It's time for jury to decide which face of Petters is the real one

When jury selection starts today in the Tom Petters trial in St. Paul, a cross-section of Minnesotans will be asked whether they believe the good-looking entrepreneur standing in front of them, a guy who once owned Polaroid and an airline and gave millions to charity, could knowingly cheat friends and acquaintances out of $3 billion for more than a decade.

For most honest people, it's a difficult concept to grasp. Because inside us are mechanisms that punish us when we do something illegal or immoral. Call it a conscience, or guilt. Call it a soul.

The jury in the Petters trial will not likely be trying to determine if a Ponzi scheme occurred in this case. Several people have already pleaded guilty, and some close to Petters have told me they think a massive crime was committed. They just think that Petters was another victim, a dupe of con artists or mobsters.

So a jury will have to look at those involved and decide which of the people in the courtroom masterminded the largest financial fraud in state history. They will likely wonder how someone could start such a scam, and keep it going without detection or, apparently, guilt.

I asked two people with different takes on the subject to explain how a colossal fraud continues, not so much mechanically as psychologically.

Barry Minkow was a lauded young entrepreneur during the 1980s who was actually running a Ponzi scheme and served seven years in prison. His company, ZZZZ Best, appeared to be a successful carpet-cleaning company. But it collapsed in 1987, costing investors $100 million. One of those involved in his crime was Jack Catain, a reputed mobster and, coincidentally, father of Michael Catain, who has pleaded guilty in the Petters case.

"First, Ponzi scheme perpetrators rarely start out to commit fraud, but are faced with economic pressure or the unknown variable [like a severe downturn in the economy] and then use the scheme as a means to a temporary fix," said Minkow, who now does fraud consulting and testifies as an expert. "Most of us have 'cures' we are looking forward to that will clean up the Ponzi scheme so that we can go legit [which often leads to compulsive gambling].

Minkow said no one close to him knew it was a fraud. Those who invested with him employed what he calls "due-diligence-by-I-got-paid. They say, I've been in it for seven years, and I got paid. We who perpetrate fraud rely on that trust. And friends do not seek independent proof of profitability."

Dr. Terrance Lichtenwald is a psychologist who has studied white-collar criminals, especially psychopaths, who are incapable of feeling guilt and thus can perpetrate a crime for many years. Research estimates they make up 4 percent of the population.

"When you talk to their employees, a certain group is extremely loyal," Lichtenwald said. "But if you interview all of them, many know exactly who this guy is."

The white-collar psychopath is clever but not necessarily intelligent, has a charm that masks callousness, can readily assess a person's weaknesses and is likely to cut ties with anyone who begins to doubt him.

"If you confront him, he'll slip it," said Lichtenwald. They put themselves "in a target-rich environment," such as a church or charity, where people are literally willing to give money away. Then they surround themselves with greedy people who "want to make a lot of money quickly, even if it doesn't make sense."

"Look at [the criminal's] career, what did they make? Nothing," Lichtenwald said. "He's a consumer, a black hole" that devours businesses, money, people, drugs and luxuries.

In presentations, Lichtenwald shows a picture of a man with a small pet snake. "The guy bonded with that snake," he said. Then he tells his audience the snake grew, and eventually killed its owner. "He never bonded with the man, he just saw him as a food source." Psychopaths are "snakes in suits."

Minkow said it's not always that way.

"When it is inevitable that we are going to get caught, then all bets are off and we prepare for demise, which means hoard money to pay for lawyers," he said.

"You say to yourself, 'I'm not a crook until I fail to pay back the money. If I win it back, no harm, no foul, and I'm a hero,'" Minkow said. "I've seen it a million times. Ask anybody in the federal pen[itentiary]. None of us was supposed to be here. Nobody was supposed to get hurt."