BULLETIN: Five days after Ponzi swindler Trevor Cook pleaded guilty to defrauding victims in an elaborate international scam that reduced investors to ruin, a Minneapolis man hid proceeds from the caper from law enforcement and the court-appointed receiver, federal prosecutors said.
Victims of the Cook scheme — many of whom were people of faith — were defrauded of tens of millions of dollars. Court records strongly suggest that some of the recoverable money was spent on booze, exotic dancers and gambling — after the scheme was exposed by the SEC and CFTC in November 2009 and Cook’s assets were frozen.
Jon Jason Greco, 40, now has been charged with making false statements to federal agents. The case was filed under seal Tuesday, and the seal was lifted yesterday.
Cook, 38, pleaded guilty on April 13, 2010, and is serving a term of 25 years in federal prison. His plea agreement in the $190 million swindle required him to disclose the whereabouts of assets and cooperate with investigators. Investors immediately expressed fears that money that could be used to help them recover from the devastating scam had been hidden and that Cook could not be trusted in any context.
Some of the hidden loot was found months after the plea and cooperation agreement. Part of it had been concealed behind a toilet-paper dispenser and in air ducts in an apartment occupied by Cook’s brother, Graham Cook. Loot also was found in a storage locker at the Mall of America.
Although the recovered loot made up only a tiny percentage of the $190 million scam, victims said every dime was needed and that justice demanded that no third party should be permitted to profit from Cook’s colossal fraud.
Prosecutors now say that Greco came into possession of some of the loot on April 18, 2010 — five days after the Cook guilty plea. Greco helped hide the loot and lied about it when questioned by investigators, according to prosecutors.
Court records suggest investigators established links among Cook, Graham Cook and Greco, who once worked briefly for Trevor Cook as a purported security guard at the Van Dusen mansion in Minneapolis. The big break in the case appears to have occurred in July 2010, when Greco’s roommate told federal agents that Greco was “holding assets” for the Cook brothers and impeding a federal investigation.
Investigators had believed since at least June 2010 that Greco had stashed money from the caper, according to court filings.
The case against Greco was bolstered when an exotic dancer told an IRS criminal investigator who was following leads that Greco, believed to have been unemployed for months, suddenly began to spend generously at a Minneapolis strip club and to plow $100 bills into slot machines at a gambling emporium.
“Greco placed some of the assets in his possession in a locker at the Mall of America,” prosecutors charged. “On July 24, 2010, law enforcement seized the assets, valued at approximately $150,000. Subsequently, Greco allegedly claimed to investigators that the seized assets belonged to him.”
But the assets were from the Ponzi caper, prosecutors charged.
Greco faces up to 10 years in federal prison if convicted on two counts of making false statements.
When interviewed last summer, Greco told agents that he had no knowledge of concealed assets belonging to Cook, when, in fact, he did,” prosecutors said.
“Based on his track record, there is no reason to doubt — and every reason to believe — that [Trevor] Cook is hiding assets, and that he can do much, much more to recover stolen funds. Why else would Cook send millions of dollars to 14 foreign countries, including Dubai, Cyprus, Greece, Belize, Antigua, England, Germany, Denmark, Mexico, Canada, Panama, Costa Rica, Jordan, and Switzerland?”— SEC, Sept. 24, 2010
On July 21 — six months after Trevor Cook had been jailed for contempt of court in a civil case brought by the SEC, and three months after he had pleaded guilty to criminal charges and agreed to cooperate with investigators — the FBI received a tip that led agents to the home of Cook’s brother Graham.
“The investigation involved assets hidden in Graham Cook’s home in ‘air ducts,’ in ‘ceiling rafters,’ and behind a ‘toilet paper dispenser,’” the SEC said yesterday.
The FBI “learned about the assets through a tip, not from Cook,” the SEC stressed, arguing that Cook’s earlier pledge to cooperate to make victims as whole as possible was virtually meaningless.
Agents later found even more loot stashed at a Minnesota shopping mall, the SEC said.
All in all, federal agents “ultimately recovered over $200,000 in cash, over 2,000 gold and silver coins (worth an additional $200,000), numerous Rolex watches, and valuable sports memorabilia” from the home, the SEC advised Chief U.S. District Judge Michael Davis of the District of Minnesota.
Meanwhile, at the mall, agents summoned by a security guard found “118 gold and platinum coins, as well as ‘stocks of different currency denominations from different foreign countries to include Iraqi Dinars, Turkish Lira, [and] Dominican Republic, Canadian, and Asian currencies,’” the SEC said.
The money stashed at the mall was recovered July 24, three days after the FBI recovered the cash from Graham Cook’s home, the SEC said.
