Fraud alleged in Baker bankruptcy

Ed Baker can't win for losing.

The 63-year-old Excelsior businessman, a former president of Piper Jaffray Trust, filed for bankruptcy protection in June as a result of the fallout from a business deal he had going with Minnesota money manager Trevor Cook, who has since been sentenced to 25 years in federal prison for running a $190 million Ponzi scheme.

Though Baker hasn't been implicated in the crime, his bankruptcy filing put him in a pickle.

The receiver rounding up Cook's assets asked a federal judge in August to jail Baker for contempt unless he withdrew the bankruptcy petition because it has the potential to erase any claims that Cook's investors might have against about $1.5 million in insurance that Baker carried. Chief U.S. District Judge Michael Davis has been mulling that request, but recent court filings say Baker and the receivership are on the verge of resolving their dispute without him going to jail.

Even so, Baker's bankruptcy petition could end up dead in the water.

John Stoebner, the trustee assigned to the case, filed a 51-page lawsuit Thursday in Minneapolis seeking to block the discharge of Baker's debts, alleging that he fraudulently transferred assets, concealed financial records or kept falsified records and filed false statements under oath.

Neither Baker nor his bankruptcy attorney could be reached for comment.

Cook invested $3.75 million of his investors' money in Baker's businesses, and the receivership rounding up Cook's assets wants the money back. Baker recently testified that he and his companies are broke and have no assets.

Stoebner says in his lawsuit that in 2007, though, Baker and his ex-wife provided information to Private Bank Minnesota indicating that Baker Capital was worth nearly $4 million. He said Baker's explanations about what happened to the money don't add up. And he said Baker has taken steps to mislead creditors and hide his assets.

Stoebner says that before Baker filed for bankruptcy, he signed a promissory note to his sister, Karen J. Baker, granting her collateral in his non-exempt property as a way to "hinder, delay or defraud his creditors." He says Ed Baker then used some of the money to make "fraudulent transfers" for the benefit of an adult daughter, including $9,552 in payments to the University of Arizona. Stoebner says Baker also paid $4,250 in old legal bills, made a $6,000 payment into a retirement account and transferred money from a personal account to keep it from being garnisheed by a former creditor.

After Baker filed for bankruptcy, Stoebner says, he formed a new company called IAMC that manages at least two investment adviser firms previously owned by Mesa Holdings. He ran up charges on his Minnetonka Country Club account without informing the club of his pending bankruptcy or amending his court filings to reflect the additional debt. He failed to disclose a joint personal and business credit account that he opened with American Express just days before filing for bankruptcy. And he failed to fully disclose the assets and cash holdings of his various businesses, Stoebner says.

Baker also transferred some personal property to his children, made $350 monthly tax payments to the IRS and sent $100 a week to his adult daughter without disclosing these facts, Stoebner said. In addition, he has failed to turn over $37,853 in federal and state tax refunds from 2009.