A 75-year-old Burnsville man was sentenced Monday to 20 years in prison in connection to the multimillion-dollar Ponzi scheme orchestrated by Trevor Cook.
Patrick Kiley was sentenced in U.S. District Court on 12 counts of wire and mail fraud, one count of conspiracy to commit mail and wire fraud and two counts of money laundering, according to a news release from the U.S. Attorney’s Office in Minnesota.
Because the federal criminal justice system has no parole, Kiley will spend virtually his entire sentence behind bars. Kiley and his co-defendants, who have been already sentenced, have been ordered to pay $155.36 million in restitution to the victims of their fraud scheme, which generated $194 million from investors.
Kiley was convicted on June 12, 2012, after a nearly two-month trial.
On January 3, Jason Bo-Alan Beckman, 43, of Plymouth, was sentenced to 30 years in federal prison on 17 counts of wire and mail fraud, two counts of conspiracy to commit mail and wire fraud, four counts of money laundering, two counts of filing a false tax return and one count of tax evasion.
Gerald Joseph Durand, 62, of Faribault, was sentenced to 20 years on 12 counts of wire and mail fraud, one count of conspiracy to commit mail and wire fraud, two counts of money laundering, two counts of concealing a material fact from the United States and three counts of filing a false tax return.
Christopher Pettengill, 56, of Plymouth, was sentenced to 90 months on one count of securities fraud, one count of conspiracy to commit wire fraud and one count of money laundering.
Evidence presented at trial proved that between 2005 and November 2009, the defendants, along with Cook, defrauded investors by soliciting them to invest money in a foreign currency trading program that they alleged would earn a double-digit rate of return, typically between 10.5 and 12 percent annually, with little or no risk. They also claimed investor assets would be held in a segregated account and could be withdrawn at any time. Those representations were false.
The defendants and Cook made the investment offers through entities known as Universal Brokerage Services or bearing the acronym UBS. The UBS entities had no legitimate affiliation to the global provider of financial services UBS, AG.
Cook operated the currency program through various foreign currency trading firms, including but not limited to one in Chicago and another in Switzerland.
To induce investors, the defendants and Cook, directly or through others, made false representations regarding the performance, safety, and liquidity of the currency program. They also omitted material information concerning their own backgrounds and qualifications as well as the backgrounds and qualifications of those working for them.
Once investments were made, some investors received UBS account statements that indicated the currency program was performing as promised, while others received checks for “returns on their investments.”
Both the statements and checks, however, were actually produced by the co-conspirators, the purpose being to lull investors or encourage them to make additional investments. At the same time, most investors received nothing from the true custodians of their funds.
Although some investment funds were invested in foreign currency trading, most of that trading was high-risk, often resulting in significant losses, none of which was disclosed to investors. Moreover, the co-conspirators concealed that the currency trading firm in Switzerland was in dire financial condition and, instead, continued to solicit investor assets to be sent to the firm.
Co-conspirators also concealed from investors their own concerns about Cook’s operation of the currency program and alleged illegalities surrounding it.
In 2007, when UBS, AG filed a trademark infringement lawsuit against Cook, Durand, Kiley, and others, the defendants began operating their scheme under other names, including those identified by the terms “Oxford” and “Universal Brokerage FX.” They then continued to solicit investors for the currency program, using telemarketing, media spots and seminars in which they repeated the false representations.
Kiley, a former Christian radio host who had a show called “Follow the Money,” solicited investors for the scam through his radio talk show, which was carried on more than 200 stations across the country. On those programs, he regularly warned listeners to avoid financial ruin by giving their life savings to his company for investment.
Between 2005 and July 2009, the defendants, Cook, and others secured approximately $194 million in investments for the currency program. Of that amount, only about $109 million was actually sent to currency trading firms. About $52 million was paid to investors in the form of lulling payments, and approximately $30 million was diverted to fund the business and personal expenses of the defendants, Cook, and others.
In August of 2010, Cook was sentenced to 25 years in federal prison for his role in the scam. On July 18, 2011, Jon Jason Greco pleaded guilty to two counts of making false statements to federal agents, specifically lying about assets he had concealed in the scam. He was sentenced to 10 months.
Proceeds from the Cook fraud scheme are the subject of an ongoing investigation and recovery efforts led by the law firm Carlson, Caspers, Vandenburg, and Lindquist, through a previous appointment by U.S. District Court Chief Judge Michael Davis.