Tom Petters’ defense team continued its cross-examination of former Petters Co. Inc. (PCI) executive Deanna Coleman Wednesday, seeking to discredit the key government witness.

They also used recorded calls in an attempt to bolster their contention that Petters was unaware of the fraud going on around him.

Under cross-examination, Coleman acknowledged that she gave part of her PCI bonus to her boyfriend because she wanted to avoid declaring the income to her husband, who she was divorcing. Coleman also testified that she sent at least $680,000 in bonus money from PCI to her brother.

In addition, Coleman admitted that, even after she pleaded guilty to charges associated with the Petters case, she failed to tell law-enforcement officials that she had paid for court-side Timberwolves tickets with fraudulently obtained funds. She continued to attend games following her guilty plea before later turning over the $1,600-per-game tickets to the federal government. She also confessed that she failed to turn over $88,000 in cashier’s checks to law enforcement after pleading guilty.

The defense also questioned Coleman about her gambling habits. Coleman admitted she once spent $241,000 in one day of gambling in Vegas.

The defense later turned toward tape recorded conversations between Coleman and Bob White, another former Petters Co. Inc. employee. In one call, White said, “I don’t know for sure what Tom knows. … He lives in this fantasy world once in a while.” Coleman responded, “Once in a while? All the time.”

Coleman interjected in court that she was joking during those taped conversations when she said Petters didn’t know about the fraud.

In a separate conversation with Larry Reynolds, who also has pleaded guilty in the case, Coleman said: “Tom is in complete denial. Tom talks to me like these are real purchase orders.”

The Petters defense team is trying to prove that Reynolds and Coleman ran a Ponzi scheme through PCI, a Petters-owned entity that promised to buy and resell electronic goods with investors’ money. PCI then funneled funds to Petters Group’s companies, individuals and to other investors, prosecutors allege.

In taped calls played at trial, Reynolds also said that Petters was working with someone named “Ramy” who he said had ties to arms dealer Adnan Khashoggi.

In other testimony on Thursday, David Margolis, Petters’ personal assistant from 2004 to 2008, talked about the death of Petters’ son in 2004, saying tht it didn’t distract him from running the company.

“He took a week off and then got more focused on what was going on with the business,” Margolis said.

Tim Gonsior, an insurance broker with Arthur J. Gallagher & Co. who was previously with the Stanton Group, testified how he arranged insurance on PCI merchandise for one of the company’s investors. He related how St. Paul-based The Travelers Cos. Inc. canceled the policy in 2004 because it couldn’t gain access to inspect PCI warehouses that were supposed to be holding goods.

In 2006, Gonsior e-mailed Coleman about inspections involving a similar policy; an insurer had found that two warehouses were vacant and had apparently moved.

Dean Vlahos, who founded the Champps Americana restaurant chain and Redstone American Grill, took the stand late in the day. He described how he invested $16 million in Petters’ operations since 2001.

Prosecutors had previously called two bank executives to testify: Kevin McShane, a senior vice president at Rochester, Minn.-based Home Federal Savings Bank’s Edina office, and Ken Brooks, co-founder and president of Minnetonka-based Signature Bank.

Each bank assembled loans for Vlahos in January 2008 so he could invest more in Petters’ business — $6 million in the case of Home Federal and $4 million in the case of Signature.

Both loans were due in August 2008 and both banks are still trying to collect the money.

Vlahos’ testimony is expected to resume Thursday morning.