Attorney Jon Hopeman appeared before a panel of judges on Thursday and explained why he believes convicted Ponzi schemer Tom Petters deserves a new trial.

Petters is currently serving a 50-year prison sentence for running a Ponzi scheme that defrauded investors of an estimated $3.65 billion. Petters filed an appeal shortly after he was sentenced.

Speaking to judges James Loken, Michael Melloy, and Bobby Shepherd of the Eighth U.S. Circuit Court of Appeals, Hopeman said that Petters didn't receive a fair trial because U.S. District Judge Richard Kyle didn't allow them to thoroughly expose the criminal background of Petters' associate Larry Reynolds.

The core of Hopeman's argument: The defense wasn't able to introduce, or make available to the public, evidence that could have debunked Reynolds' testimony by exposing prior convictions and ties to the mafia.

“We discovered in our investigation that there was a New England mobster in the middle of Petters' companies during the entire time of this fraud, more than 15 years, under government supervision in the witness protection program, and no one at Petters' companies knew about it,” Hopeman told the judges. They also found that Reynolds had cooperated with the government to take down members of the mob, and he in turn received leniency and a spot in the witness protection program.

Hopeman said that Petters' attorneys had uncovered the “cornerstone of the defense.” It explained how Petters' companies' fraud “germinated and flourished over the course of a 15-year period, because of this man.” More focus on Reynolds' criminal past could have built a case that he engineered the fraud scheme, rather than Petters, Hopeman said.

Hopeman also emphasized Reynolds' role in the fraud, stating that “only he was responsible for stiff-arming insurance inspectors” so they couldn't discover that certain goods didn't exist at warehouses.

But Assistant U.S. Attorney Joe Dixon described Petters' trial as “fair and constitutionally sound,” adding that Judge Kyle gave the Petters defense “great latitude” in cross examining Reynolds.

The defense was “allowed to present substantially what they wanted in terms of dirtying up Larry Reynolds,” Dixon said. “None of it demonstrates with any degree of certainty at all that Tom Petters was innocent.” It simply suggests that Petters “knowingly used somebody familiar with fraud to help him perpetrate the fraud.”

In addition, Dixon said that Petters' assistant David Margolis testified that he was informed by Petters of Reynolds' background and his potential connection to the mob.

Petters' defense was allowed to cross examine Reynolds during the trial and describe his ties to the mafia, but Hopeman argues that the judge cut them off, and introducing copies of Reynolds' witness protection files would have strengthened their case.

Keeping the witness protection file private was a measure to ensure people's safety, Dixon countered.

But Hopeman said that the defense found a picture of Reynolds on an Internet gambling Web site, so “how much danger can he be in?”

Hopeman also contends that there was “extraordinary press and public interest in the case, before, during, and after trial”-and the defense unsuccessfully fought to make Reynolds' witness protection file public. The Star Tribune also intervened, demanding access to the files.

Petters is “entitled to a new trial,” and “the public should be allowed to see the whole process, because they monitor the process,” Hopeman stated. “An important check on the government's power was lost.”

Media reports suggest that the Eighth Circuit Court is expected to rule on the appeal in the coming months, although court documents indicate that no date has been formally set.

Reynolds pleaded guilty to money laundering conspiracy in 2008 for his role in the Petters fraud case. In September, he was sentenced to 10 years and 10 months in prison.