Davis had jailed Trevor Cook in January for ignoring orders in the civil case. In August, he was sentenced to 25 years in federal prison by U.S. District Judge James Rosenbaum, who presided over the criminal aspect of the case brought by federal prosecutors.
Now, the SEC says Cook never purged the contempt citation in the civil case and should remain jailed until he does. The blistering filing suggests that, in theory, the clock may not start running on Cook’s 25-year sentence in the criminal case until he purges the civil contempt.
Some defendants jailed for contempt in civil cases involving large sums of money have remained behind bars for years, the SEC noted.
Going against the prosecution’s recommendation, Rosenbaum did not give Cook credit for time served in the civil case when sentencing the Ponzi schemer last month.
“I will tell you that I will not purge him of that contempt,” Rosenbaum said from the bench last month, according to a transcript of the proceeding in sentencing court. “That is an order of my Chief and that is his choice.”
In a memo to Davis, the SEC said Trevor Cook simply cannot be trusted.
“This Court ruled that Cook would remain incarcerated unless and until he performed 11 duties, including repatriating over $27 million from overseas, recovering over $6 million in preferential payments, and surrendering $2 million from domestic accounts, among others,” the SEC argued.
“Since then, Cook has repatriated $0 from overseas, has recovered $0 in preferential payments, and has surrendered $0 from domestic accounts,” the agency continued. “Yet Cook now asks to be released [from the contempt citation], based on the notion that he has done everything that he can do, and based on his promise to be helpful in the future. He gives his word.
“With all due respect, Cook’s word is not worth the paper that it is written on,” the SEC argued to Davis.
Any bid by Cook to argue he has cooperated with investigators and genuinely sought to purge the contempt citation is defeated by the facts of the case, the SEC argued.
“Cook promises that he is not hiding anything — honest — but Cook’s credibility has long since run out. As Judge Rosenbaum stated: ‘You haven’t got a clue what the difference is between the truth and a lie. The two words mean nothing to you,’” the SEC said, citing Rosenbaum’s courtroom comments to the Ponzi schemer.
And Cook is thumbing his nose at both the court and victims, the SEC said.
“Despite holding the keys to the jailhouse gates in his pocket, Cook has chosen to stay in jail, presumably in the hope of reaping a bounty someday,” the SEC said. “That is his choice, but he cannot now be heard to complain that his detention continues. Cook cannot secure his release by offering self-serving statements and empty promises.
“One of Cook’s victims said it best at the sentencing hearing: ‘If he wanted to help, he’s been sitting in jail since January. He could have helped recover any money that there was between now and then. Promises now of being able to help in the future are ridiculous. It’s just not acceptable,’” the SEC argued, quoting a statement from a victim.
Even as Cook professes to be cooperative, a laundry list of unanswered questions remains, the SEC said:
What were the circumstances surrounding each overseas transfer?
Who did Cook interact with concerning each transfer?
In particular, who did Cook communicate with at the foreign banks?
Who helped him create the accounts and/or wire the funds?
How much money was in each account at the time of the entry of the Asset
Freeze Order?
Where are the account statements?
What, if anything, has he done to obtain the account statements and all other financial records?
Did Cook transfer any funds from those foreign accounts to other foreign or domestic accounts? If so, where, when, and how much? And why?
What role did Cook play in creating the accounts in the first place?
What was the purpose of the offshore accounts?
What was the purpose of each transfer?
Who are the signatories? Who else had access to the funds in the accounts?
What are the passwords?
If Cook has no access to the accounts, as he suggests, then how does he know that the accounts lost money in trading?
What, if anything, has he done to return the funds to the United States?
What, if anything, has prevented him from simply contacting the foreign institutions and having them return the money?
Indeed, the SEC said, question-and-answer sessions involving the agency, Cook and R.J. Zayed, the court-appointed receiver, “were remarkable for [Cook’s] inability to remember and answer straightforward questions.”
Although Cook has the keys to the contempt cell, he has chosen not to use them, the SEC argued.
“Cook cannot lighten his burden by claiming that he has already sat in jail for eight months,” the agency said. By definition, there is no time limit for civil contempt. Sanctions for civil contempt include ‘confining a contemnor indefinitely until he complies.’”
Meanwhile, one of Cook’s victims told the PP Blog late last night that Cook showed no respect for victims and set aside money to gamble even after the SEC probe began 16 months ago.
A court filing suggests a bid was made to route the gambling money through Antigua.
“The United States suggested I give you credit for the time which you have served, and I shan’t do that,” Judge Rosenbaum told Cook in sentencing court, according to the transcript. “You’re not doing my time, you’re in jail as a contempt order. That’s called
dead time. That’s Judge Davis’s sentence. It’s not mine.
