1 00:00:02,670 --> 00:00:08,430 In this episode of American Greed, Trevor Cook claims to have a 2 00:00:08,430 --> 00:00:13,550 new way to trade foreign currency with guaranteed profit. 3 00:00:15,040 --> 00:00:19,100 Investments were safe and protected and in segregated accounts. 4 00:00:19,540 --> 00:00:25,400 I am here to give you solutions to this massive fiscal pollution that everyone 5 00:00:25,400 --> 00:00:28,900 in this country is experiencing without exception. 6 00:00:29,280 --> 00:00:33,040 And more than 700 investors roll over their life savings. 7 00:00:33,400 --> 00:00:35,180 This is very impressive. 8 00:00:37,000 --> 00:00:42,740 He's invested overseas, so therefore it isn't taxed. Oh my goodness, this is too 9 00:00:42,740 --> 00:00:46,760 good to be true, isn't it? But no one knows that Cook and his partners are 10 00:00:46,760 --> 00:00:51,900 conmen by day who turn their historic mansion into a den of debauchery by 11 00:00:52,260 --> 00:00:54,760 He enjoyed all the wealth he could steal. 12 00:00:55,060 --> 00:00:58,300 Until the feds ask a straight -laced banker to go undercover. 13 00:00:58,520 --> 00:01:00,460 Can he help catch the thieves? 14 00:01:00,960 --> 00:01:06,140 Somehow they had merged into some conglomerate of fraud and scumbaggery. 15 00:01:21,840 --> 00:01:27,240 In downtown Minneapolis, Minnesota, the Van Dusen Mansion was built in the late 16 00:01:27,240 --> 00:01:29,980 1800s by a baron of the grain industry. 17 00:01:31,620 --> 00:01:36,940 Made of hand -carved quartzite, it appears solid, steady, and built for the 18 00:01:36,940 --> 00:01:37,940 ages. 19 00:01:38,960 --> 00:01:42,240 Exactly the image its newest owner wants to project. 20 00:01:43,020 --> 00:01:48,660 He is one of the nation's leading money managers. Please welcome Trevor Cook. 21 00:01:50,380 --> 00:01:53,500 Trevor Cook acts like a modern -day magnet. 22 00:01:54,600 --> 00:02:00,200 A top trader in the high -risk, high -reward world of foreign currency 23 00:02:01,660 --> 00:02:06,500 The story begins with Cook playing the role of local boy made good. 24 00:02:07,140 --> 00:02:09,820 But there were warning signs early on. 25 00:02:11,210 --> 00:02:15,490 Trevor Cook was an average student, went to the University of Minnesota, 26 00:02:15,710 --> 00:02:20,970 graduated with a degree in economics, who was like a bull in a china shop. He 27 00:02:20,970 --> 00:02:24,670 had an alcohol problem. He ran sports numbers well in college. 28 00:02:25,090 --> 00:02:29,710 After college, looking to make big money fast, Cook goes to work for a 29 00:02:29,710 --> 00:02:32,130 Minneapolis gold coin dealership. 30 00:02:32,370 --> 00:02:37,910 He was a largely unsuccessful coin dealer and sort of bounced around jobs 31 00:02:37,910 --> 00:02:40,510 was not particularly successful in any way. 32 00:02:40,960 --> 00:02:45,720 Until he hit upon this currency exchange program in the early 2000s. 33 00:02:46,600 --> 00:02:49,140 Then his career takes a big jump. 34 00:02:49,380 --> 00:02:54,740 Within five years, Cook goes from small -time coin dealer to big -shot currency 35 00:02:54,740 --> 00:02:55,740 trader. 36 00:02:57,040 --> 00:03:02,000 Cook partners with former co -workers from the coin dealership. And by 2008, 37 00:03:02,260 --> 00:03:04,500 they set up shop at the Van Dusen Mansion. 38 00:03:05,260 --> 00:03:07,980 They call themselves the Oxford Group. 39 00:03:08,410 --> 00:03:12,790 And they play up their new headquarters to the hilt. They would hold seminars at 40 00:03:12,790 --> 00:03:17,990 the mansion to try and entice people to invest in this foreign currency exchange 41 00:03:17,990 --> 00:03:19,610 program that Trevor would pitch. 42 00:03:19,990 --> 00:03:24,510 Dozens of potential investors are bussed in each week through brokers and 43 00:03:24,510 --> 00:03:31,470 partner firms. Under his Universal Brokerage Service, or UBS, Cook claims 44 00:03:31,470 --> 00:03:36,390 be a worldwide leader in the highly complex game of foreign currency 45 00:03:37,320 --> 00:03:41,860 If you get out a Webster's Dictionary and you look up arbitrage in the 46 00:03:41,860 --> 00:03:46,940 dictionary, it means a transaction that can extract profits 47 00:03:46,940 --> 00:03:53,200 with no risk from an inefficiency in the marketplace. 48 00:03:53,700 --> 00:03:56,140 The strategy is complex and confusing. 49 00:03:56,760 --> 00:04:01,340 Cook claims to have invested in a revolutionary new software program that 50 00:04:01,340 --> 00:04:05,820 tiny percentages from international banks converting foreign currencies 51 00:04:05,820 --> 00:04:07,300 thousands of times a day. 52 00:04:07,600 --> 00:04:13,640 The key to how we execute arbitrage is largely technology based. 53 00:04:14,000 --> 00:04:20,160 Cook says that the principle invested with his program is guaranteed safe and 54 00:04:20,160 --> 00:04:22,560 encourages attendees to go all in. 55 00:04:23,070 --> 00:04:27,270 rolling over their IRAs, 401ks, and other retirement accounts. 56 00:04:27,730 --> 00:04:29,870 We also always keep liquidity. 57 00:04:30,430 --> 00:04:36,170 It's another big thing I recommend is stay away from investments that are not 58 00:04:36,170 --> 00:04:39,790 liquid. You know, what good is your money if you can't get at it? 59 00:04:40,070 --> 00:04:45,250 They made these representations consistently in terms of principal 60 00:04:45,650 --> 00:04:48,290 double -digit returns on their investments. 61 00:04:49,800 --> 00:04:56,380 dealing with sophisticated banks and countries, and that their investments 62 00:04:56,380 --> 00:05:01,400 safe and protected and that they were always liquid so that the investor could 63 00:05:01,400 --> 00:05:04,780 obtain them 24 hours a day, seven days a week. 64 00:05:05,040 --> 00:05:09,620 Cook comes off as a down -to -earth Minnesotan who happens to be a financial 65 00:05:09,620 --> 00:05:14,620 whiz. His disfiguring scar is said to be the result of a high school hockey 66 00:05:14,620 --> 00:05:15,620 injury. 67 00:05:16,270 --> 00:05:19,110 And it doesn't hurt his ability to close deals. 68 00:05:19,510 --> 00:05:25,370 He and his partners are able to pull in nearly $200 million in capital for more 69 00:05:25,370 --> 00:05:26,790 than 700 investors. 70 00:05:27,590 --> 00:05:32,290 Cook's partners in the Oxford Group include licensed stockbroker Bo Beckman 71 00:05:32,290 --> 00:05:36,310 a former professional wrestler turned coin dealer Jerry Duran. They each have 72 00:05:36,310 --> 00:05:38,150 role to play at the investment seminars. 73 00:05:39,050 --> 00:05:43,330 And they would have Bo come up as sort of this super successful financial 74 00:05:43,330 --> 00:05:49,650 services guy, and he would lay out his pitch for his handling their money. 75 00:05:50,010 --> 00:05:53,190 So I started at Merrill. I ran money there. I ran money at Ernest from 76 00:05:53,290 --> 00:05:54,430 I ran money at Wells Fargo. 