Investment fraud suit grows more complex

A federal lawsuit filed in July described a group of Twin Cities business entities that had been pitching a controversial foreign currency investment as "confusingly intertwined." That appears to be an understatement.

A 146-page amendment to the complaint, unsealed Thursday at the request of the Star Tribune, makes the business entities look deeply enmeshed, with investment advisers from the firms allegedly working side-by-side at times to entice investors into a currency arbitrage program that promised double-digit returns without risk to capital.

Even the amended complaint is more complex than the original: It now has 57 plaintiffs -- up from nine -- and names as defendants three new individuals accused of participating in the alleged scheme.

The plaintiffs say they haven't been able to get at their money since early July and no one will tell them where it is.

Their lawsuit names five investment advisers as defendants -- Trevor Cook, Pat Kiley, Jason Bo-Alan Beckman, Christopher Pettengill and Gerald Durand -- along with a dozen business entities that include the word Oxford or the letters UB in their names. The defendants are accused of fraud, conversion, civil theft, negligent misrepresentation, civil conspiracy, deceptive trade practices, breach of contract, and breach of fiduciary duty.

Jack Harper, the Bloomington attorney representing the investors, says he expects to file another amended complaint before the month is out that will add more plaintiffs and defendants.

The lawsuit, a 6-inch-thick stack of exhibits and a motion for a temporary restraining order seeking to tie up some of the defendants' bank accounts were filed under seal this week. But after the Star Tribune objected, Chief U.S. District Judge Michael Davis ordered the attorneys to refile the documents electronically so the public can download them from the court's Web page. Davis said Thursday that he had stayed up late into the night reading the documents and found nothing in them that the public couldn't see.

Attorneys for Kiley and Pettengill did not attend the hearing. Beckman's attorney, Lawrence Shapiro, argued that his accounts should not be frozen because he did not handle the investors' money directly. Shapiro said the amended lawsuit alleges that Beckman helped place just three of the plaintiffs in the currency investment strategy.

'Our partner'

But the lawsuit makes it appear that Beckman was working hand-in-glove with the other business entities, including Oxford Global Advisors and Oxford Global Partners, a company formed by Cook and Beckman's wife, Hollie. The suit says that Brian Siewart, an adviser with Oxford Global Advisors, had described Beckman's firm as "our partner" in an e-mail to an investor, and he referred to Beckman as "our portfolio manager."

Beckman has denied ownership of Oxford Global but said he did get "rebates" for referring clients to Cook's currency investment strategy.

In an affidavit filed Thursday, Beckman said that he and his wife have invested $6.8 million in the strategy "managed by Cook" since early 2007.

Harper argued that Beckman's accounts should be frozen. He said Beckman had told investors at a meeting in his attorneys' offices that he had $300,000 tied up in the strategy, which allegedly involves a bankrupt Swiss company called Crown Forex SA.

But Harper cited bank records that indicate the Beckmans received $6.6 million from an Associated Bank account under the name of Crown Forex LLC, which he said appears to be a fictitious entity. The lawsuit indicates that many of the investors' funds were wired into that account before the money disappeared. Swiss bankruptcy trustees say the investors had no accounts with Crown Forex SA.

In his affidavit, Beckman said that the plaintiffs seem to think the $6.6 million he and his wife got didn't belong to them. "That is absolutely untrue. The money we withdrew from the currency arbitrate strategy managed by Mr. Cook was our own money," he said.

Davis said he would rule Monday on the motion to freeze the three new defendants' bank accounts.