Wells Fargo goof aided Trevor Cook

An "inexcusable mistake" by Wells Fargo Bank allowed Minneapolis money manager Trevor Cook to continue spending tens of thousands of dollars long after a federal judge ordered a freeze on his accounts last year, according to the receiver hunting down assets from Cook's $190 million Ponzi scheme.

Receiver R.J. Zayed said in court filings Wednesday that the bank failed to freeze two accounts as ordered by Chief U.S. District Judge Michael Davis last July. Although the accounts had shrunk by just $9,275 by the time the oversight was caught five months later, Zayed said they provided unchecked conduits for Cook, who used the accounts to pay personal and business expenses.

Zayed says the bank has not responded to repeated demands that it restore the missing $9,275. He wants Davis to order the payment, plus legal expenses.

Although the amount isn't much in the scheme of things, Zayed wrote, "Wells Fargo's failure to freeze these accounts allowed Cook to funnel thousands of dollars in receivership funds through these two accounts between July 7, 2009, and November 2009." He said the transfers resulted in "further dissipation and concealment of investor funds."

As examples, he cited a $60,000 payment to Mike Shutze, a currencies consultant recruited from the Chicago area; $20,000 that Cook spent on a Lexus in November; mortgage payments on Cook's residence; and a $2,000 payment on one of his credit cards.

Cook pleaded guilty in April to tax and fraud charges related to the currency investment scheme he ran from his offices in the historic Van Dusen mansion just south of downtown Minneapolis. More than 1,000 investors were misled by his promises of double-digit returns with no risk to principal.

Wells Fargo declined to comment Wednesday, citing pending litigation.

Cheré Oliver, a paralegal at Wells Fargo, left a message at the receiver's office explaining that the accounts were overlooked because Trevor Cook is such a common name that a computer search returned a large number of "hits." The bank didn't have enough information to narrow the search, she said.

Zayed argues in his motion that Wells Fargo would have found the two accounts if it had relied on information from the accounts the bank did freeze to focus the search.

"Instead of inquiring further, or at a minimum informing the court and counsel of these facts, Wells Fargo simply did nothing," he wrote.

Zayed's staff asked Wells Fargo in January to return $9,275 that was missing from the two accounts after the freeze order. But despite several attempts since then, the bank has not returned the money.

"In the interest of justice, defrauded investors must not be punished for Wells Fargo's inexcusable mistake," Zayed said.