Federal regulators announced Tuesday that they have charged a Minneapolis money manager and a Burnsville radio personality with running a Ponzi scheme that defrauded at least 1,000 people out of more than $190 million in a bogus currency investment scheme.
The U.S. Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) issued statements about separate lawsuits the agencies filed Monday in Minneapolis that were made public Tuesday.
The agencies said they had obtained emergency orders freezing the assets held by "self-proclaimed" money manager Trevor Cook, 37, of Apple Valley, and conservative radio talk show host Patrick Kiley, 71, of Burnsville, as well as four of their business entities and 13 "relief defendants" related to the alleged scheme, including two of Cook's in-laws.
Chief U.S. District Judge Michael Davis in Minneapolis issued the order freezing the assets of the defendants and appointing a receiver to oversee them. He scheduled a hearing on a motion for a preliminary injunction in the matter for Dec. 4. According to the complaints, Cook and Kiley sold unregistered investments through shell companies and misled investors into thinking their money would be held in separate accounts and used to trade in foreign currencies. They promised returns of 10 to 12 percent and said there was no risk to their capital, which could be withdrawn anytime.
'Spending spree'
Kiley pitched the investment on his radio show, "Follow the Money," which was broadcast in more than 200 markets and on Christian shortwave radio. Cook, operating out of the Van Dusen mansion in Minneapolis, promoted the currency program through investment seminars and financial advisors around the country and in Canada.
"Cook and Kiley told investors that their money would be invested safely and profitably," Merri Jo Gillette, director of the SEC's Chicago regional office, said in a prepared statement. "Instead, they went on a $40 million-plus spending spree with investors' money and lost another $40 million in risky foreign currency trading."
Peter Wold, a criminal defense attorney representing Kiley, said the actions came as no surprise. Regulators have been investigating for several months, and the investment program has been the subject of numerous stories in the Star Tribune.