Jurors told of sex, drugs and booze at Cook's firm

The atmosphere at the Van Dusen mansion in Minneapolis when convicted fraudster Trevor Cook ran his financial services firm there was nothing like the successful, button-down image the firm portrayed, according to a former employee.

Stephanie Boltan, 28, electrified the federal fraud trial of three of Cook's former business associates when she testified this week in Minneapolis that drinking and marijuana smoking regularly took place during business hours. Boltan testified that prostitutes were frequently brought in after hours and that the late-night revelry often left Cook and others incapacitated the next day with hangovers.

Cook, 39, of Apple Valley, is serving 25 years in federal prison after pleading guilty to running the fraud. Some 700 investors sunk $194 million into the bogus investment scheme before it collapsed in July 2009.

Boltan said her former boss -- defendant Gerald Durand, 61, of Faribault -- smoked pot several days a week while doing business.

Julia Gilsrud, defendant Patrick Kiley's former secretary, testified that Kiley, Cook and Durand would sometimes drink during the day, though she didn't see Kiley intoxicated. Gilsrud also said Kiley is a friend of her mother's and that she likes him.

Only defendant Jason "Bo" Beckman refrained from partying, Boltan and other witnesses said. But Boltan said one of Beckman's top assistants, Eric Erickson, often smoked pot and brought in prostitutes who partied with staff and spent the night.

Boltan worked for Durand from the spring 2007 until she was fired at the end of the year. "They fired me for being pregnant," she said. She said she settled a complaint with the company in 2009 for $33,000.

"This is my worst nightmare," Toder told Chief U.S. District Judge Michael Davis in a hearing without the jury present. He argued that her testimony would inflame jurors and complained that federal prosecutors would imply drug and alcohol use was rampant.

He said people take different views about the use of marijuana, and noted that the astronomer Carl Sagan regularly smoked marijuana.

"Carl Sagan was looking at the stars," Davis said, ruling that Boltan's testimony would be allowed.

The trial was interrupted briefly Thursday morning when Assistant U.S. Attorney David MacLaughlin accused Durand of "indirect witness tampering" after learning that he had called the widow of one of Boltan's in-laws and said she was spreading lies about him, "smearing him," and asked her to testify on his behalf. Durand knew the message would get back to Boltan, MacLaughlin said.

Boltan once drove Durand to a court hearing involving another woman, MacLaughlin said. She said he produced a picture of the woman and said he wanted physical harm to come to her, MacLaughlin said: "I'll tell you, she's scared to death."

Davis dropped his glasses on the bench, exasperated. He noted that the government was paying for a private investigator for Durand's defense team who should make such calls.

At a midday hearing, the government called Misty Watkins to testify about Durand's phone call.

"I don't want to be somebody who comes in here like a narc or something," she said, clearly agitated.

Davis refused her request to leave.

Her testimony proved inconclusive, though, and MacLaughlin dropped the matter. Davis warned Durand to steer clear of any witnesses or he'd have him hauled off to jail.

Federal prosecutors are trying to establish that the goings-on at the Van Dusen mansion and to a lesser degree at a Burnsville residence where Kiley worked belied the claims that Beckman, Durand and Kiley made to investors about Cook's investment program being a sophisticated operation run by top financial pros.

Jared Jenkins, 34, said he met Cook and Durand while he was working at Rick's Cabaret, a downtown Minneapolis strip club. They asked him to "bring some girls" on a cruise around Lake Minnetonka, then hired him as a broker, he said. At first, he said he worked for Durand. He said he was given a list of leads and told to "pre-qualify" potential investors by finding out if they had any assets.

"They were old gold leads" from a Bloomington company called Investment Rarities Inc., where Durand had once been sales manager, and where Cook, Kiley and Jerry Watkins -- Misty Watkins' late husband -- had once worked as a salesmen, he said.

Jim Cook (no relation to Trevor), the owner of Investment Rarities, said in a recent interview that stolen sales leads have been a problem for his company.

Jenkins said his sales efforts weren't successful, and Durand fired him at one point. But he said Cook rehired him and arranged for him to work with Kiley.

"No," Jenkins said. "That's absolutely false."