77 00:05:54,790 --> 00:05:58,110 And I'm a senior portfolio manager for the Oxford for a large cap core. 78 00:05:58,330 --> 00:06:03,870 I believe the market is here and exists to do this. Take as much from as many 79 00:06:03,870 --> 00:06:04,930 for as long as it can. 80 00:06:07,280 --> 00:06:11,820 Jerry Durand would come up and he would introduce some of the younger sales 81 00:06:11,820 --> 00:06:15,320 staff that would then go mingle among the people who were having dinner and 82 00:06:15,320 --> 00:06:18,860 drinks and whatnot, and then invite them to invest in the program. 83 00:06:19,100 --> 00:06:25,820 You're going to learn how you can create wealth and survive your 84 00:06:25,820 --> 00:06:30,940 wealth. But the Oxford Group also has another marketing strategy, one that has 85 00:06:30,940 --> 00:06:33,080 the potential to reach millions of people. 86 00:06:33,840 --> 00:06:34,840 Talk radio. 87 00:06:36,440 --> 00:06:40,330 Welcome. America to the broadcast Follow the Money with Pat Kiley. 88 00:06:41,210 --> 00:06:46,290 Pat Kiley is a partner whose radio show airs on more than 200 stations around 89 00:06:46,290 --> 00:06:51,870 the country and is a funnel for bringing in new investor capital into Trevor 90 00:06:51,870 --> 00:06:52,870 Cook's program. 91 00:06:56,130 --> 00:07:00,950 In a suburb of Atlanta, Georgia, 55 -year -old Curtis Harvey is hearing good 92 00:07:00,950 --> 00:07:02,830 things about the show from a friend. 93 00:07:03,510 --> 00:07:06,270 He said, you know, I've been listening to this guy, Pat Kiley. 94 00:07:06,860 --> 00:07:09,860 I started listening, and that's what encouraged me to do that. 95 00:07:10,200 --> 00:07:14,320 And he said, I feel pretty comfortable. The returns look very good up to this 96 00:07:14,320 --> 00:07:15,580 point from what I can tell. 97 00:07:16,300 --> 00:07:19,360 Harvey is intrigued but doesn't want to make a hasty move. 98 00:07:19,760 --> 00:07:22,800 He's been a protective coating salesman for 30 years. 99 00:07:23,240 --> 00:07:26,860 He works hard, makes a good living, and contributes to his IRA. 100 00:07:27,460 --> 00:07:29,680 But he'd love to get better returns. 101 00:07:30,220 --> 00:07:36,200 I am here. to give you solutions to this massive fiscal pollution that everyone 102 00:07:36,200 --> 00:07:39,700 in this country is experiencing without exception. 103 00:07:40,260 --> 00:07:46,060 I listened to Pat probably for six, eight weeks, and a lot of what Pat 104 00:07:46,060 --> 00:07:52,760 up was safety, security, and integrity and 105 00:07:52,760 --> 00:07:56,180 honesty and things like that, and you need to secure your money. 106 00:07:57,040 --> 00:08:03,320 For 22 years, we have worked with various countries, governments, and 107 00:08:03,320 --> 00:08:06,480 currencies, and the global bank interest rates. 108 00:08:06,960 --> 00:08:12,060 He said that while the principal is segregated, you'd make like an 8 to 10 109 00:08:12,060 --> 00:08:13,520 percent swing. 110 00:08:13,820 --> 00:08:18,540 He said some months it might bump to 12 and some it might drop to 7. But he said 111 00:08:18,540 --> 00:08:20,360 it's a consistent 8 to 10 range. 112 00:08:20,900 --> 00:08:22,980 So I invested. 113 00:08:23,900 --> 00:08:29,900 Harvey decides to roll over $120 ,000 from his IRA and over the next year adds 114 00:08:29,900 --> 00:08:31,180 another $80 ,000. 115 00:08:31,560 --> 00:08:35,580 After getting his initial statements, he believes he's made a sound decision. 116 00:08:36,520 --> 00:08:38,900 It looked like there was growth taking place. 117 00:08:39,860 --> 00:08:44,280 There were some parts they had where it showed a linear growth, an upward curve. 118 00:08:44,540 --> 00:08:49,080 It would be incremental, small amounts, not big. I didn't want to get rich 119 00:08:49,080 --> 00:08:50,960 quick. I just wanted some steady growth. 120 00:08:52,170 --> 00:08:53,230 was secure and safe. 121 00:08:53,690 --> 00:09:00,150 Next on American Greed, investors believe that their money, like the Van 122 00:09:00,150 --> 00:09:05,990 mansion, is being cared for by respectable businessmen, if they only 123 00:09:07,230 --> 00:09:10,310 Prostitutes regularly visited, as did strippers. 124 00:09:10,530 --> 00:09:15,610 Drug use, drinking, prostitution, anything happened there. 125 00:09:27,790 --> 00:09:32,830 In 2008, Trevor Cook appears to be a master of the universe. 126 00:09:33,270 --> 00:09:39,450 From his grand historic mansion in downtown Minneapolis, he claims to run a 127 00:09:39,450 --> 00:09:45,470 billion hedge fund, raking in guaranteed profits from a foreign currency trading 128 00:09:45,470 --> 00:09:46,470 program. 129 00:09:47,070 --> 00:09:52,010 More than 700 people from around the country have invested, including senior 130 00:09:52,010 --> 00:09:53,850 citizen Betty Wager. 131 00:09:54,360 --> 00:09:59,100 who learns of the program through Cook's partner, Pat Kiley, and his talk radio 132 00:09:59,100 --> 00:10:01,140 show, Follow the Money. 133 00:10:02,460 --> 00:10:06,280 You couldn't help but just want to listen, and he was on for a whole hour 134 00:10:06,280 --> 00:10:11,560 Sunday morning from 7 to 8 o 'clock, and I'd lay there in bed before I had to 135 00:10:11,560 --> 00:10:13,960 get up and go to church, and I'd listen to him. 136 00:10:14,250 --> 00:10:18,070 I'm the senior partner of an international investment banking firm. 137 00:10:18,310 --> 00:10:23,990 And we are not connected in any way to stocks, bonds, and all of the rest. 138 00:10:24,330 --> 00:10:30,170 He would talk about how awful it was that the government taxed every penny we 139 00:10:30,170 --> 00:10:34,910 made. And I thought, wow, and I've got an investment with a company right now. 140 00:10:35,010 --> 00:10:38,750 And, you know, when I get the printout in the mail. 141 00:10:40,040 --> 00:10:45,900 Anything that I've invested has a minus sign in front of it. And I'm going, I've 142 00:10:45,900 --> 00:10:49,900 got to call them and see what's going on because I really don't understand 143 00:10:49,900 --> 00:10:51,740 investing money. 144 00:10:52,180 --> 00:10:56,660 Wager has been retired from the phone company Quest since 1992. 145 00:10:57,160 --> 00:11:00,620 She lives on a pension and Social Security income. 146 00:11:01,100 --> 00:11:04,940 She bought her house with an inheritance left to her by her parents. 147 00:11:05,500 --> 00:11:07,620 The rest, about $50 ,000. 148 00:11:08,280 --> 00:11:10,160 She is invested with a brokerage firm. 149 00:11:10,440 --> 00:11:16,020 But listening to Pat Kiley, she begins to rethink where she placed her nest 150 00:11:16,360 --> 00:11:18,880 He sounded very convincing, let me tell you. 151 00:11:19,560 --> 00:11:26,440 No more taxing your money. It's invested overseas, so therefore it isn't 152 00:11:26,440 --> 00:11:31,020 taxed. After listening for several months, Betty and her daughter Betsy 153 00:11:31,020 --> 00:11:33,020 to meet with Kiley in person. 