subsequently indicted on twenty
charges, including wire fraud, mail fraud, money laundering, and conspiracy,
which carried a possible term of hundreds of years in prison.
Shortly after the indictment was unsealed, Petters met
with Hopeman, who allegedly told Petters that he had not received any plea
offer from the government. The next week, Hopeman against met with the U.S.
Attorney, who reiterated the 30-year sentence offer. According to the motion,
and as allegedly depicted in Hopeman's personal files, Hopeman informed the
prosecutor that, "as a matter of personal pride," his
"professional integrity would not allow" him to advise Petters to
accept the offer. In an affidavit filed with the Motion, Petters avers that he
was never advised of this offer. Petters then proceeded to trial, and on
December 2, 2009, was convicted on all counts.
Following Petters' conviction, Hopeman met with Shauna
Kieffer to discuss possible issues that might arise during post-conviction
proceedings. In an affidavit, Kieffer claims that Hopeman told her of the
Government's offer, and that he did not advise Petters of the offer because he
felt "it was not a respectable offer." The Motion concludes by
stating that the sentence should be vacated or modified because of Hopeman's
ineffective assistance of counsel and, in a claim likely disputed by Petters'
victims, that the sentence was cruel and unusual because it was
disproportionate to Petters' crimes.
In the Motion, Petters' current counsel cites to Missouri
v. Frye, a recent case decided by the U.S. Supreme Court involving the
ramifications of the failure to disclose plea offers to an accused. In Frye,
the Court acknowledged the crucial role plea bargaining plays in the criminal
justice system, stating that " Ours is for the most part a system of
pleas, not a system of trials...To a large extent ...horse trading [between
prosecutor and defense counsel] determines who goes to jail and for how long. That
is what plea bargaining is. It is not some adjunct to the criminal justice
system; it is the criminal justice system." Missouri v. Frye,
132 S. Ct. 1399, 1402 (2012) [an enhanced version of this opinion is available to lexis.com
subscribers]. Holding that there were certain responsibilities
required of defense counsel in the plea bargain process to render adequate
assistance of counsel under the Sixth Amendment, the Court ruled that, as a
general rule, defense counsel had an affirmative duty to communicate formal
offers for settlement from the prosecution to the accused defendant.
While it is almost certain that the government will oppose
the Motion, it will be interesting to see what position the response will tae. Frye
stands in contrast to the position that an accused's guarantee to a fair
and impartial trial is an adequate backstop that immunizes any errors in the
pre-trial process. The government may also seek to distinguish its
communications with Petters' former counsel from the "formal offers for
settlement" addressed by the Court in Frye, noting that the lack of
any written offer of settlement supports a position that the 30-year offer was
merely part of an informal negotiating process that did not progress to any
A copy of the Motion is here.
For more news and analysis of Ponzi schemes, visit
Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.
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