» more from American Greed

The Story of Tom Petters

Before anyone had heard of Bernie Madoff, Minnesota businessman Tom Petters carried out the largest Ponzi scheme in U.S. history.

His company, Petters Group Worldwide, owned brands like Polaroid and Fingerhut, as well as a controlling share of Sun Country Airlines. As federal agents learned, though, these legitimate businesses were propped up entirely by a $3.5 billion Ponzi scheme.

Petters sold promissory notes through his wholesale brokerage firm Petters Co. Inc., offering stunning returns of 15 percent to 20 percent. The company offered financing on the niche business known as diverting. Investors believed PCI was dealing in electronics and consumer goods, but there was no real merchandise bought and sold — and no real profits. Petters was running a scam.

Prosecutors say Petters defrauded investors to finance his "extravagant lifestyle," which included luxury homes, fancy cars, several yachts and a private jet. He was convicted of federal fraud charges in 2009 and is serving a 50-year prison sentence.

Click ahead for a glimpse into his lavish lifestyle and collapse of his multibillion-dollar Ponzi scheme.

By Drew Sandholm with CNBC.com
Posted 22 February 2012

Source: AP