154 00:11:33,790 --> 00:11:38,570 He struts in there just like a celebrity, you know, and he sits down at 155 00:11:38,570 --> 00:11:42,530 desk. And we talked for over an hour. 156 00:11:42,990 --> 00:11:46,830 The longer you sit there with him, the better it sounds. 157 00:11:47,570 --> 00:11:48,690 What can I say? 158 00:11:49,410 --> 00:11:55,970 On the way home, I said to Betsy, you know, I feel good about this investment 159 00:11:55,970 --> 00:11:59,410 and that it wouldn't be taxed and that when I needed some. 160 00:12:00,090 --> 00:12:05,030 maybe for a new furnace or an air conditioner for my home, I would have 161 00:12:05,030 --> 00:12:09,210 money. And I thought, this is right where I have to be with this investment. 162 00:12:10,610 --> 00:12:11,930 And that's what I did. 163 00:12:12,290 --> 00:12:15,250 Betty invests her $50 ,000 in inheritance. 164 00:12:15,490 --> 00:12:18,470 And for a time, she believed she made a great choice. 165 00:12:18,970 --> 00:12:22,250 After all, she has promised there is no way she could lose it. 166 00:12:22,510 --> 00:12:26,150 Every two weeks, I'd call and ask, how is my money doing? 167 00:12:26,650 --> 00:12:28,010 And he'd say, just fine. 168 00:12:28,460 --> 00:12:29,119 Just fine. 169 00:12:29,120 --> 00:12:30,120 You need money today? 170 00:12:30,300 --> 00:12:34,900 No, I don't need money today. But I just thought I'd see and he'd say, no, just 171 00:12:34,900 --> 00:12:36,120 remember what I said. 172 00:12:36,380 --> 00:12:37,440 Have a good day. 173 00:12:39,320 --> 00:12:44,520 Wager, like hundreds of others, simply trusts that the investment program is 174 00:12:44,520 --> 00:12:47,940 legitimate. But while they may appear to be highly successful, 175 00:12:48,700 --> 00:12:52,900 Trevor Cook and his cohorts are not actually making any profits. 176 00:12:53,560 --> 00:12:57,220 They are spending hard -earned investor capital on whatever they like. 177 00:12:58,760 --> 00:13:04,640 Cook spends $3 million on the mansion itself, using it as a showpiece by day. 178 00:13:04,900 --> 00:13:10,160 And after hours, a shameful din of debauchery that Betty Waker's life 179 00:13:10,160 --> 00:13:12,300 should have had no part in funding. 180 00:13:12,660 --> 00:13:15,620 Well, the mansion at night was an entirely different place. 181 00:13:15,820 --> 00:13:20,400 There were big parties there. Thousands of dollars' worth of booze were consumed 182 00:13:20,400 --> 00:13:24,260 there. Trevor Cook would pass out in his chair, wet himself. 183 00:13:24,600 --> 00:13:26,900 He was falling down drunk. 184 00:13:27,480 --> 00:13:33,840 Drug use, drinking, prostitution, anything happened there. 185 00:13:34,100 --> 00:13:38,040 One night, Trevor, in order to impress a stripper that he had picked up, bet 186 00:13:38,040 --> 00:13:40,140 $500 ,000 on a football game and lost. 187 00:13:40,420 --> 00:13:44,860 Not the kind of place where you would want your mother or grandmother to go to 188 00:13:44,860 --> 00:13:46,280 invest their life savings. 189 00:13:46,680 --> 00:13:51,240 Former employees report that not all of the partners are partaking in the 190 00:13:51,240 --> 00:13:56,250 bacchanal. But they are all spending their so -called profits, with Trevor 191 00:13:56,250 --> 00:13:57,250 leading the way. 192 00:13:57,530 --> 00:14:01,010 He bought the mansion to make it look like they were this huge successful 193 00:14:01,010 --> 00:14:06,110 operation. But he was also spending money trying to make money because he 194 00:14:06,110 --> 00:14:08,210 he was losing so much money. He was a gambler. 195 00:14:08,650 --> 00:14:15,190 And this investment scheme was pretty much a gamble. He was not making trades 196 00:14:15,190 --> 00:14:16,590 these guys were promising. 197 00:14:16,950 --> 00:14:21,390 It wasn't safe. It wasn't hedged. He was buying oil, commodities. 198 00:14:22,630 --> 00:14:27,190 Things that the investors had no idea what was going on. I think Mr. Cook also 199 00:14:27,190 --> 00:14:32,510 enjoyed a luxurious lifestyle while he was performing this fraud and enjoyed 200 00:14:32,510 --> 00:14:34,250 the wealth he could steal. 201 00:14:34,790 --> 00:14:39,130 Cook spends his money on high -end items that suggest wealth and class. 202 00:14:39,710 --> 00:14:43,750 Fabergé eggs, Rolex watches, and luxury sports cars. 203 00:14:45,330 --> 00:14:50,450 But the real Trevor Cook is neither wealthy nor classy, and he does a poor 204 00:14:50,450 --> 00:14:51,630 of pretending to be. 205 00:14:52,490 --> 00:14:57,530 He had a Jägermeister tap and a couple of beer taps and there was a lot of 206 00:14:57,530 --> 00:15:02,210 bottles all over the place. In his private bathroom, he had all these 207 00:15:02,210 --> 00:15:06,370 from gangster movies, Al Pacino and the like. 208 00:15:08,040 --> 00:15:11,960 He was a real fan of Scarface, you know, and the gangster life. 209 00:15:12,200 --> 00:15:17,500 In line with his wannabe gangster persona, Trevor Cook decides to take a 210 00:15:17,500 --> 00:15:22,300 in the casino business and shells out $13 million for a piece of property in 211 00:15:22,300 --> 00:15:23,300 Central America. 212 00:15:23,620 --> 00:15:28,700 He got into a Panama casino deal. I think it was all in hopes of making it 213 00:15:28,700 --> 00:15:33,580 and being able to, you know, actually get some money since he was losing so 214 00:15:33,580 --> 00:15:34,720 in this trading. 215 00:15:35,340 --> 00:15:38,940 Cook isn't the only one spending on whatever he sees fit. 216 00:15:39,920 --> 00:15:44,860 His partner, Bo Beckman, the licensed financial advisor of the outfit, prefers 217 00:15:44,860 --> 00:15:48,440 to spend his millions on real estate and other amenities. 218 00:15:49,360 --> 00:15:52,440 He had very lavish homes in a variety of places. 219 00:15:52,660 --> 00:15:59,100 He had cars. He had country clubs. He had a variety of different accoutrements 220 00:15:59,100 --> 00:16:00,860 that goes with actual success. 221 00:16:01,680 --> 00:16:06,480 In reality, this wasn't based on his own success, but based on the sales to 222 00:16:06,480 --> 00:16:10,480 investors to turn over money, which was then converted for his own use. 223 00:16:12,600 --> 00:16:18,880 In 2008, Beckman even attempts to purchase a stake in the NHL hockey team, 224 00:16:18,880 --> 00:16:19,880 Minnesota Wild. 225 00:16:21,380 --> 00:16:27,120 Attempting to buy the NHL team was an effort to provide legitimacy to him and 226 00:16:27,120 --> 00:16:31,700 indicate that he was a real business person, when in fact the entire bid was 227 00:16:31,700 --> 00:16:33,180 premised on a fraud. 228 00:16:33,600 --> 00:16:38,900 Pat Kiley is the only one that appears to live frugally. But in reality, he's 229 00:16:38,900 --> 00:16:43,380 spending millions of dollars to produce and expand his radio show, which in turn 230 00:16:43,380 --> 00:16:45,420 brings in two -thirds of the investors. 