Federal authorities knew nothing about the Petters scheme until Deanna Coleman, whistle blower volunteered her confession. She pleaded guilty today.

he massive investment fraud investigation of Twin Cities businessman Tom Petters and several of his associates began Sept. 8, when one of his longtime employees approached federal authorities and said she'd helped him bilk more than $3 billion from unwitting investors.

Joe Dixon, an assistant U.S. attorney in charge of white-collar crime prosecutions in Minnesota, said the government knew nothing about the alleged scheme until last month, when Deanna Coleman, a 42-year-old Wayzata resident who had served as vice president of operations for Petters Co. Inc., confessed to her involvement and offered to help authorities investigate Petters.

Coleman, wearing a navy suit with orange pinstripes, stood nervously before U.S. District Judge Paul Magnuson today and pleaded guilty to a single charge of conspiracy to commit mail fraud.

Robert Dean White, 67, of Excelsior, had pleaded guilty just before her to his role in the scheme, which involved the creation of false bank statements and other documents that were used to trick investors into funding what he called a giant Ponzi scheme.

White, looking gaunt in a gray sportcoat and sporting a scruffy white beard, said he got involved as a consultant in 1998, when Tom Petters asked him to create a false bank statement. "It was used to convince a lender that we had spent the money appropriately," White said.

White said he created the document and soon went to work for Petters. He said he later learned from Coleman that all of the loan documents for Petters Co. Inc., or PCI, were false. White said that about the time he joined the company, PCI had used false documents to obtain about $100 million in loans. As of Sept. 24 of this year, when the government investigation became public, White said the total "exceeded $3 billion."

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