business

Trevor Cook, the 37-year-old Minneapolis money manager at the center of an alleged $190 million investment fraud, was taken into custody Monday by U.S. marshals after a federal judge found him in contempt for failing to help a receiver locate and liquidate the assets.

Chief U.S. District Judge Michael Davis said evidence presented by federal regulators provides "clear and convincing" proof that Cook has violated a court order requiring him and his associates to turn over investor assets.

Cook utilized a "vast array" of business entities that make it hard to find the money he took in from about 1,200 investors, said John Birkenheier, an attorney with the U.S. Securities and Exchange Commission. He told Davis that Cook had direct or indirect control of at least eight accounts in the United States and 19 accounts in a dozen foreign countries, some of which are "notorious bank secrecy havens."

"The losses are at least $130 million in this case," Birkenheier said, arguing for the contempt citation.

He said jailing Cook would not be punitive. To gain his release, Cook merely needs to cooperate with the receiver, Birkeneheier said.

But Cook's attorney, William Mauzy, said jailing Cook would produce no information. Noting that Cook has asserted his constitutional right not to incriminate himself, Mauzy said he expects a federal grand jury to indict his client "in a month or two."

"To call this anything other than a punitive incarceration is to create a fiction," Mauzy said.

Davis found otherwise. He said he drew "adverse inferences" from Cook's decision to invoke the Fifth Amendment when he refused to answer questions about the existence of offshore accounts and the location of cash and certain valuable possessions such as Rolex watches, Fabergé eggs, expensive cars -- even tickets to an upcoming Bon Jovi concert.

"Mr. Cook, you'll be taken into custody," Davis said. "You can purge yourself of my contempt by complying with my order," Davis said. Among the things Cook must surrender to get out of jail: $27 million in offshore accounts, a BMW, two Lexus automobiles, a submarine, a houseboat, his collections of valuables, and $670,000 in cash that was withdrawn since the end of June.

Davis' decision upset Alex English, a longtime friend of Cook's who attended the hearing. "What is this, Nazi Germany?" English said. "It's absolutely absurd. How's he going to return a houseboat and a submarine that don't exist?" English said it was just hype when Cook talked or wrote about buying such items.

"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," Merri Jo Gillette, director of the SEC's regional office in Chicago, said in a statement.

Davis also ordered Cook to help recover a computer and a box of paper records -- including e-mails and wire transfers -- that his brother Graham allegedly took from a secretary in the office of former business associate Pat Kiley. Kiley had promoted the suspect currency investment on his widely distributed radio program, "Follow the Money."

Barbara Pefley, a former sales associate with Cook and Kiley who also invested in the currency program, said she was happy that Davis required Cook to produce the computer rather than just letting him "buy his way out of this" by returning the money.

Ralph and Mary Abrahamson said they put $750,000 into the currency investment program promoted by Cook after speaking about it with investment adviser Bo Beckman, who had an office in the same building as Cook. They said after the hearing that they hope jail will make Cook more cooperative, but they seemed doubtful.

"We've lost everything," Ralph Abrahamson said. "I'll turn 60 in March. I can't earn that money back," he said. "We have $6,000 in the bank."