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Still wondering: Where's the money?
Two money managers in a legal morass over currency investments were in court to try to explain the program. But they couldn't answer the big question.
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Investors seeking to recover millions of dollars from a controversial foreign-currency investment program promoted by some Twin Cities money managers learned some tantalizing facts Friday during a federal court hearing in Minneapolis.
But they didn't get an answer to their most critical question: What happened to their money?
"I don't know where all the investable dollars went," Minneapolis financial adviser Bo Beckman testified.
Beckman, senior portfolio manager of the Oxford Private Client Group, said that he and his wife still have $385,000 tied up in the investment program, and that family members have $245,524 in it. "Where our money went, we don't know. We're trying to get to the bottom of it," he said.
Beckman and his former business associate, Christopher Pettengill of Plymouth, were in court to account for about $11 million that they withdrew from the investment program during the past few years.
Fifty-seven investors are suing Beckman, Pettengill, Burnsville radio talk show host Pat Kiley and financial advisers Trevor Cook and Gerald Durand, along with a dozen business entities.
Many investors believed that their money was to be held in segregated accounts at the Swiss firm Crown Forex SA. Others thought their investments were in other accounts. But their attorneys say it appears that the money was commingled in accounts at Wells Fargo and Associated Bank before being transferred who-knows-where.
Beckman produced a letter from some Swiss lawyers he has hired that indicates that at least some of the money may have gone into an account at Credit Suisse bank that was allegedly controlled by former Crown Forex CEO Shadi Swais, a Jordanian who had lived in Switzerland.
"Criminal complains [sic] will be filed as soon as possible with the competent public prosecutor in Switzerland," attorney Dominique Christin wrote to Credit Suisse in a Sept. 1 letter that had been translated into English.
Cook operated Oxford Global Advisors, which later morphed into Oxford Global Partners. Beckman testified that he collected $694,125 in "rebates" from Oxford Global for steering about 80 clients into the currency investments since 2007. Just less than half of that was paid in December, according to a court exhibit.
Beckman said that he believed in the currency investment program. He said his wife, Hollie, invested $52,443 in January from her retirement account in the program, and that his in-laws and his wife's aunts invested in the program in mid-2009.
Beckman said he parked $3.3 million in borrowed money in the currency program while he tried to close a business deal this spring. When that didn't happen, he pulled the money out and repaid the loans. The money he got didn't come from investors' accounts, he said.
But plaintiffs' attorney Molly Hamilton showed that wire transfers to Beckman did not come from Crown Forex, but from what she called commingled accounts at U.S. banks that got money from other investors, too. Beckman said that he never reviewed his bank statements to see where the wire transfers originated.
Pettengill said that he had gotten $9 million from Wells Fargo and Associated Bank accounts since May 2006. About $1 million of it was his own money that he invested and withdrew over time, Pettengill said, but he said the rest of the money came from Cook.
Cook used Pettengill's bank accounts as a means of avoiding paying interest on complex currency arbitrage investments, Pettengill testified.
According to Pettengill, Cook wanted to make it appear as though two parties were involved in the transactions instead of just one. He said Cook told him he was doing this only with corporate earnings rather than investor funds.
Chief U.S. District Judge Michael Davis unfroze Beckman's and Pettengill's bank accounts Friday with assurances from their attorneys that they would make no improper transfers or expenditures while he considers whether to hold a hearing on a motion for a preliminary injunction to freeze the accounts.
Dan Browning • 612-673-4493
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