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updated 4/8/2010 12:00:22 PM ET 2010-04-08T16:00:22

A federal judge sentenced fallen Minnesota tycoon Tom Petters to 50 years in prison on Thursday for orchestrating a $3.65 billion Ponzi scheme that counted hedge funds, pastors, missionaries and retirees among its victims.

"Every day, I'm filled with pain and anguish for all the lives that have been destroyed and touched by this episode," Petters said at his sentencing hearing, apologizing to family, friends, co-workers and others who were hurt.

U.S. District Judge Richard Kyle said a long sentence was necessary and that he didn't believe Petters, the one-time owner of Polaroid and Sun Country Airlines, was unaware of the fraud.

"Mr. Petters was captain of the ship," Kyle said.

The judge will recommend to the Bureau of Prisons that Petters be allowed to serve his time in Minnesota.

A jury convicted Petters four months ago on 20 counts of wire fraud, mail fraud, money laundering and conspiracy.

Prosecutors said Petters deserved the statutory maximum of 335 years — effectively life in prison for the 52-year-old.

"The defendant's fraud is beyond comprehension in size and scope," prosecutor Joe Dixon wrote in court documents. "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 a little more than four years.

After the sentencing, Petters' attorneys released a statement that read: "We are saddened by the verdict and sentence. There is no victory for anyone when a vibrant young man is placed into a prison cell for the balance of his days and nights."

Attorney Jon Hopeman said the defense team would have no further comment. Earlier, it said it planned to appeal the conviction and maintained that Petters was innocent.

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 at trial 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."

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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