Investors looking to recover their money from a suspect currency investment program have a new, $300 million trail to follow into Canada.
Regulators are quietly pursuing a complaint against a Toronto commodities firm and one of its executives, alleging they helped Minneapolis money manager Trevor Cook facilitate the currency trading program.
The $300 million that passed through the Toronto firm -- KINGZ Capital Management Corp. -- is the largest chunk of money found so far in the still-unfolding case, which drew investors from across the United States and several other countries. They have been unable to withdraw their money from what many were told was a Swiss-based currency trader since at least early July.
The National Futures Association (NFA) complaint says that Cook took over a KINGZ Capital bank account and pumped several hundred million dollars through it. In the process, it says, Cook changed the bank account's password and transferred $75 million to a "purported investor" known to the commodities trader only as "Fased."
The NFA has charged KINGZ Capital Management Corp. and David M.S. Krywenky, vice president and co-founder of the firm, with failing to uphold ethical standards; cheating, fraud or deception; and failing to supervise its employees or agents.
Krywenky's attorney, James Koch of Chicago, says his client was taken advantage of by Cook and is cooperating fully with federal authorities.
Cook's currency investment program is under investigation by a federal grand jury in Minneapolis, as well as by the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission. Cook's attorney, John Thompson, declined to comment Wednesday, saying he hadn't read the NFA complaint.
A federal lawsuit over the currency investment program grew to 107 plaintiffs and 18 defendants Wednesday with the filing of an amended complaint in Minneapolis.
Estimates for the total amount invested in the program range from several hundred million dollars to more than $4.4 billion.
Making the connection
Attorney Koch said that David Krywenky and his father, Michael Krywenky, had been trying to put together "hypothetical trading portfolios" to demonstrate how well they could perform. He said his clients created a pooled investment fund in May 2008 and shopped it through foreign exchange trading channels.
Koch said a man named Dan Alvarez introduced the Krywenkys to Cook at a meeting in West Palm Beach, Fla., and Cook offered to provide them with start-up funding. Alvarez has since disappeared, Koch said. He and other sources said the Krywenkys also met with Cook at his office in the Van Dusen mansion in Minneapolis in the summer of 2008, apparently to finalize a deal.
In a statement issued Oct. 15, 2008, KINGZ Capital Investments, of Delaware, said it had obtained $334,263,000 for its "Absolute Return Program."
The NFA said it began investigating KINGZ in July after regulators learned that the firm had "links to an intertwined group" of businesses and individuals in the Twin Cities who had promoted the currency investment. The NFA cited a July 19 story in the Star Tribune about Cook, a business associate named Pat Kiley who had promoted the investment on his conservative talk radio program, and several businesses with Oxford or Universal Brokerage in their names.
The NFA said it learned that Oxford Global Partners, a firm Cook managed, was the only investor in KINGZ's Absolute Return Program. The regulator said David Krywenky and KINGZ promoted the investment by copying an Oxford Global brochure without taking steps to verify its claims. Asked why KINGZ president Michael Krywenky wasn't also charged, Koch said he doesn't know.
The investors' money was supposed to be deposited into a Swiss brokerage firm called Crown Forex SA. Swiss regulators forced that company to liquidate in May, the NFA noted. The investors' money has since disappeared and Cook has remained silent on the subject.
In a formal response to the NFA complaint, Koch said that KINGZ and the Krywenkys did substantial due diligence on Cook and Crown Forex. They obtained letters from Deutsche Bank, Credit Suisse and UBS SA vouching for Crown Forex, he said. And they spoke to several other fund managers about Oxford Global and obtained a letter from a California attorney that said Oxford Global had more than $4.4 billion in assets under management.
Koch said his clients feel "very victimized" by Cook.
"I think they bought this guy's story hook, line and sinker, found out a couple of days later he had transferred all the money out, and that their account was used for illicit purposes," Koch said.
"My clients -- I don't think it's any big secret -- have cooperated with every man, woman and child from every regulatory and other organization" investigating the matter, he said. "Not only did they not make a penny on it, they have to hire guys like me to explain it to the feds."
Koch, a partner in Gardiner Koch Weisberg & Wrona, has extensive securities, commodities and white-collar crime experience as a former prosecutor, former NFA attorney and as a defense attorney. "It will be interesting at the end of the day to see where this dough went because, obviously, it ain't Trevor [Cook] who's running the show," he said.
"This is pretty sophisticated," Koch said. "It takes several persons to pull this kind of thing together. There's something else going on, and there's somebody overseas."
Dan Browning • 612-673-4493
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