Frequently Asked Questions

The Receiver continues to receive a significant volume of questions from investors by email, at hearings, and through our 800 number. While we cannot answer every question we receive for a variety of reasons, we would like to address some of the more frequently asked questions here.

June 24, 2010 FAQ

Question 1: Has the plea agreement specifically helped your office in locating assets? If so, how?

As of today, the answer to these questions is no. Earlier this year, representatives of the Receiver sat down with Trevor Cook for a lengthy interview concerning what he did with investors’ money. Cook confirmed that he sent the investors’ money to Crown Forex, JDFX, Mesa Holdings, JP Fund Services, Capricorn, Oxford Global Managed Futures Fund, various Panamanian entities, various other Swiss entities, and a number of offshore gambling accounts. In short, Cook corroborated what we already knew and confirmed some details that were previously only our suspicions.

After the meeting, Cook signed numerous releases, waivers and powers of attorney appointing the Receiver as his legal representative concerning various accounts that he or his companies held around the globe. These releases were notarized under the Hague Convention standards and served on the various institutions where the accounts were opened requesting information about the accounts, their balances and transactions histories. The use of notarized releases, waivers and powers of attorney are important because although the Receiver, pursuant to Chief Judge Davis’ orders, controls the assets of Cook and his various entities in the United States, the Receiver and the underlying orders from Chief Judge Davis are not recognized in another country without an order from that country’s court. Obtaining such an order in another country can be costly, difficult, and in some cases, impossible to obtain.

The Receiver is hopeful that with the notarized releases, waivers and powers of attorney signed by Cook, we will be able to more effectively search for offshore funds without having to incur the cost of separate court proceedings, unless warranted by the facts. We are planning a follow-up interview with Cook before he is sentenced.

Question 2: In your own opinion (not to be considered legally binding in any way), has Trevor Cook cooperated with the letter and intent of the plea agreement? My understanding from your quoted comments is that he has merely corroborated what you have discovered.

See the answer to question 1 above. The letter and, what we believe to be the intent, of the plea agreement is that Cook is to be fully cooperative with us in identifying and repatriating investors’ funds. Cook has answered the questions we posed to him and signed the releases we presented to him. However, he has not led us to any new or significant assets.

Cook’s basic claim is that the bulk of the money was sent to Crown Forex and is presumably now lost due to its insolvency. This story does not make sense to us, given the SEC’s investigation, as disclosed in the public record, and the vast amounts of money that seemingly have vanished into offshore banking, trading, and gambling institutions. Moreover, Cook’s past behavior of recklessly spending investors’ money, sending it all over the world, and trying to hide the remainder in violation of the Court’s Asset Freeze Orders, is indicative of his mindset in this matter.

Question 3: In a recent email, Fred Abrams alluded approvingly of your activity concerning the Crown Forex issue. Please elaborate as much as possible in that regard.

The Receiver had a lengthy call with Mr. Abrams at the request of the investors. Our discussion centered on the Receiver’s public efforts to repatriate funds from Switzerland and other countries and whether Mr. Abrams could be of assistance in these efforts. The Receiver is appreciative of Mr. Abrams’ offer of assistance and is evaluating, in consultation with Chief Judge Davis, where Mr. Abrams could be of most use to the Receivership.

As we explained to Mr. Abrams, shortly after being appointed last fall, the Receiver began working with Swiss counsel to repatriate investor funds that were sent to Crown Forex and any other Swiss institutions where investor money may have been sent. Specifically, the Receiver is working with two highly reputable law firms in Switzerland. One set of Swiss counsel is pursuing a claim for $66 million in the Crown Forex bankruptcy case. The Receiver is using the other set of Swiss counsel to interface with a variety of Swiss financial institutions and government officials in pursuit of investor funds. For example, the Receiver has uncovered a $1 million account in Cook’s name at UBS bank in Switzerland. That account has been frozen by the Swiss criminal authorities under suspicion of money laundering. Our Swiss counsel is our liaison with the bank and Swiss criminal authorities to ensure that those funds are ultimately repatriated to the investors. We also are working with Swiss counsel to identify any additional funds in Switzerland through the releases, waivers and powers of attorney that Cook has signed.

