Minnesota authorities have been actively pursuing the players in the Trevor Cook Ponzi scheme. In June, Christopher Pettengill pled guilty to securities fraud, conspiracy to commit wire fraud and money laundering. In July, federal authorities charged three more men, including a conservative radio host, bringing the total number of individuals implicated in the fraud to seven.
A Ponzi scheme is a particular form of investment fraud where the organizers of the plan promise large, risk-free returns to investors but never engage in any legitimate investment activity. In this type of white collar crime, earlier investors are paid so-called returns out of the funds contributed by new investors. Ponzi schemes inevitably collapse when operators can no longer attract new investors and the funds owed to older investors dry up.
Trevor Cook’s Ponzi Scheme
Trevor Cook of Apple Valley, pled guilty in April 2010 to charges of mail fraud and tax evasion for his role in organizing and conspiring with others in a plan that defrauded nearly 1,000 investors-mainly retirees-of over $150 million by promising 10.5 to 12 percent risk-free returns on investments in foreign currency from 2005-2008. Cook and his partners created several business entities as fronts for carrying out the scheme, including Oxford Global Advisors, Crown Forex SA and PFG.
Cook diverted investor funds, lied to Swiss authorities when one of his overseas entities was going bankrupt and used investor funds for gambling and personal purchases, including the Van Dusen mansion in Minneapolis, real estate in Panama as well as an interest in two investment firms.
Penalties For Conviction
A federal judge sentenced Cook to 25 years in prison in August 2010. Pettengill faces a maximum of ten years in prison for the money laundering charge and a maximum of five years in prison each for the conspiracy and securities fraud charges. Jason Bo-Alan Beckman, Gerald Joseph Durland and Patrick Kiley, the three other men charged in connection with Cook’s activities, face a maximum of 20 years in prison for each of the wire and mail fraud charges. Jon Jason Greco, another associate of Cook’s who pled guilty in July faces five years in prison when he is sentenced.
Minnesota and White Collar Crime
The Trevor Cook fraud is just the latest example of white collar crime making headlines in Minnesota. Authorities may bring charges against people they suspect of such activities under one of many state statutes dealing with fraud. However, federal authorities usually become involved when large amounts of money are involved.
State and federal authorities dedicate significant resources to prosecuting white collar crime cases. In 2010, the U.S. Attorney’s office in Minnesota vigorously pursued several mortgage fraud and Ponzi scheme cases, dedicating about one third of the office’s resources to such cases, announcing its intention to continue to do so.