“So whatever you’ve done up until now counts zero against the sentence I’m imposing. And as far as I’m concerned, but it’s not my opinion that matters, you’re still in contempt,
and whether or not they’re going to run your time till you purge yourself with my brother, that’s up to somebody else,” Rosenbaum said.
Part of the loot the FBI and the IRS found under the alleged control of Graham Cook on July 23.
Trevor Cook’s brother was hiding more than $400,000 in cash and valuables from a $190 million Ponzi scheme, according to an extraordinary statement by the court-appointed receiver in the case.
The loot was found July 23 — after Trevor Cook, whose plea agreement in the case required him to submit to a lie-detector test if requested by the government — “flubbed” the test, according to the Star Tribune of Minneapolis/St. Paul.
Graham Cook, Trevor Cook’s brother, has not been charged in the case. But the revelation that proceeds from the scheme allegedly were under his control and concealed for months from investigators and two federal judges presiding over elements of the case raise troubling, new questions about Trevor Cook’s capacity to tell the truth in any context and whether Cook and others had stashed money elsewhere.
Trevor Cook was jailed in January by Chief U.S. District Judge Michael J. Davis for concealing assets and spending money frozen by court order on Nov. 23, 2009. Davis, who is presiding over the civil elements of the case filed by the SEC and the CFTC, said the government had established that Cook had violated the court order.
Another part of the loot.
At the time, Cook made a technical argument that he had not been properly served in the case at the Van Dusen mansion in Minneapolis on Nov. 24 and thus was not bound to follow the order, a position that gave short shrift to the hundreds of victims in the case, some of whom had been rendered destitute.
Victims complained that Cook was thumbing his nose at both the court and investors. Cook also asserted his 5th Amendment right against self-incrimination, which caused victims to wonder what else he could be hiding.
Davis did not buy any of Cook’s story, and jailed him.
“[C]opies of said Orders were shown to Cook, and the relevant portions of the Orders were explained to him by the Receiver” on Nov. 24, 2009, Davis ruled. Regardless, Cook later used frozen assets to purchase $7,510 in gift cards from Cub Foods and $16,000 in gift cards from Target.
“Given the amount of investor money at issue, and Cook’s repeated violations of the Asset Freeze Orders, the Court finds that the appropriate remedy for the contempt finding in this case is to incarcerate Cook until such time as he purges such contempt.”
Jail was an appropriate remedy for Cook, even in a civil case, a top SEC official said at the time.
Sports collectibles, such as this baseball card of Minnesota Twins' immortal Kirby Puckett, also were part of the stash.
“Mr. Cook has elected to disregard the court’s orders and will now be a guest of the federal correctional system until he mends his ways,†said Merri Jo Gillette, director of the SEC’s Chicago Regional Office.
In March, while Cook was jailed in the civil case, prosecutors charged him criminally with mail fraud and tax evasion, opening up a new round of litigation over which U.S. District Judge James M. Rosenbaum is presiding.
Cook pleaded guilty to the criminal charges in April. His plea required him to take a lie-detector test “if requested†by prosecutors to determine “whether he has truthfully disclosed the existence of all of his assets and the use of the fraud proceeds.â€
It is believed the test was administered in mid-July, prior to Cook’s scheduled sentencing date of July 26. Sentencing has been postponed until Aug. 24, and Rosenbaum may have to determine whether Cook once again has thumbed his nose at the court, prosecutors, victims and the receiver in a bid to prevent the discovery of funds that could be used to make the victims as whole as possible.
The discovery of the funds also raises questions about whether Cook failed to disclose the whereabouts of assets in a bid not to implicate others in the scheme.
The stash also included Rolex and other expensive watches.
Cook’s plea agreement also required him to to “fully and completely disclose to the United States Attorney’s Office the existence and location of any assets in which he has any right, title, or interest and the manner in which the fraud proceeds were used.â€
Prior even to Cook’s polygraph exam, R.J. Zayed, the court-appointed receiver, raised questions about Cook’s cooperation and level of truthfulness. The plea agreement, as written, conceived a 25-year sentence for Cook, although prosecutors said Rosenbaum had the final say.
Victims fretted that Cook, who is in his late thirties, could emerge from prison as a relatively young man in his early sixties and have access to money that had been hidden from the court, investigators and the receiver.
Zayed now says that federal prosecutors, the FBI and the IRS found the hidden loot July 23.
Seized from Graham Cook were “$202,600.00 in cash, 2891 gold and silver coins, 27 watches, some sports memorabilia cards and other personal property belonging to the Receivership,” Zayed said yesterday.
“A rough estimate of the value of the coins is approximately $200,000.00 to $225,000.00,” Zayed said.
Read this PP Blog story from April in which victims said they believed Cook was lying about the whereabouts of assets.
