The 3 defendants are accused of helping Trevor Cook promote his foreign investment scam.
Federal prosecutors are expected to rest their case Thursday against three men charged with promoting Trevor Cook's Ponzi scheme, the second-largest investment fraud case in Minnesota history.
The government's last witness is Matthew Schommer, a special agent with the IRS Criminal Investigative Division who has been summarizing the evidence for several days. Prosecutors culled 753 exhibits from 10.5 terabytes of data and have introduced 533 exhibits as evidence.
Schommer spent several days testifying about the "investigative significance" of e-mails exchanged by the defendants and their associates, comments made during radio programs produced by defendants Patrick Kiley and Gerald Durand, and promotional materials handed out to investors.
"They were all melted into one big pot," Schommer said. "All these individuals were out for one purpose, and that was to get people invested in the currency program."
Cook, who was sentenced in 2010 to 25 years in prison, admitted that he orchestrated an international fraud scheme between 2005 and 2009 from offices in Burnsville, Minneapolis and Eagan. Some 700 investors -- mostly retirees -- were bilked out of $194 million in what turned out to be a bogus foreign currency investment program run through a confusing network of business entities with "Universal Brokerage" or "Oxford Group" in their names.
86 government witnesses
So far, jurors in the Minneapolis courtroom of Chief U.S. District Judge Michael Davis have heard 20 days of testimony from 86 government witnesses. Among them were 33 "victim-investors," eight lawyers, seven accountants, several former insiders and business associates, and an investment banker working undercover for the FBI.
Beckman's own mother testified, as did two of Kiley's ex-wives and a former girlfriend who scowled at him as she exited the courtroom.
Much of Schommer's testimony focused on the period after February 2008. That's when it became clear that Crown Forex SA, a Swiss entity that held a large portion of the investors' funds, was under investigation by Swiss regulators and careening toward its ultimate liquidation in May 2009.
Cook and his associates negotiated to buy a 51 percent share of Crown Forex for $4 million with plans to convert it into a bank. But after investigating the firm, Durand raised alarms in May 2008, saying he didn't trust two Jordanian men who owned and ran the business.
Durand warned that Shadi Swais, a former Chicago grocery clerk who became the CEO of Crown Forex, was concealing information about the condition of the business. "I think we need to string him along and get as much money back as possible," Durand wrote to Cook in May 2008.
Cook fired Durand a month later, and Durand moved out of the Oxford Group's Minneapolis office at the historic Van Dusen mansion. Schommer said that despite that fact, Durand never told investors about the troubles at Crown Forex and continued to work for the Oxford Group. In an e-mail to Eric Erickson, one of Beckman's brokers, Durand wrote, "I just moved out of the bighouse nothing else has changed."
Durand added that he'd still produce a radio program on investing and help with an Oxford Group newsletter and sales seminars. "And oh yes I will continue to be an owner of the Oxford!!!"
Schommer said Durand was paid $75,000 as hush money in December 2008, and $15,000 a month after that until the scheme imploded in July 2009. Durand characterized the payments as severance.
Even as Crown Forex crumbled, Schommer said, Beckman pursued a $5 million, 10 percent stake in the Minnesota Wild, misrepresenting investor assets as his own. He and the Oxford Group hired the law firm of Briggs and Morgan to help prepare his application to the National Hockey League. But the lawyers said the currency program appeared to violate securities laws and advised him to immediately return the investors' money.
Beckman, Durand and Kiley never informed their clients that Crown Forex was in trouble, and Beckman and Kiley continued to promote investments in the currency program until the end, Schommer said.
And after its collapse, he said, Beckman got out from under a court-ordered asset freeze by testifying falsely before Judge Davis about the origin of millions of dollars that he withdrew from the currency program. The government contends that money belonged to investors, not Beckman.
Cook to be witness?
Defense attorneys tried to poke holes in Schommer's testimony, positing different interpretations of the evidence and raising questions about whether he had confused who did what. Durand's attorney, Brian Toder, got Schommer to admit that investigators don't actually know what went on at Crown Forex in Switzerland and whether it ever generated any profits. Schommer called it a "far stretch."
Next, it will be the defendants' turn to present evidence.
Beckman will call just two witnesses, said his lawyer, Douglas Altman. Beckman will be one of them, he said. He has 288 exhibits, 84 of which are already in evidence.
Durand has 139 exhibits, 17 of which are in evidence. Kiley hasn't introduced any exhibits, but his case may take the longest, as he's expected to call up to 10 witnesses.
It's uncertain whether Durand or Kiley will testify. Cook, 39, of Apple Valley, likely will.
Dan Browning • 612-673-4493