231 00:16:46,780 --> 00:16:48,280 Next on American Green. 232 00:16:49,120 --> 00:16:53,840 Trevor Cook tries to recruit a local investment banker into his scheme, but 233 00:16:53,840 --> 00:16:54,840 picks the wrong guy. 234 00:16:55,460 --> 00:16:59,820 This was not only fraud, but it was populated by guys who had been involved 235 00:16:59,820 --> 00:17:00,820 fraud for years. 236 00:17:00,840 --> 00:17:05,859 Somehow they had merged into some conglomerate of fraud and scumbaggery. 237 00:17:19,880 --> 00:17:24,760 In late 2008, Trevor Cook's Oxford Group is hemorrhaging money. 238 00:17:25,000 --> 00:17:29,480 Cook is losing tens of millions of dollars in illegal gambling and risky 239 00:17:29,480 --> 00:17:34,200 commodities trades, all while telling his investors their principle is 240 00:17:34,200 --> 00:17:35,200 protected. 241 00:17:35,440 --> 00:17:41,960 Trevor Cook and the others really sold him on how safe this investment was, and 242 00:17:41,960 --> 00:17:45,800 they got a lot of investors to pretty much give all of their savings. 243 00:17:46,420 --> 00:17:51,100 Things get decidedly worse when Cook decides to partner with a shady 244 00:17:51,100 --> 00:17:52,360 international firm. 245 00:17:52,940 --> 00:17:57,560 They had invested in a business called Crown Forex over in Switzerland. 246 00:17:57,840 --> 00:18:04,020 In 2008, they became patently aware that it was highly illiquid and that they 247 00:18:04,020 --> 00:18:07,280 were going to have difficulty getting their money out. They had already 248 00:18:07,280 --> 00:18:11,980 significant losses through their trading program that lost millions and tens of 249 00:18:11,980 --> 00:18:12,980 millions of dollars. 250 00:18:13,640 --> 00:18:17,860 Cook is in need of a huge infusion of capital to keep his operation running. 251 00:18:18,080 --> 00:18:20,860 And that's where Ty Schlobom comes in. 252 00:18:21,100 --> 00:18:26,360 In 2009, Schlobom is managing director of a Minneapolis investment bank. 253 00:18:26,640 --> 00:18:29,160 His clients are large institutional investors. 254 00:18:29,740 --> 00:18:32,660 One day, he gets a cold call from Trevor Cook. 255 00:18:33,000 --> 00:18:39,140 Somehow, Trevor and his team became aware of me and the services I provided. 256 00:18:39,620 --> 00:18:42,060 So they contacted me to see if I could. 257 00:18:42,430 --> 00:18:44,310 be a conduit to institutional capital. 258 00:18:44,610 --> 00:18:49,130 Within a couple of days, Slobom is headed to the Van Dusen mansion in 259 00:18:49,130 --> 00:18:50,130 Minneapolis. 260 00:18:50,530 --> 00:18:56,190 It was a very ornate, old, historic mansion. In Trevor's office, which was 261 00:18:56,190 --> 00:19:00,650 the very top floor, it was a large office filled with trading screens and 262 00:19:00,650 --> 00:19:05,430 computers and such. And Trevor began to opine on what his strategy was, which 263 00:19:05,430 --> 00:19:09,150 was in the fixed income slash currency arbitrage game. 264 00:19:10,310 --> 00:19:14,630 My first impression was that I had never heard of this before, but he was 265 00:19:14,630 --> 00:19:20,070 offering a guaranteed risk -free rate of return of 12%. That is a number that is 266 00:19:20,070 --> 00:19:25,490 very attractive. So I obviously entertained the thought of what the heck 267 00:19:25,490 --> 00:19:31,030 doing. As Schlobom carefully listens, Trevor Cook lays out the details of his 268 00:19:31,030 --> 00:19:32,030 investment program. 269 00:19:32,270 --> 00:19:36,210 The strategy that Trevor said he employed was doing something called a 270 00:19:36,210 --> 00:19:37,210 carry trade. 271 00:19:37,520 --> 00:19:42,240 A carry trade is basically borrowing securities in a low -interest -rate 272 00:19:42,240 --> 00:19:46,520 and using those funds to buy currency in a higher -earning -interest -rate 273 00:19:46,520 --> 00:19:51,300 country. Shalobo knows the carry trade as one of the riskiest financial 274 00:19:51,300 --> 00:19:52,239 out there. 275 00:19:52,240 --> 00:19:56,020 They describe the carry trade as picking up pennies in front of a bulldozer. 276 00:19:56,380 --> 00:20:02,000 But Trevor's strategy, or often the story he would tell, was that he would 277 00:20:02,000 --> 00:20:05,760 able to fully hedge out the risk through his relationships with Middle Eastern 278 00:20:05,760 --> 00:20:10,710 banks. Cook says he is able to get interest -free loans from Middle Eastern 279 00:20:10,710 --> 00:20:15,810 banks that are compliant with Sharia law, which states that banks cannot 280 00:20:15,810 --> 00:20:20,970 interest. I understand Sharia compliance, whereas they see charging 281 00:20:20,970 --> 00:20:25,710 interest as usury and not allowed within the compliance of their religion or 282 00:20:25,710 --> 00:20:26,710 ideology. 283 00:20:26,950 --> 00:20:32,050 For years, this has been Trevor Cook's pitch. And the unsophisticated investors 284 00:20:32,050 --> 00:20:33,790 he targets have eaten it up. 285 00:20:34,280 --> 00:20:36,440 perhaps without fully understanding the plan. 286 00:20:36,980 --> 00:20:39,160 But now Cook has met his match. 287 00:20:39,740 --> 00:20:44,540 Ty Schlobom understands exactly what Cook is saying. He just doesn't believe 288 00:20:45,660 --> 00:20:48,980 My initial thoughts were that this makes no sense. My experience having done 289 00:20:48,980 --> 00:20:51,980 business in the Middle East is that in lieu of taking interest payments, they 290 00:20:51,980 --> 00:20:56,280 usually take an equity ownership in the firm, or they find some way to monetize 291 00:20:56,280 --> 00:20:59,420 their lack of interest that they're having. I certainly asked, well, why 292 00:20:59,420 --> 00:21:00,860 they offer you? 293 00:21:01,480 --> 00:21:07,680 these hundreds of millions, conceivably dollars, of use of their capital for no 294 00:21:07,680 --> 00:21:10,520 revenue. And that's where the story became a little elaborate and highly 295 00:21:10,520 --> 00:21:11,520 inconsistent. 296 00:21:11,600 --> 00:21:16,080 Schlobom leaves the mansion uncertain about what he has stumbled upon and 297 00:21:16,080 --> 00:21:20,680 decides to do some more research into Oxford's head honcho, Trevor Cook. 298 00:21:20,960 --> 00:21:25,380 He said he's managing $4 billion, which at the time in 2009 would have put him 299 00:21:25,380 --> 00:21:30,520 in, you know, top 25 largest hedge funds in the world. And I never had heard of 300 00:21:30,520 --> 00:21:31,439 him once. 301 00:21:31,440 --> 00:21:33,180 But he was registered on the NFA. 302 00:21:33,480 --> 00:21:36,460 So when I looked him at the NFA, I could see that he had spent most of his time 303 00:21:36,460 --> 00:21:37,460 as a coin dealer. 304 00:21:37,820 --> 00:21:39,360 Schlobom doesn't stop there. 