Forex Fraudster Jailed For Violating Court Orders in CFTC Anti-Fraud Action
Minnesota Federal Judge Throws Trevor G. Cook in Jail For Dissipating Funds and Failing to Surrender $35 Million+ in Assets
In November 2009, the U.S. Commodity Futures Trading Commission (CFTC) ordered an emergency freeze of assets belonging to Minnesota residents Trevor G. Cook and Patrick Kiley and their trading companies. Cook and Kiley, who were charged with fraud and the misappropriation of customers’ funds, are accused of running a “massive forex scheme that defrauded hundreds of customers of more than $190 million”. In addition to providing their customers with falsified account statements, the CFTC’s complaint accuses the defendants of “misappropriating customers funds to purchase property, develop a hotel and casino in Panama, buy seven luxury cars, a house boat and a submarine and find their frequent gambling”.
The details of this case further justify the new registration requirements under the new CFTC forex proposal released in January. These requirements have been put in place to combat the issue of fraud with respect to off-exchange foreign currency trading (forex) by allowing more regulatory oversight of the forex industry. Hopefully, this increased oversight will prevent outrageous defrauding of forex customers in the future.
The full text of the CFTC press release is reprinted below and can also be found here.
To read the initial CFTC press release from November 24, 2009, click here.
To read the full CFTC complaint, click here.
To read the full CFTC order, click here.
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Release: 5779-10
For Release: January 29, 2010
Minnesota Resident Trevor Cook Incarcerated for Violating Court Orders in CFTC Anti-Fraud Action Charging Him in $190 Million Foreign Currency Fraud
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that Minnesota federal Chief Judge Michael J. Davis incarcerated CFTC defendant Trevor G. Cook on January 25, 2010, for violating the court’s asset freeze order against him by dissipating funds and failing to surrender more than $35 million in assets. The court had ordered the asset freeze in connection with a CFTC civil anti-fraud action.
In a hearing that concluded on the same day, the court found Cook in civil contempt, and U.S. Marshals escorted him from the courtroom to jail. Chief Judge Davis ordered that Cook remain in jail until he has “purged the contempt” by, among other things, surrendering $27 million located in offshore accounts, a BMW and two Lexus automobiles, a submarine, a houseboat, a collection of expensive watches, a collection of Faberge eggs and $670,000 in cash.
The CFTC filed a motion in December, 2009, alleging that Cook had violated the court’s asset freeze in the CFTC’s case against him entitled CFTC v. Trevor Gilson Cook et al., filed in U.S. District Court for the District of Minnesota on November 23, 2009 (see CFTC Press Release 5756-09, Nov. 24, 2009). The CFTC obtained an emergency court order freezing Cook’s assets on the same day the CFTC filed its complaint.
The CFTC complaint charges Cook, nationally syndicated radio host Patrick J. “Pat” Kiley, and six entities they controlled with fraud and misappropriation in connection with running a massive scheme that defrauded over 900 U.S. customers of more than $190 million. As alleged, the defendants fraudulently solicited customers for the purported purpose of trading off-exchange foreign currency (forex) contracts in managed, segregated accounts. The accounts were allegedly placed with Crown Forex, SA, a Swiss entity, in which Cook has been a majority owner since at least December 2008. The CFTC also charges that Cook and the other defendants misappropriated millions of dollars of customer funds, using them to purchase property, develop a hotel and casino in Panama, buy seven luxury cars, a house boat and a submarine and to fund their frequent gambling.
In its continuing litigation in this matter, the CFTC seeks a return of ill-gotten gains, restitution to defrauded customers and civil monetary penalties.
The CFTC appreciates the assistance of the U.S. Securities and Exchange Commission and the U.S. Attorney’s Office in Minneapolis.
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Other related forex law articles include:
- Federal Court Freezes Assets of Moroccan Resident Richmond Hamilton, Jr., and the Chicago Commodity Pool He Manages in a $1 Million Pool Anti-Fraud Case Brought by the CFTC
- Pennsylvania Resident Joseph Forte Admits to Operating a Multi-Million Dollar Ponzi Scheme in CFTC Enforcement Action
- CFTC Charges a Couple in North Carolina and Their Companies in a $22.5 Million Ponzi Scheme
- Retail Forex Registration Regulations Proposed
- Series 34 Exam
Bart Mallon, Esq. of Mallon P.C. runs the Forex Law Blog and provides forex registration service through forexregistration.com. Mr. Mallon also runs the Hedge Fund Law Blog. He can be reached directly at 415-868-5345.
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[...] Forex Fraudster Jailed For Violating Court Orders in CFTC Anti-Fraud Action Bart Mallon, Esq. of Mallon P.C. runs the Forex Law Blog and provides forex registration service through forexregistration.com. Mr. Mallon also runs the Hedge Fund Law Blog. He can be reached directly at 415-868-5345. [...]