Investors sue to get $5M back from Twin Cities entities

An attorney for a group of Ohio investors told a federal judge in Minneapolis Friday that "potentially hundreds or more individuals around this country and abroad" who gave their life savings to a collection of Twin Cities investment entities have been unable to get their money back or even find out where it's being held.

Nine Ohio investors filed suit in Minneapolis July 7 seeking to recover nearly $5 million they invested in a currency arbitrage program. So far, attorney John Harper III said he's only been able to find about $1.2 million in several bank accounts that were subject to two emergency asset freezes imposed in the case.

"We are growing more and more concerned every day, not only for the plaintiffs, but for a much broader group of people," Harper said. About 20 worried investors and a few interested lawyers looked on from the gallery.

The investors said they put their savings into the currency arbitrage programs promoted by national radio talk show host Pat Kiley, who operates out of Burnsville, or by Trevor G. Cook, a Minneapolis-based investment adviser. Some learned of the investment program through Bo Beckman, an investment adviser who, like Cook, works out of the Van Dusen mansion in Minneapolis.

The investors say they were promised annual returns of 10 to 12 percent, Harper said, adding that the money was supposed to be held in fully liquid, segregated accounts.

Several days ago, however, two of the business entities involved in the investment program -- Universal Brokerage FX of Burnsville and Oxford Global Partners of Minneapolis -- posted notices on their websites saying they'd received subpoenas from federal authorities and would neither be accepting funds nor making distributions. The notices indicated the problem was related to Crown Forex AG, a firm Swiss regulators forced into bankruptcy May 19. Claims were supposed to be filed in the bankruptcy by June 30, Harper said, but the investors weren't notified of that fact.

Several people in the courtroom recently contacted the trustee overseeing the Crown Forex bankruptcy, Harper said. He said they were told their account numbers didn't exist, nor was there an account listed under their names. In short, he said, many investors have been unable to find where their money is held.

Harper displayed a letter from Associated Bank showing that one of the accounts subject to the asset freeze was held under the name Crown Forex LLC; Pat Kiley and his secretary, Julia Smith, are signatories on the account, which contained $778,307.85.

Christian Sande, another attorney who attended the hearing Friday, said the Minnesota Secretary of State has no record of any such business entity. The Minneapolis address listed for the account, 5413 Nicollet Av., does not appear in Hennepin County property records as a valid address.

Kiley also controlled Associated Bank accounts under the names Universal Brokerage FX Management and Basel Group. Cook controlled Associated Bank accounts under the names Oxford Global FX and Market Shot. None of those accounts contained much money.

The defendants in the Ohio lawsuit include Cook, a former business associate named Gerald Durand, and a dozen "confusingly intertwined" business entities with Universal Brokerage, UBS Diversified, or Oxford as part of their names. Kiley is named in the lawsuit as a related party.

Durand said in a recent interview that he would be cleared of wrongdoing. Neither he nor an attorney representing him appeared at the hearing Friday. Harper said he's been unable to serve a defendant called Oxford Global Advisors, which operated out of the Van Dusen mansion in Minneapolis.

Beckman, who owns and operates Oxford Private Client Group, also agreed to the injunction. But his attorney, Andy Luger of Green Espel in Minneapolis, said Beckman and his firm shouldn't be considered defendants.

"Mr. Beckman and his wife are investors in the very same currency trading strategy that is at issue in this case," Luger said. He said they invested "hundreds of thousands of dollars" in the program and encouraged family and friends to do so as well. "He's trying to get his funds, too," Luger said.

Chief U.S. District Judge Michael Davis said he would sign the proposed order for a preliminary injunction, which keeps the bank accounts frozen until further notice.