RECEIVER: Trevor Cook’s Story ‘Does Not Make Sense’; Ponzi Losses Expected To Top $139 Million; America’s Sad, Stunning Ponzi Tale Continues

The documents were “served on the various institutions w[h]ere the accounts were opened requesting information about the accounts, their balances and transactions histories,” Zayed notes on his website. “The use of notarized releases, waivers and powers of attorney are important because although the Receiver, pursuant to Chief Judge Davis’ orders, controls the assets of Cook and his various entities in the United States, the Receiver and the underlying orders from Judge Davis are not recognized in another country without an order from that country’s court. Obtaining such an order in another country can be costly, difficult, and in some cases, impossible to obtain.”

In recent months, FBI Director Robert Mueller has warned Congress about the increasing complexities of white-collar fraud and the reliance of criminals on “shell” companies and “shadow” banking systems to cover their tracks.

The Cook case has turned into an international paper chase. Vast sums of money have gone missing, and Zayed now says Cook’s core story isn’t adding up.

In an opinion that is not legally binding, Zayed related his skepticism.

“Cook’s basic claim is that the bulk of the money was sent to Crown Forex [a bankrupt Swiss entity] and is presumably now lost due to its insolvency,” Zayed notes on his website. “This story does not make sense to us, given the SEC’s investigation, as disclosed in the public record, and the vast amounts of money that seemingly have vanished into offshore banking, trading, and gambling institutions.

“Moreover, Cook’s past behavior of recklessly spending investors’ money, sending it all over the world, and trying to hide the remainder in violation of the Court’s Asset Freeze Orders, is indicative of his mindset in this matter,” Zayed said.

On June 24, Zayed added an FAQs section to his website. It is worth a read if you are a Ponzi victim, the loved one of a Ponzi schemer or a person interested in understanding the pain and conflict of Ponzi schemes and the logistical difficulties of unraveling an incredibly complex fraud.

Alleged McLeod Scheme Sets New Standard For Gall By Targeting Government Workers And Thin Blue Line That Preserves Society

Although unrelated to the $190 million Cook/Kiley scheme, the Ponzi and fraud case filed this week in Florida against the estate of the late Kenneth Wayne McLeod is worth considerable focus. At a minimum, it demonstrates that even members of law enforcement can be duped by a clever Ponzi fraudster.

McLeod is believed to have killed himself Tuesday, as the Ponzi was collapsing and there were no more shells to move and no way to continue hiding in plain sight. If the allegations against him are true, it would mean he started a company with a catchy name — Federal Employee Benefits Group Inc. (FEBG) — and pulled the wool over the eyes of federal officials to win a shot at pitching federal employees on retirement planning.

The SEC alleges that McLeod got paid by the government to educate employees on benefits and retirement planning, and then proceeded to suck at least 260 government workers into a $34 million Ponzi scheme that had been operating since 1988, plundering their savings.

Ronald Reagan was President of the United States in 1988. The timeline of the case predates the administration of President George Herbert Walker Bush, who succeeded Reagan. Few Americans outside of Arkansas recognized the name Bill Clinton when the scheme allegedly began, and Barack Obama was only 27 years old. Obama would not meet Michelle Robinson, who went on to become his wife and the First Lady of the United States, for another year. The current President was 16 years away from his 2004 election to the U.S. Senate when the McLeod scheme allegedly began.

In 1988, people flocked to theaters to watch Dustin Hoffman perform in “Rain Man” and Jodie Foster” perform in “The Accused.” Teen singing sensation Miley Cyrus was still four years away from birth at the dawning of the McLeod Ponzi; O.J. Simpson was a bankable brand name six years away from his arrest for the murders of Nicole Brown Simpson and Ronald Goldman and 19 years away from his Las Vegas arrest for robbery. The space shuttle Columbia, meanwhile, was 15 years away from breaking apart upon reentry in 2003 and sending the United States into a period of mourning for the seven lost astronauts.

The danger with the McLeod Ponzi is that everything about it appears to be old, literally sustained by lies that are older than the original celluloid of “Rain Man,” “Mississippi Burning” and “The Accidental Tourist.” The lies are nearly twice as old as Google, which was founded in 1998, when McLeod’s scheme was a decade old.

In an email to investors just four days before his June 22 death, McLeod, knowing full well that the lies had been exposed because he’d confessed to the SEC earlier this month that he’d been operating a “scheme” from the start, announced that investors should expect to be contacted by “regulators” soon, but nonetheless maintained he was “proud” of the work he had done.

Some signs of the oldness of the lie appear on the Web.

FEBG’s website , which was registered in February 2000 when Bill Clinton was in the final year of his Presidency, uses dated, less-than-interactive technology despite claims of the company’s fabulous success. The website is downright cheesy.

Despite this seeming incongruity, the alleged scheme apparently thrived for another decade. A link on the site leads to the U.S. Office of Personnel Management, something that perhaps bolstered investors’ confidence. The use of the word “Federal” in the company’s name perhaps also contributed to the trust accorded McLeod, even though the government itself was warned over the years that fraudsters sometimes misuse words such as “federal” to con victims.

It’s a remarkably sad case — and the sadness is magnified by the allegation that the scheme was targeted at government employees, that the government paid McLeod to speak to employees and that the government did not detect the scheme until after it had ruined the financial lives of some of its best and brightest.

Indeed, the SEC alleges that McLeod duped government professionals into investing in a government bond fund that simply did not exist. If a Ponzi scheme can occur in this context, it can occur in any context, something that’s worth noting if you’re ever inclined to paint victims with the wide brush of stupidity.

One of the potential casualties of the alleged McLeod scheme is hope. At risk is faith in government itself because yet another robber like Madoff appears to have been hiding in plain sight — only this time in the government’s own back yard.

If there is a lesson in all of this, it’s that nothing is sacred to criminals. There is no space that cannot be invaded. Schemers may seek to gain trust by glad-handing and smooth-talking their way into the power corridors — Scott Rothstein and his politicians and sheriff’s deputies, McLeod and his government-sponsored seminars.

If there is no front door, the schemers will try the back door –  Andy Bowdoin and his claims to have received an award from the White House, Bernard Madoff and his “charitable” giving, Trevor Cook and his connections to Pat Kiley, a Christian radio host. The schemers trade on trust and will manufacture it if necessary, using every means at their disposal to sustain the deception.

America’s Ponzi story changed yesterday when the news about McLeod was announced. It signaled an entirely new level of gall, one directed at the thin blue line that exists to sustain civilized society and protect the heartbeat of Democracy itself.

If McLeod was willing to use the government to set the stage for him to rip off government workers, one necessarily must ask if nothing is out of bounds to Ponzi criminals. Our fear is that the Ponzi wave has not yet crested and that a tsunami is hidden in the depths of the financial ocean.

Three Ponzi schemes were broken up in Utah yesterday alone. Among the victims were Mormons allegedly targeted for a good fleecing by other Mormons.

The combined weight of these relentless Ponzi schemes is damaging American prestige, harming markets and putting the the nation’s security at risk. The plague cannot end soon enough — and 25 years in prison for Trevor Cook may not be enough if prosecutors and the judge doubt the value and validity of the information he is providing and have rational fears he has been less than truthful or has told a truth of convenience.

A Trevor Cook emerging from jail in his early sixties with an undisclosed map to hidden treasures may be every bit as dangerous as the Trevor Cook who exists now at age 38.

See story on McLeod.

See follow-up story that identifies the agencies he pitched.

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