The high-flying capital investor declined to answer questions, including why he shifted $948K to his in-laws.
Eyes reddened and jaws clenched among investors who attended a federal court hearing in Minneapolis on Friday, when an attorney with the U.S. Securities and Exchange Commission (SEC) said that it looks as though they will get just 2 cents to 3 cents on the dollar from the savings they entrusted to some Twin Cities money managers over the past few years.
Aggravating their anger was the presence of Trevor Cook, the 37-year-old money manager with Oxford Global Partners who operated from the Van Dusen mansion in Minneapolis, where he promised double-digit returns on supposedly risk-free investments in currencies.
Until now, Cook has remained silent, avoiding several court hearings over the imploded currency investment program that federal regulators have characterized as a massive Ponzi scheme that soaked more than 1,000 mostly unsophisticated investors for at least $190 million.
But investors got no satisfaction from Cook's court appearance in response to a subpoena.
SEC attorney Adolph Dean Jr. questioned Cook about $830,000 in checks written to his in-laws, Clifford and Ellen Berg, between late June and early July, and whether he gave them the money to hide from investors.
"I respectfully assert my Fifth Amendment privilege," Cook said, repeating the phrase 10 times, as he invoked his constitutional right against self-incrimination. A federal grand jury in Minneapolis is investigating Cook and the currency investment program.
SEC records indicate that the Bergs collected a total of $948,848.36 from Cook. The Bergs were in court Friday to fight an effort by regulators to freeze their accounts and recover any assets related to that money. Their attorney, John Brink, said that the Apple Valley couple had invested $472,056 of their own money, and got it out before the currency program imploded in July. He said they should be allowed access to at least that much of the money.
Clifford Berg just learned that he is being laid off at the end of this month from his job at a floor covering company, Brink said, and Ellen Berg is semi-retired, providing day care for her grandchildren.
But SEC attorney John Birkenheier objected, saying that would place them in a more favorable position than other investors, many of whom face severe financial hardships.
RJ Zayed, a receiver appointed to recover the assets from the currency investment program, agreed.
"It would be a gross miscarriage of justice for your honor to allow the Bergs access to any of the $900,000, when other investors will be getting 2 to 3 cents on the dollar," Zayed told Chief U.S. District Judge Michael Davis.
During a break in the three-hour hearing, a couple of investors let the Bergs know just what they thought of Cook.
'Hiding behind attorney'
"Your son-in-law is scum," snapped Barbara Pefley, 58, of New Richmond, Wis., a former sales representative for Oxford Global who also invested in the currency program. "The toughest part is that he's not saying anything," Pefley said. "If he was straightforward and honest, he'd be up there telling us where the money is, but he's not. He's hiding behind his attorney."
A 60-year-old woman who has just more than $1 million invested in the currency program fought back tears. "I'm losing everything!" she told the Bergs. After the hearing, the woman, who did not want to be identified, explained that she and her husband had to sell their Bloomington home, her husband has sold his car, and that they expect to give their lake home back to the bank.
Thomas Hoel, 51, of Woodbury, testified that he invested $95,000 in the program after it was recommended by a longtime friend, Michael Prueher, a South St. Paul dentist who said it was producing good returns. SEC records show that Prueher invested more than $600,000 in the program. Hoel, who has a master's degree in business administration from the University of St. Thomas, said after losing money in other investments, "My only goal was to keep my money. It wasn't to make money."
Some blips began to appear
James Cochran, 62, of Victorville, Calif., testified that he and his wife, Denise, put $200,000 in the currency program in December after meeting with Cook at the Van Dusen mansion during a vacation. Cochran, a drywall contractor, said that Cook had told him he was familiar with Victorville, because he made a number of trips there to visit Southern California Edison, a major utility that he claimed was among his largest investors. Cochran said Cook told him that he held a portion of Edison's retirement accounts, which made Cochran feel more comfortable about the investment.
Cochran said he monitored his accounts closely online. "I looked at it daily, and I could see it grow," he said.
But he soon stumbled across some Internet blogs indicating that some people weren't getting their money out of the program as promised. Cochran said Cook denied any problems, and suggested that he call Shadi Swais, the CEO of Crown Forex SA, a Swiss brokerage that held his account.
"Swais gave me the same assurances," Cochran said. "Cook said they were working on getting their [Swiss] banking licenses, and we should go ahead and invest" more money. Cochran wired $800,000 more into the program in February. He said he and his wife, who were semi-retired at the time, have had to go back to work.
Cook and his business associate, radio talk show host Patrick Kiley, agreed at the last minute to an asset freeze in the case, joining some business entities named as codefendants. But some shell entities did not agree to the freeze, said Susan Gradman, an attorney with the Commodities Futures Trading Commission. "We believe the evidence has shown ongoing fraud by the shell entities. We don't know if the shell entities are going to consent [to an asset freeze] or who represents them," she added.
Davis ordered a preliminary injunction to freeze the assets of the defendants who hadn't yet worked out an agreement, including the Bergs.
Dan Browning • 612-673-4493