305 00:21:39,660 --> 00:21:45,460 He digs deeper into Oxford's supposed investment strategy and the backgrounds 306 00:21:45,460 --> 00:21:49,000 the principal partners Bo Beckman, Jerry Durand, and Pat Kiley. 307 00:21:49,420 --> 00:21:54,020 I made some calls into colleagues that were quite the experts in foreign 308 00:21:54,020 --> 00:21:58,780 exchange and foreign exchange arbitrage, and I could not find anyone that had 309 00:21:58,780 --> 00:22:01,260 even heard of this so -called trade. 310 00:22:01,620 --> 00:22:04,860 I looked into the infrastructure and the backgrounds of all the individuals 311 00:22:04,860 --> 00:22:09,700 there, and they were checkered, to say the least. I saw many individuals with 312 00:22:09,700 --> 00:22:11,720 regulatory marks in their background. 313 00:22:13,000 --> 00:22:16,360 Empirically, the returns were not only improbable, but impossible. 314 00:22:16,700 --> 00:22:20,800 Very quickly, Ty Schlobom begins to believe the program is a fraud. 315 00:22:21,060 --> 00:22:25,520 And so this banker, husband and father of two small children, faces a life 316 00:22:25,520 --> 00:22:26,520 -changing decision. 317 00:22:26,600 --> 00:22:31,340 Does he simply walk away, say no thank you, and leave the Oxford Group for 318 00:22:31,340 --> 00:22:32,360 someone else to deal with? 319 00:22:32,600 --> 00:22:34,000 Or does he do something? 320 00:22:34,640 --> 00:22:38,000 My first thought was, God, this is so bad. Don't walk away, run. 321 00:22:38,240 --> 00:22:41,040 And make sure, you know, you never... 322 00:22:41,260 --> 00:22:42,920 find something as slimy as that again. 323 00:22:43,300 --> 00:22:49,060 But Slobom's deciding factor comes down to the investors, a room full of whom he 324 00:22:49,060 --> 00:22:52,120 sees at a seminar during his very first visit to the mansion. 325 00:22:52,640 --> 00:22:57,060 My observation quite quickly was that these were financially unsophisticated 326 00:22:57,060 --> 00:23:01,640 individuals, what appeared to be elderly people without a lot of financial 327 00:23:01,640 --> 00:23:07,940 resources. And my observation was it was 70 -plus people with a nest egg under 328 00:23:07,940 --> 00:23:09,560 six figures that were investing. 329 00:23:11,120 --> 00:23:16,260 When American greed returns, the straight -laced banker goes undercover 330 00:23:16,260 --> 00:23:17,500 crime -stopping mission. 331 00:23:18,240 --> 00:23:23,300 I'm jettisoned from being an investment management financial service employee, 332 00:23:23,400 --> 00:23:27,220 and now I'm trying to be a junior G -man and get the smoking gun. 333 00:23:40,430 --> 00:23:46,450 In March 2009, investment banker Ty Schlobom presents a case to Minneapolis 334 00:23:46,450 --> 00:23:51,230 Assistant U .S. Attorney Joe Dixon about what he believes to be an outright scam 335 00:23:51,230 --> 00:23:54,930 involving the Oxford Group's foreign currency program. 336 00:23:55,410 --> 00:24:00,830 This was 100 % without any doubt a Ponzi scheme. I couldn't walk away and do 337 00:24:00,830 --> 00:24:06,070 nothing. He was an investment advisor himself, and the story that was being 338 00:24:06,070 --> 00:24:08,550 to investors simply didn't make a lot of sense. 339 00:24:09,120 --> 00:24:13,520 The group is headed by Trevor Cook, who reached out to Schlobom as a possible 340 00:24:13,520 --> 00:24:15,960 conduit to large institutional investors. 341 00:24:16,620 --> 00:24:19,800 Now Schlobom wants the feds to shut Cook down. 342 00:24:20,180 --> 00:24:24,300 But before they can act, the U .S. Attorney's Office needs to know more. 343 00:24:24,860 --> 00:24:29,360 What was important to us was to understand what exactly was being told 344 00:24:29,360 --> 00:24:32,820 investors. Because in a fraud investigation, at least from a criminal 345 00:24:32,820 --> 00:24:36,580 perspective, there's two components. One is, what are investors told? 346 00:24:37,389 --> 00:24:40,930 It's going to happen with their money. And the other thing is, what's actually 347 00:24:40,930 --> 00:24:42,050 happening with their money? 348 00:24:42,290 --> 00:24:46,150 My expectation was they were going to give me a pat on the head and send me 349 00:24:46,150 --> 00:24:51,090 with a lollipop and say, you know, good job. We appreciate the tip. And that was 350 00:24:51,090 --> 00:24:52,610 not the case. They asked me if I'd help. 351 00:24:53,930 --> 00:24:57,810 So very quickly, I said, I have to think about this. 352 00:24:58,550 --> 00:25:02,470 Ultimately, Schlobom decides that he wants to do everything he can to put 353 00:25:02,470 --> 00:25:04,230 out of business as soon as possible. 354 00:25:05,230 --> 00:25:10,090 And so the gears begin turning on a case that takes him from the rarefied air of 355 00:25:10,090 --> 00:25:13,510 high finance to the gritty world of criminal investigation. 356 00:25:14,270 --> 00:25:20,350 They wanted me to collect evidence, both audio and video evidence, of what they 357 00:25:20,350 --> 00:25:25,090 were saying and what they were doing to basically cross the T's and dot the I's 358 00:25:25,090 --> 00:25:27,850 on what was actually the fraud. 359 00:25:28,350 --> 00:25:33,110 I also tried to engender myself to Trevor. 360 00:25:33,930 --> 00:25:38,030 and hoping that they would offer and let down their guard and say, you want in 361 00:25:38,030 --> 00:25:38,729 on this. 362 00:25:38,730 --> 00:25:43,390 The FBI wires him up with undercover audio and video equipment and sends him 363 00:25:43,390 --> 00:25:46,030 back to Oxford's headquarters at the Van Dusen mansion. 364 00:25:46,830 --> 00:25:48,150 It is pretty surreal. 365 00:25:48,670 --> 00:25:52,630 I'm trying to gather information. I'm trying to get them talking. 366 00:25:52,910 --> 00:25:56,010 I'm asking them a host of questions, and it's all recording. 367 00:25:56,510 --> 00:25:58,630 It's exciting. It's really nervous. 368 00:25:59,670 --> 00:26:03,250 It's just a situation that you're ready to wake up from. 369 00:26:03,740 --> 00:26:06,920 But in the back of my head, I kept timing, so this is the right thing to 370 00:26:07,140 --> 00:26:11,500 Schlobaum spends an increasing amount of time at the mansion and secretly 371 00:26:11,500 --> 00:26:13,960 records several investment seminars. 372 00:26:14,540 --> 00:26:19,240 I'm seeing a marketing factory in terms of quantity of potential investors that 373 00:26:19,240 --> 00:26:20,940 they're drawing into this place. It's high. 374 00:26:21,300 --> 00:26:27,080 And they seem to have enough swagger that they're bringing in a high hit 375 00:26:27,080 --> 00:26:28,080 in terms of closing business. 376 00:26:28,420 --> 00:26:33,360 In this seminar video, filmed for promotional purposes, Trevor Cook 377 00:26:33,360 --> 00:26:37,440 explain to potential investors his foreign currency arbitrage program. 378 00:26:38,000 --> 00:26:43,700 The key to how we execute arbitrage is largely technology -based. 