A key figure in the case of a Minnesota businessman accused of orchestrating a massive Ponzi scheme acknowledged Monday that he was a disbarred lawyer with a criminal record who had entered the federal witness protection program decades earlier.

Larry Reynolds testified about his past and about the Ponzi scheme, saying he and Tom Petters started doing fraudulent deals together in 1998. Reynolds also testified that he lied to auditors and helped stall nervous investors as late as last year to keep the scam going.

Reynolds already pleaded guilty to money laundering conspiracy for operating one of the companies involved in what authorities say was a $3.65 billion fraud by Petters, operated out of Minnetonka-based Petters Co. Inc.

Reynolds could face up to 20 years in prison and doesn't have a formal cooperation agreement with prosecutors as several other defendants do. But the 68-year-old acknowledged he hopes for a reduced sentence so he doesn't die in prison.

"I only agreed with them I'd come here and tell the truth," he said. "Nothing more."

Petters' attorneys have said he is innocent and did not know that Reynolds and others were running a Ponzi scheme, in which investors are paid with other investors' money instead of real profits. Petters, 52, of Wayzata, is charged with 20 counts and could face life in prison.

Reynolds said that in his first bogus deal with Petters, he gave Petters a false invoice for $1.7 million worth of shoes that Petters wanted to show investors who were going to loan him money.

Petters attorney Paul Engh used Reynolds' criminal record to attack his credibility but was hampered by prosecution objections.

Reynolds acknowledged he was Larry Reservitz, of the Boston suburb of Brockton, Mass., when he joined an insurance fraud scheme soon after graduating from law school in the 1960s. He fled abroad when he learned he was in trouble, spending time in Europe before going to Israel, where he said he traded U.S. dollars on the black market. He was arrested in Scotland, extradited, pleaded guilty to larceny in 1973, served 13 months in prison, and was disbarred.

After he got out, Reynolds went into the clothing business. He pleaded guilty in 1983 for his role in a large marijuana deal and to bank fraud in 1984. He said he was looking at a long sentence when he agreed to wear a wire and cooperate against other defendants accused of trying to cash a large forged check drawn on an account that belonged to Church of Scientology founder L. Ron Hubbard. Continued...