The Golden Boy
Minnesota businessman Tom Petters appeared to be at the top of his game. He was the founder, CEO and sole owner of Petters Group Worldwide. He boasted billions in revenue and ownership of 150 companies including Polaroid and Sun Country Airlines. Petters' sterling reputation helped bring in billions of investment dollars from people around the world.

The Scam
Petters sold promissory notes through his wholesale brokerage firm Petters Company Inc., offering stunning returns of 15 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... no real profits. Petters was running a con.

The Empire Falls
For 10 years, PCI secured hundreds of millions of dollars in investments from unsuspecting clients. Petters and a small cadre of employees covered up the scam by forging documents on fake deals. Law enforcement had no idea what Petters was up to until his "Girl Friday" decided to save herself and take her boss down.

1. Describe internal and external controls that should have discovered the fraud perpetrated by Petters' company.

2. How might the company's customers and independent auditors have discovered this fraud?

3. How he was able to get away with this fraud for as long as he did?

4. What details can you add if you were hired as a contractor for input on controls?