379 00:26:43,960 --> 00:26:47,180 A lot of times they said that their big secret to their success was this 380 00:26:47,180 --> 00:26:49,020 technology company which was based in Switzerland. 381 00:26:49,340 --> 00:26:53,480 If you were to just look up and or even Google their name, you can see that 382 00:26:53,480 --> 00:26:57,820 they're in as close to financial default as possible because their software, 383 00:26:57,960 --> 00:27:00,420 lack thereof, was totally ineffective. 384 00:27:01,450 --> 00:27:05,790 But their success, if I can even use that word, was they would make it so 385 00:27:05,790 --> 00:27:10,090 complicated because they would not be consistent with their stories that 386 00:27:10,110 --> 00:27:12,970 again, they'd have to just take sort of a leap of faith. 387 00:27:13,210 --> 00:27:16,930 While federal agencies work together to methodically build their case, 388 00:27:18,070 --> 00:27:21,190 Ty Schlobom is spending less time at his actual job. 389 00:27:21,810 --> 00:27:25,450 And he doesn't feel good about receiving a salary while keeping his employer in 390 00:27:25,450 --> 00:27:26,409 the dark. 391 00:27:26,410 --> 00:27:30,210 He decides to make yet another personal and professional sacrifice. 392 00:27:30,940 --> 00:27:34,940 choosing to resign and focus full -time on the undercover operation. 393 00:27:35,440 --> 00:27:40,160 It's probably not the best story to come home with to your wife that you quit 394 00:27:40,160 --> 00:27:44,860 your job and that you are undercover informant trying to take down a Ponzi 395 00:27:44,860 --> 00:27:49,940 scheme that will have absolutely no reward and is fraught with risk. 396 00:27:50,840 --> 00:27:57,500 But my wife was supportive and was on the same plane in terms of doing 397 00:27:57,500 --> 00:27:59,260 something that was right. 398 00:28:00,270 --> 00:28:03,910 in a time when a lot of things were going wrong in the financial industry. 399 00:28:04,250 --> 00:28:08,730 This is the dog and pony show. You would have a number of inconsistent stories 400 00:28:08,730 --> 00:28:13,310 coming from them. But after four months, Schlobom is ready to be done with his 401 00:28:13,310 --> 00:28:14,310 secret assignment. 402 00:28:14,690 --> 00:28:21,230 I'm nervous of something falling out of my pocket or a camera head being 403 00:28:21,230 --> 00:28:22,230 exposed. 404 00:28:22,840 --> 00:28:26,600 I'm certainly wondering, what the hell am I going to do if that does happen? 405 00:28:27,540 --> 00:28:33,000 Am I going to run? Am I going to, you know, get killed? 406 00:28:33,540 --> 00:28:38,880 So I definitely didn't want to get caught doing what I was doing. 407 00:28:39,120 --> 00:28:43,700 But investigators are still relying on their man inside to provide key 408 00:28:43,700 --> 00:28:49,080 information. You have to have really good probable cause to shut something 409 00:28:49,080 --> 00:28:50,380 that down. So it's not... 410 00:28:50,890 --> 00:28:56,150 Just one person going in and coming back and saying, yep, it's fraudulent. Let's 411 00:28:56,150 --> 00:28:57,510 shut it down. It's not that easy. 412 00:28:58,410 --> 00:29:02,930 Next on American Greed, the feds figure out exactly how the bad guys are 413 00:29:02,930 --> 00:29:06,630 operating. And it's the beginning of the end for Trevor Cook. 414 00:29:06,870 --> 00:29:11,750 They said things are happening quickly now. And on this day, can you arrange to 415 00:29:11,750 --> 00:29:14,210 make sure that Trevor Cook is at this location? 416 00:29:15,040 --> 00:29:20,300 Find out more about Trevor Cook's depraved decadence at AmericanGreed 417 00:29:20,300 --> 00:29:24,060 .com. Want inside information from the show? 418 00:29:24,380 --> 00:29:26,720 Join the Greed social network. 419 00:29:27,220 --> 00:29:30,860 Like us on American Greed's Facebook page. We'll be right back. 420 00:29:38,040 --> 00:29:40,020 In 2009... 421 00:29:40,650 --> 00:29:44,350 Trevor Cook's Oxford Group is running into trouble from all sides. 422 00:29:44,890 --> 00:29:48,730 Multiple federal agencies are investigating them for civil and 423 00:29:48,730 --> 00:29:49,730 prosecution. 424 00:29:50,370 --> 00:29:55,830 Then, in July, a group of Ohio investors decides they want to take several 425 00:29:55,830 --> 00:30:00,370 million dollars out of the fund. When they can't get their money back, they 426 00:30:01,000 --> 00:30:06,060 It was a combination of the civil lawsuit by investors starting to ask 427 00:30:06,060 --> 00:30:10,780 questions about where their money was and how it was invested, along with the 428 00:30:10,780 --> 00:30:15,460 efforts by the Department of Justice and the SEC and the CFTC really sort of 429 00:30:15,460 --> 00:30:20,860 caused a real bright spotlight onto this business, which caused the collapse of 430 00:30:20,860 --> 00:30:21,819 the organization. 431 00:30:21,820 --> 00:30:24,120 The feds decide it's time to move in. 432 00:30:24,400 --> 00:30:29,620 And once again, they tap their confidential informant, Ty Schlobom, for 433 00:30:30,080 --> 00:30:33,900 They began to tell me that things were going to proceed quite rapidly and to 434 00:30:33,900 --> 00:30:39,020 have organized or scheduled Trevor to be in the mansion at this time on this 435 00:30:39,020 --> 00:30:40,020 specific date. 436 00:30:40,220 --> 00:30:44,100 We also diagrammed the matrix of the interior of the building as well. 437 00:30:44,520 --> 00:30:48,960 On the day of the raid, investigators know exactly how to get to Trevor Cook's 438 00:30:48,960 --> 00:30:51,200 office and keep him there for questioning. 439 00:30:51,880 --> 00:30:55,040 They also collect hundreds of thousands of documents and files. 440 00:30:55,680 --> 00:30:59,140 including phony statements that were regularly sent to investors. 441 00:30:59,840 --> 00:31:02,220 The paper statements were made in -house. 442 00:31:02,460 --> 00:31:05,280 They were basically done by simple math. 443 00:31:05,480 --> 00:31:10,640 If you had $100 ,000 invested and you were promised 12%, you got your $1 ,200 444 00:31:10,640 --> 00:31:15,540 month, added on to your account statement, and then mailed to you. 445 00:31:16,620 --> 00:31:20,400 Investigators are tasked with tracking down and speaking to more than 700 446 00:31:20,400 --> 00:31:22,800 investors scattered across the country. 447 00:31:23,340 --> 00:31:27,680 One of those is Betty Waker, who first learned of the investigation from the 448 00:31:27,680 --> 00:31:28,680 press. 449 00:31:29,900 --> 00:31:31,320 I can't believe this. 450 00:31:32,380 --> 00:31:37,040 These guys are a bunch of crooks. I couldn't believe this in a million 451 00:31:37,140 --> 00:31:39,260 that this could happen to me. 452 00:31:40,620 --> 00:31:46,820 And yet I couldn't say, I'm so dumb, because I'm not dumb. 453 00:31:47,600 --> 00:31:50,660 I knew what I was doing. My eyes were open. 454 00:31:51,360 --> 00:31:57,320 But it was such a great, big, beautiful lie that we couldn't see through. 