Twin Cities investment advisers focus of probe

Embattled Minneapolis investment adviser Trevor Cook and his associate, Burnsville radio talk show host Pat Kiley, are the focus of a federal grand jury investigation into a foreign currency investment strategy that the two men pitched along with other Twin Cities investment advisers.

Cook revealed the existence of the criminal investigation by the U.S. Attorney's office in Minnesota in recent court filings in which he seeks a court order to suspend a parallel, nonpublic investigation by the Securities and Exchange Commission (SEC).

"As a result of simultaneous investigations ... the United States is seriously threatening Trevor Cook's constitutional rights and is otherwise taking advantage of its vast powers to obtain an unfair advantage over Cook," attorney John Thompson wrote on his client's behalf.

The court filings, filed Friday and made public Monday, say that Assistant U.S. Attorney Joe Dixon has informed attorneys for both Cook and Kiley that the two are the focus of a grand jury investigation into the foreign currency arbitrage strategy, which they had promoted through Oxford Global Partners and Universal Brokerage FX, among other possibly related business entities.

Cook says in his filings that he is part-owner of Oxford Global, though he does not identify additional owners. Kiley has been associated with Universal Brokerage FX as a senior investment adviser and chief economist. Neither of the men is a licensed investment adviser, however.

Piper Kenney Webb, a criminal defense attorney representing Cook, said in an affidavit that Dixon told her the investigations by the SEC and U.S. Attorney's office stem from investors' inability to withdraw their money from the currency investment program.

Fifty-seven investors have joined a federal lawsuit filed July 7 alleging that they were told their money would be fully liquid and that there would be no risk to their principal in the currency investment program, but none has been able to make withdrawals since July.

Cook and Kiley have been subpoenaed to testify before the SEC, along with Kiley's office assistant, Julia Smith, and Ryan Moeller, who worked closely with Cook, court records show.

According to Thompson, the subpoenas called for them to testify before the SEC this past Friday and Monday.

Peter Wold, an attorney representing Kiley, said in an affidavit signed Thursday that he would advise his client to invoke his Fifth Amendment right not to testify.

The investors got Chief U.S. District Judge Michael Davis to freeze accounts at Wells Fargo and Associated Bank containing about $1.2 million in response to their civil lawsuit against Cook, Kiley, several associates and a dozen business entities. On Tuesday, Davis ordered a temporary freeze on up to $16 million in the personal accounts at either of those banks for defendants Jason Bo-Alan Beckman, a Minneapolis investment adviser who owns and operates the Oxford Private Client Group, and Christopher Pettengill, a Plymouth money manager formerly associated with Beckman's firm.

Beckman and Pettengill can withdraw money to pay usual living expenses and attorneys' fees from their accounts, but nothing more, Davis said. He scheduled a hearing for Friday morning at which they must personally appear and provide an accounting for money withdrawn from certain accounts where investors' funds had been sent.

Cook and Kiley are no longer in business, Thompson said in his affidavit. In mid-July, Oxford Global and Universal Brokerage FX posted notices on their websites saying that the lawsuit, together with SEC subpoenas and the bankruptcy of Crown Forex SA in Switzerland, meant they could no longer accept money or make disbursements.

No accounts found

Crown Forex was forced into liquidation in May by Swiss authorities, who have told investors that they found no indication of any Oxford Global and Universal Brokerage FX accounts there.

"Any investor money at Crown Forex in Switzerland is under the control of a Swiss governmental trustee," Thompson wrote in a memo supporting his motion to stay the SEC lawsuit. "It does not appear that the trustee will resolve matters any time soon."

Beckman has said through his attorneys that he referred some of his clients into the currency investment strategy and that he and his family members have committed substantial sums of their own. Attorney Andrew Luger said in a letter to the court this week that Beckman has lawyers ready to press legal actions in Switzerland, but they cannot proceed unless he gets permission to share materials obtained under a protective order in the Minneapolis investor lawsuit.