Currency trading: Minneapolis man pleads guilty to USD190 million currency ponzi

In his plea agreement, Cook admitted that from January 2007 through July 2009 he, aided and abetted by others, schemed to defraud no fewer than 1,000 people out of approximately USD190 million by purportedly selling investments in a foreign currency trading scheme. In reality, however, he diverted a substantial portion of the money provided him for other purposes, including making payments to previous investors; providing funds to Crown Forex, SA, in an effort to deceive Swiss banking regulators; purchasing ownership interest in two trading firms; buying a real estate development in Panama; paying personal expenses, including substantial gambling debts; and acquiring the Van Dusen Mansion in Minneapolis.

To carry out his scheme, Cook caused false statements to be made to potential investors, including promises that the investment scheme would generate annual returns of 10 to 12 per cent, and that trading would present little or no risk to investors' principal. He also caused material information to be withheld from investors, such as the precarious financial position of Crown Forex, SA, in Switzerland, an entity through which he traded. In addition, he withheld the fact that trading at PFG in Chicago generated losses in excess of USD35 million between 1 July, 2006, and 31 Aug., 2009.

In furtherance of the scheme, Cook caused an account to be opened in the name of Crown Forex, LLC, at Associated Bank, which he used for depositing investor funds that he subsequently diverted for his personal use as well as the personal use of others.

He also caused statements to be sent to investors that misrepresented the status of their investments. In addition, he caused due-diligence letters to be prepared that falsely represented Oxford Global Advisors as having more than USD4 billion in assets under management, and that all accounts were liquid.

Specific to the charges, Cook admitted that on 29 Jan., 2009, he caused a USD50,000 cheque to be sent through the U.S. mail from Arizona to Minnesota for investment in his foreign currency trading scheme. He also admitted that on 15 April, 2009, he filed a false and fraudulent U.S. Individual Income Tax Return, Form 1040, for calendar year 2008, by failing to report taxable income of at least USD5,285,719, upon which there was tax due in the amount of at least USD1,844,571.