455 00:31:58,080 --> 00:32:04,100 The grandmother has no choice but to accept her fate as a victim of fraud. 456 00:32:04,880 --> 00:32:08,640 What do you say? What do you do? What can you do? 457 00:32:09,640 --> 00:32:11,940 Pray. There's nothing left. 458 00:32:13,300 --> 00:32:14,300 It's gone. 459 00:32:14,880 --> 00:32:18,480 The average investor lost about $200 ,000. 460 00:32:18,680 --> 00:32:19,680 The median... 461 00:32:20,000 --> 00:32:24,440 was about a $100 ,000 investment, and half of those people lost their entire 462 00:32:24,440 --> 00:32:25,440 life savings. 463 00:32:25,700 --> 00:32:30,340 So we're not talking about big institutions or sophisticated parties. 464 00:32:30,340 --> 00:32:36,500 talking about regular people who were scared about the economy, were scared 465 00:32:36,500 --> 00:32:39,760 about their investment options, and really trusted people. 466 00:32:40,580 --> 00:32:46,140 1 ,100 miles away, near Atlanta, Georgia, Kurt Harvey is happy that he 467 00:32:46,140 --> 00:32:51,680 invested. $200 ,000 of his retirement savings in hopes of a bright future. 468 00:32:52,600 --> 00:32:57,940 He is blissfully unaware that the walls are closing in on the Oxford Group until 469 00:32:57,940 --> 00:33:02,460 he tries to reach them about rolling over his wife's 401K as well. 470 00:33:02,860 --> 00:33:05,720 I left message after message, no answer. 471 00:33:06,180 --> 00:33:13,140 I started to get worried. I was traveling at the time, and so I made a 472 00:33:13,140 --> 00:33:14,140 more phone calls. 473 00:33:14,510 --> 00:33:18,990 And when I got to my hotel that night, I tried to go on the website, and the 474 00:33:18,990 --> 00:33:24,150 website was shut down already. And all of these different blogs came up and 475 00:33:24,150 --> 00:33:29,710 reviews came up, and it was run and hide, take your money before, don't 476 00:33:30,090 --> 00:33:33,070 it's a scam, the whole thing. 477 00:33:33,270 --> 00:33:39,050 And right then is when, you know, I lost it, just lost it. 478 00:33:39,610 --> 00:33:42,730 It's not long before Harvey confirms the worst. 479 00:33:43,440 --> 00:33:45,680 Much of his life savings is gone. 480 00:33:46,140 --> 00:33:48,440 Panic, just sick to my stomach. 481 00:33:50,480 --> 00:33:53,980 Definitely had to make several trips to the restroom. 482 00:33:54,220 --> 00:33:59,380 It was just so upsetting to know that I'd lost that much money. 483 00:33:59,960 --> 00:34:05,820 And to, I think I felt, you feel betrayed when you're duped by someone 484 00:34:05,820 --> 00:34:06,820 thought you could trust. 485 00:34:07,530 --> 00:34:12,250 While Harvey and hundreds of other victims are left reeling, a team of 486 00:34:12,250 --> 00:34:14,909 agencies is figuring out where the money went. 487 00:34:15,210 --> 00:34:20,250 And a federal judge assigns a receiver to seize the assets of the Oxford Group. 488 00:34:21,090 --> 00:34:23,790 $190 million was taken in from investors. 489 00:34:25,190 --> 00:34:29,310 Approximately $50 million of that was returned to investors in what I call 490 00:34:29,310 --> 00:34:30,308 lulling payments. 491 00:34:30,310 --> 00:34:34,929 So payments to investors that suggest to them that there's reality here, that 492 00:34:34,929 --> 00:34:36,570 there's profits that are being made. 493 00:34:37,050 --> 00:34:40,469 and gives them comfort that their investments are safe. 494 00:34:40,670 --> 00:34:46,710 But a lot of the money was sent to various banks, both domestically and 495 00:34:47,290 --> 00:34:51,050 for the purpose of these currency investments. 496 00:34:51,350 --> 00:34:55,330 The high -risk currency investments and tens of millions of dollars were 497 00:34:55,330 --> 00:34:57,310 actually lost in these currency investments. 498 00:34:57,930 --> 00:35:04,110 About $25 million was sent to the Swiss company called Crown Forex and then 499 00:35:04,110 --> 00:35:05,110 disappeared. 500 00:35:05,280 --> 00:35:08,380 So where did the money from Crown Forex go? The Swiss government is 501 00:35:08,380 --> 00:35:10,820 investigating and has been since this broke. 502 00:35:11,440 --> 00:35:14,380 No one seems to be saying where that money went. 503 00:35:14,820 --> 00:35:19,180 Another $13 million went to Trevor Cook's Panama casino deal. 504 00:35:19,540 --> 00:35:23,540 And Cook and his partners also spent about $30 million on themselves. 505 00:35:25,820 --> 00:35:32,080 Cars, houses, all of which ultimately was recovered by the receiver and sold 506 00:35:32,080 --> 00:35:37,590 auction. The receiver is able to recoup less than $15 million, which means 507 00:35:37,590 --> 00:35:42,890 pennies on the dollar return to the more than 700 investors who lost a total of 508 00:35:42,890 --> 00:35:44,770 nearly $150 million. 509 00:35:45,470 --> 00:35:49,990 When American Greed returns, instead of cooperating with the receiver as he 510 00:35:49,990 --> 00:35:55,370 agrees to, Trevor Cook is still lying and trying to stash as much loot for 511 00:35:55,370 --> 00:35:56,590 himself as he can. 512 00:35:56,990 --> 00:36:00,850 They found some money hidden in a locker. They found some money hidden in 513 00:36:12,560 --> 00:36:19,300 In November 2009, accused fraud mastermind Trevor Cook agrees to 514 00:36:19,300 --> 00:36:23,620 turn his assets over to a court -appointed receiver, but they find out 515 00:36:23,620 --> 00:36:24,620 still lying. 516 00:36:24,720 --> 00:36:30,140 Mr. Cook evaded that receivership and defied the court order, and ultimately 517 00:36:30,140 --> 00:36:34,340 was put in jail for failing to follow the court orders regarding his assets. 518 00:36:34,740 --> 00:36:37,960 We had received a call that the Mall of America had... 519 00:36:38,400 --> 00:36:42,640 found two duffel bags containing a bunch of foreign currency and a bunch of gold 520 00:36:42,640 --> 00:36:47,240 coins. They proceeded to put a camera on the lockers to see who shows up to get 521 00:36:47,240 --> 00:36:51,580 it. The next day, a known associate of Trevor Cook's comes to collect the 522 00:36:51,580 --> 00:36:54,180 contents of the locker and gives Cook up. 523 00:36:55,300 --> 00:37:00,620 Trevor Cook also fails a lie detector test and eventually leads agents to his 524 00:37:00,620 --> 00:37:05,240 brother's home, where they find another stash hidden in baseboards in the 525 00:37:05,240 --> 00:37:11,100 basement. $100 bills, gold and silver coins, collectible watches and sports 526 00:37:11,100 --> 00:37:14,980 memorabilia totaling more than $400 ,000. 527 00:37:15,900 --> 00:37:18,080 Trevor Cook sees the writing on the wall. 528 00:37:18,380 --> 00:37:19,780 He's got no other play. 529 00:37:20,160 --> 00:37:24,680 So he decides to plead guilty to charges of tax evasion and mail fraud. 