Read this June PP Blog story in which Cook victims said they sought a meeting with prosecutors to delay Cook’s sentencing until more facts emerged. Victims said they feared he stashed money and covered his tracks so well that he could emerge from prison and benefit from his crime — or perhaps permit insiders or unknown criminal colleagues to benefit from the fraud while he is jailed.
Read this July 12 PP Blog story in which a source told the PP Blog that Cook would be subjected to a lie-detector test.
A Minnesota man accused of operating a Ponzi scheme with Christian radio host Pat Kiley is not cooperating with the court-appointed receiver in the case and might have spent $30,000 on “gift cards” after the SEC and CFTC brought twin actions last month, according to the receiver.
The receiver, R. J. Zayed, described efforts to locate and claim assets tied to the alleged $190 million fraud as an international paper chase. On Dec. 21, Zayed said, the Ontario Superior Court of Justice recognized his appointment by a U.S. federal judge and granted him power over receivership assets in Canada.
Zayed said he was able to take control over a Cook property in Rainy River. Some investors said Cook had purchased a two-person submarine on eBay for $40,000 to access the island property, but Zayed did not mention the submarine in his initial receivership report to U.S. District Court Chief Judge Michael J. Davis.
“Based on the Receiver’s Canadian authority, the Receiver obtained a Certificate of Pending Litigation that has been filed against the property in Canada to prevent its transfer without the authority of the Receiver. In addition, the Receiver is in the process of obtaining the three necessary appraisals to sell the property.”
The situation involving land in Panama upon which a casino was planned is less clear because of litigation filed against receivership assets in the Central American country by Oxford FX Growth, one of the relief defendants named in U.S. litigation.
“Prior to the appointment of the Receiver, Relief Defendant Oxford FX Growth, L.P. secured Panamanian counsel and filed a lawsuit in Panama in an effort to prevent the sale of the real estate in Panama that was acquired with funds of the Receiver Estates,” Zayed said. “The Receiver has taken control of the Panamanian lawsuit, including the costs of litigation.”
Zayed said he had been in contact with legal counsel for Oxford FX Growth, and learned that four of five pieces of property had been “successfully attached” and secured by a bond in the amount of $200,000.
He also learned that Oxford FX Growth had filed a local claim in Panama against Cook, Gary Saunders and Holger Bauchinger for $12 million and that lawyers in Panama are attempting to perfect service.
The Cook/Kiley investigation is among a number of Ponzi probes in Minnesota. Like other Ponzi cases, it has included spectacular allegations that investor funds were diverted to acquire expensive automobiles and real-estate. Among the assets frozen in the case is the landmark Van Dusen Mansion at 1900 LaSalle Ave. in Minneapolis.
Zayed said he took control of the mansion and secured its furnishings and equipment on Nov. 24, with the assistance of the U.S. Marshal’s Service and the Minneapolis Police Department.
“Trevor Cook, Patrick Kiley, Graham Cook and Marc Trimble were found on and escorted from the premises without being allowed to remove any property (except for Patrick Kiley who was allowed to take his personal clothing and toiletries with him),” Zayed said. “All exterior locks were changed and security guards were posted to safeguard the property.”
He added that he found 41 computer hard drives and other media at the mansion and that they were “forensically copied.” Meanwhile, 21 computer hard drives and other media were found at a separate property at 12644 Tiffany Court in Burnsville, Minn. The data was copied, the premises and furnishing were secured, locks were changed and guards were posted.
To date, Zayed said he has seized six cars — a 1989 Rolls Royce; a 1985 Pontiac Fiero;Â a 1989 Mercedes 420 SEL; a 1998 BMW Z3; a 2000 Lexus; and a 2004 Audi RS6 — and “has identified additional vehicles that may be subject to the Receivership.”
Cook, he said, “has asserted the Fifth Amendment privilege and refused to cooperate with the Receiver.” Zayed also asserted that Cook might have depleted receivership assets after the SEC and CFTC brought their respective cases.
“In December, the Receiver received information that Mr. Cook had been purchasing gift cards in large denominations,” Zayed said. “As a result of this information, Mr. Cook turned over approximately $30,000 in gift cards and now faces Motions brought by the SEC and CFTC for a Rule to Show Cause as to why he should not be held in contempt of the Court’s asset freeze orders.”
A hearing on the motions is set for Jan. 8.
Zayed said he has been receiving “30 to 60” calls from investors each day. He established a website for information.
BULLETIN: Five days after Ponzi swindler Trevor Cook pleaded guilty to defrauding victims in an elaborate international scam that reduced investors to ruin, a Minneapolis man hid proceeds from the caper from law enforcement and the court-appointed receiver, federal prosecutors said.
