(AP - By STEVE KARNOWSKI) -- When Minnesota businessman Tom Petters' corporate empire collapsed, the losers in what prosecutors say was a $3.65 billion Ponzi scheme included not just hedge funds, but at least 10 pastors, three missionaries, dozens of retirees and a half-dozen nursing home residents, according to federal court filings.
Prosecutors have argued in court documents that Petters captained a fraud so massive that he has earned the statutory maximum of 335 years _ effectively life in prison for the 52-year-old. The defense says four years would be sufficient.
A jury convicted the one-time owner of Polaroid and Sun Country Airlines four months ago on 20 counts of wire fraud, mail fraud, money laundering and conspiracy. His sentencing hearing was scheduled for Thursday morning.
"The defendant's fraud is beyond comprehension in size and scope," prosecutor Joe Dixon wrote. "The offense is the largest fraud in the history of Minnesota. Indeed, there are only a handful of fraud schemes that are even comparable in the history of the United States."
One of those few was run by Bernard Madoff, the New York financier who was sentenced to 150 years in prison after pleading guilty for a Ponzi scheme that cost thousands of investors at least $13 billion.
Using the Madoff model and some creative math, defense attorney Paul Engh last week proposed a sentence of just over four years.
Petters plans to appeal his conviction and has maintained his innocence. The defense also disputes that what happened was a Ponzi scheme, in which early investors are paid off with money from later investors.
Petters testified that he had thought Petters Co. Inc., an arm of his now bankrupt Petters Group Worldwide, was doing real deals involving real merchandise.
According to testimony and documents presented at trial, PCI used fake purchase orders and bogus bank records to persuade investors to finance what they were told would be purchases of electronics such as big-screen televisions that PCI would resell to discount retailer such as Sam's Club and Costco. In reality, the prosecution contended, the merchandise never existed and the sales never took place.
Petters' attorneys blamed other business associates _ who all pleaded guilty in hopes of leniency when they're sentenced later _ and said his biggest mistake was trusting them.
"Petters is imperfect yes but not evil," the defense wrote in a recent filing. Another defense filing called him "a flawed but still virtuous human being."