530 00:37:25,180 --> 00:37:30,440 For his lack of cooperation, a federal judge sentences Cook to the maximum, 25 531 00:37:30,440 --> 00:37:35,020 years. But the judge still doesn't believe that Cook has revealed 532 00:37:35,790 --> 00:37:38,010 Judge Rosenbaum warned Trevor. 533 00:37:38,330 --> 00:37:42,830 He said, if you have any inklings that when you get out, you're going to go and 534 00:37:42,830 --> 00:37:49,030 find some money and live well for the rest of your life, get over it, because 535 00:37:49,030 --> 00:37:50,650 we're going to be watching you the rest of your life. 536 00:37:51,070 --> 00:37:55,990 It takes another two years for investigators to build their cases 537 00:37:55,990 --> 00:38:01,530 Cook's partners, Bo Beckman, Jerry Duran, and Pat Kiley. 538 00:38:02,310 --> 00:38:06,920 A fourth partner, Chris Pettengill, cooperates with prosecutors and gets a 539 00:38:06,920 --> 00:38:08,980 reduced sentence of seven and a half years. 540 00:38:09,380 --> 00:38:14,940 The other three go to trial and all are found guilty on more than 10 counts of 541 00:38:14,940 --> 00:38:21,000 fraud. On January 3rd, 2013, Betty Wigert is in the federal courtroom when 542 00:38:21,000 --> 00:38:24,480 men are sentenced for stealing her $50 ,000 inheritance. 543 00:38:25,220 --> 00:38:29,780 It is the most trying experience for just someone like me to sit there in 544 00:38:29,780 --> 00:38:32,740 room and listen to them lie. 545 00:38:33,500 --> 00:38:36,900 before the judge and get on their knees and cry. 546 00:38:37,540 --> 00:38:44,100 Bo Beckman couldn't even breathe. He was crying so hard before the judge to go 547 00:38:44,100 --> 00:38:50,160 lenient on him and have mercy on him. And then Jerry Duran's daughter, oh, my 548 00:38:50,160 --> 00:38:52,520 father has always taught us to be honest. 549 00:38:53,520 --> 00:38:55,860 I said, oh, yeah, right. 550 00:38:57,080 --> 00:38:59,540 Too bad he wasn't. 551 00:39:00,670 --> 00:39:03,890 And so it was quite a day, quite a day. 552 00:39:04,330 --> 00:39:10,790 The judge then sentences Bo Beckman to 30 years and Jerry Duran to 20 years. 553 00:39:11,610 --> 00:39:17,010 74 -year -old Pat Kiley's sentencing date is delayed due to his health. 554 00:39:17,770 --> 00:39:22,410 Joe Dixon believes that the stiff sentences represent a title shift in the 555 00:39:22,410 --> 00:39:24,470 punishment of white -collar criminals. 556 00:39:24,910 --> 00:39:29,830 I think... People are starting to recognize the devastation that financial 557 00:39:29,830 --> 00:39:35,470 can have on people's lives. The fraud in this case wasn't just one person. It 558 00:39:35,470 --> 00:39:36,990 was hundreds of people. 559 00:39:37,190 --> 00:39:40,370 And we're talking about unsophisticated elderly people. 560 00:39:40,590 --> 00:39:46,090 And so the fraud was really heinous in lots of respects and deserved very 561 00:39:46,090 --> 00:39:47,170 significant sentences. 562 00:39:47,690 --> 00:39:51,490 Now, Betty Wager gets by on her pension and Social Security income. 563 00:39:51,830 --> 00:39:54,110 She has no savings and no cushion. 564 00:39:54,440 --> 00:39:55,760 I watch every penny I spend. 565 00:39:56,480 --> 00:39:58,520 Every penny. You have to. 566 00:39:59,380 --> 00:40:03,800 I just keep saying every day, Lord, don't let my refrigerator break down. 567 00:40:04,240 --> 00:40:10,980 Lord, don't let me lose my furnace or have it stop because that can be 568 00:40:10,980 --> 00:40:11,980 expensive. 569 00:40:12,520 --> 00:40:16,460 Don't let my water pipes freeze because it's zero outside. 570 00:40:17,700 --> 00:40:19,480 Retirement was good for a while. 571 00:40:20,060 --> 00:40:22,380 I don't know how they live with themselves. 572 00:40:23,080 --> 00:40:26,580 Knowing what happened to these people, families were broken up, homes were 573 00:40:26,760 --> 00:40:31,740 people don't go to the doctor when they need it. These guys had no compunction 574 00:40:31,740 --> 00:40:38,180 whatsoever about taking money from old people who needed it and spending it on 575 00:40:38,180 --> 00:40:40,040 prostitutes and gambling. 576 00:40:41,400 --> 00:40:45,360 Sixty -year -old Kurt Harvey is in better shape than a lot of the elderly 577 00:40:45,360 --> 00:40:50,100 investors, but he and his wife still feel the pain of being victimized. 578 00:40:51,370 --> 00:40:53,810 I had planned to retire much sooner. 579 00:40:54,050 --> 00:40:58,490 I'm going to be working probably an extra nine years to make up that 580 00:40:59,690 --> 00:41:05,470 And the way the market is nowadays, that nine years might end up being work 581 00:41:05,470 --> 00:41:06,470 until you die. 582 00:41:06,750 --> 00:41:10,350 And I hope I never see them on the public street. 583 00:41:10,630 --> 00:41:12,230 Ever. Ever. 584 00:41:13,490 --> 00:41:19,270 To date, the Harveys have recouped just $5 ,500 of their $200 ,000 loss. 585 00:41:20,040 --> 00:41:26,080 There is still money unaccounted for, about $2 .4 million, and as many rumors, 586 00:41:26,200 --> 00:41:27,720 it seems, about where it might be. 587 00:41:27,960 --> 00:41:32,360 The most dramatic is one that involves Trevor Cook and the purchase of a secret 588 00:41:32,360 --> 00:41:36,340 submarine. They were never able to substantiate that, and he later said, 589 00:41:36,360 --> 00:41:39,960 that was all a lie, even though he said in an email, I just bought a sub. 590 00:41:40,570 --> 00:41:44,930 And so people wonder, you know, is that money sunk in a sub somewhere? 591 00:41:45,330 --> 00:41:50,050 Is it someplace that Trevor can get it when he gets out? According to the IRS, 592 00:41:50,470 --> 00:41:54,670 the most plausible theory is that Cook and his cohort simply partied the money 593 00:41:54,670 --> 00:42:00,990 away. Well, any time you take cash out of the bank, it's pretty much gone from 594 00:42:00,990 --> 00:42:05,250 there. It's hard to track. We knew they spent lots and lots of money having 595 00:42:05,250 --> 00:42:08,850 parties at the mansion, outside the mansion, bringing parties. 596 00:42:09,160 --> 00:42:14,980 back to the mansion. But for the most part, out of the $190 -some million, 597 00:42:14,980 --> 00:42:19,040 a small percentage of money that we can't trace. 598 00:42:19,400 --> 00:42:23,900 Ty Schlobom, the undercover informant who first identified the fraud and 599 00:42:23,900 --> 00:42:27,460 it to the authorities, now works in finance for U .S. Trust. 600 00:42:27,900 --> 00:42:32,060 He believes there's a lesson in this story that should resonate with other 601 00:42:32,060 --> 00:42:33,980 professionals in the industry. 602 00:42:34,480 --> 00:42:38,220 I hope there's any takeaway to this. It's that people within the industry 603 00:42:38,220 --> 00:42:40,720 fiduciary responsibility to the financial services industry. 604 00:42:41,000 --> 00:42:46,320 And I hope my story motivates people to not be so passive in their role in 605 00:42:46,320 --> 00:42:49,120 discovering and or assisting in the closure of France.