By Todd Melby

ST. PAUL, Minnesota (Reuters) - Accused Ponzi schemer Tom Petters tried to put off an audit of his businesses shortly before they collapsed, the government's star witness testified on Monday.

Deanna Coleman, the whistle-blower for the estimated $3.65 billion alleged fraud, also told a St. Paul, Minnesota, federal jury she secretly recorded conversations with Petters on September 8, 2008, after earlier in the day telling prosecutors he was running a fraud.

Petters was indicted by a federal grand jury in late 2008 for fraud, money laundering and other charges in connection with the alleged Ponzi scheme.

The indictment said the Minnesota businessman falsely promised investors big returns from financing his company's purchase and sale of electronics goods to retailers such as Costco Wholesale Corp and Wal-Mart Stores Inc's Sam's Club.

Coleman, 43, told an overflowing courtroom that Petters' company used fake merchandise orders "basically since day one," and regularly searched for new investors to pay off earlier investors.

On a tape played by prosecutors, Petters at the September 8 meeting played down the chance he could face prison time.

"If worse came to worst, you would not go to jail," Petters told Coleman. "I'm sure I wouldn't."

Petters' now-bankrupt empire once included companies such as Polaroid and Sun Country Airlines. He was jailed in October 2008 and his trial, which began last week, may last through at least much of November.

Coleman, a former vice president for Petters, pleaded guilty to conspiracy in September 2008 and agreed to cooperate with prosecutors. Six others have also entered guilty pleas.

Defense counsel last week began efforts to shift blame for the alleged fraud toward Coleman and away from Petters.

At Monday's proceedings, Coleman said Petters was afraid an audit would unearth how transactions the company claimed to perform were a sham. Continued...