Asset forfeiture: US Court jails man for failing to deliver assets per Civil Order

The USA's Securities and Exchange Commission charged Cook and several others on 23 November last year, alleging involvement in an illegal foreign currency trading scheme.

When charges were laid, the SEC made application under the "civil recovery" regime for the freezing and seizing of a range of assets, including money in bank accounts under the control of the various defendants.

In the case of Cook, all his assets were frozen.

The SEC is pressing for delivery up of a diverse range of items that it claims Cook owns or controls: "USD27 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, Bon Jovi concert tickets, and USD670,000 in cash."

The SEC did not specify the date of the Bon Jovi concert but whatever happens, Cook's not going: he will have to hand over the tickets or he'll be in jail when the concert happens. In fact the concert is on 7 April in St Paul, Minneapolis (assuming he's booked for the event nearest home).

According to the SEC's complaint in the case, Cook and Kiley pooled investors' funds in bank and trading accounts in the names of entities they controlled. The foreign currency trading they did conduct resulted in millions of dollars in losses, and they misused approximately half of investor funds to make Ponzi-like payments to earlier investors and pay for Cook's gambling losses and the purchase of the historic Van Dusen Mansion in Minneapolis. The Commission charged Cook, nationally syndicated radio host Patrick J. "Pat" Kiley, and four companies they controlled in an alleged USD190 million foreign currency trading scheme.

The SEC alleges that Trevor G. Cook and Patrick J. "Pat" Kiley sold unregistered investments through shell companies by misrepresenting that they would deposit each investor's funds into a separate account in the investor's name to trade in foreign currencies and generate annual returns of 10 percent to 12 percent. They also misrepresented that their foreign currency trading program involved little or no risk and that investors' principal would be safe and could be withdrawn at any time. Kiley pitched the investments on his financially themed "Follow the Money" show that he hosted on radio stations nationwide.

The SEC's case is brought in the U.S. District Court for the District of Minnesota. The court also issued an asset freeze order against several relief defendants for the purposes of recovering investor funds in their possession: Basel Group LLC, Crown Forex LLC, Market Shot LLC, PFG Coin and Bullion, Oxford FX Growth L.P., Oxford Global FX LLC, Oxford Global Managed Futures Fund L.P, UBS Diversified FX Advisors LLC, UBS Diversified FX Growth L.P., and UBS Diversified FX Management LLC. The court also entered a freeze order against certain assets of Cook's in-laws, relief defendants Clifford and Ellen Berg, who received investor funds from Cook. In addition, Judge Davis issued an order appointing a receiver over all of these assets. None of these entities using the UBS name are affiliated with UBS AG, the Switzerland-based global financial services firm.

The SEC announced in November that the court had "issued the freeze and receivership orders under seal while the assets were being secured." It now seems as if that latter statement was premature.

It is believed to be the first time that a civil action by a regulatory authority has resulted in a defendant being jailed for contempt, particularly before trial.