We will continue to follow up on credible leads in Switzerland, and elsewhere, as warranted by the facts and anticipated costs.

Question 4: Would it be possible to reveal the farce of Trevor Cook's plea agreement by simply asking him if he has shared everything and then disclose an area in which he has not been truthful? (So far, no one wants to touch this one--but it is worth a try.)

If we find areas in which Cook has not been truthful, we will make that known to the Court.

Question 5: Is the recovery effort affected once Cook is sentenced? If so, how?

Possibly. After sentencing, Cook has no incentive to cooperate with the Receiver unless he believes the government will seek to reduce his sentence based on that cooperation. We cannot speak for the government and cannot speculate on whether that is a possibility.

Question 6: If Cook doesn’t explain where the money went, will you and the prosecutor still vouch that he was cooperative? It doesn’t seem right that he can refuse to disclose where the money went, serve 20 years or so, and leave prison a millionaire! We all know how good he is at hiding assets overseas.

See the answers to questions 2 and 4 above. We cannot speculate on what the prosecutor or the government will do.

Question 7: I can’t believe he will only get 25 years for ruining the lives of so many! What needs to happen for him to serve more than 25 years?

The Receiver had no involvement whatsoever in the criminal charges, the plea negotiations, or the agreement that was ultimately reached between Cook and the government. The criminal charges filed against Cook constrain the amount of time that Cook can receive. As charged, Cook cannot be sentenced beyond 25 years.

For Cook to receive a sentence longer than 25 years, two things must happen:

  1. the Court would have to reject the plea agreement; and

  2. the government would have to obtain an indictment that charged Cook with crimes that carry maximum sentences greater than 25 years.

Question 8: What is the total amount of investor losses reported?

In connection with Cook’s guilty plea, the United States Probation Officer has sent out requests for victim impact and financial loss statements and will be compiling a list of victims and the amount of loss. The Receiver has not determined the total amount of losses; however the SEC’s complaint stated losses of at least $139 million. We anticipate that the final number arrived at by Probation will be greater than $139 million.

Question 9: Do you expect this to increase?

See the answer to question 8 above.

Question 10: What is your low-end estimation of the recovery?

The largest current investors’ assets are a claim in the Crown Forex bankruptcy in Switzerland, claims against various individuals and entities in Panama, and claims in the United States against Mesa Holdings and Ed Baker. In addition, the Receiver will be making claims to “clawback” money received preferentially by others from Cook or in excess of their investments. We are pursuing these assets in a manner that is as efficient and cost-effective as possible and are hopeful that these efforts will produce additional financial restitution to investors. Nevertheless, we cannot speculate about the outcome of any particular claim or asset, how long resolution will take, or what it will cost.

In addition to the legal claims, Cook made a number of investments using investors’ money in a variety of closely held entities and financial institutions for which the present value is unknown. These include, among others, JDFX, JP Fund Services, Capricorn and Mesa Holdings. Here again, we are working to maximize the value of these investments for return to the investors although we cannot speculate at this time about what that value will be.

As of June 23, 2010, after taking into account all legal fees and expenses incurred by the Receiver including those submitted to the Court on June 23, 2010, the Receiver has approximately $4 million in cash (this amount does not include the $1 million at UBS in Switzerland).

Question 11: What is your estimation of when these recovered funds will be returned to investors?

The Receiver is still engaged in litigation in the United States, Panama, and Switzerland, with additional “clawback” litigation anticipated. Ultimate distribution of the funds will be controlled by the Court, likely through the United States Probation Office. Given the ongoing nature of the efforts to recover the assets in litigation, there is a possibility that more than a single round of distribution may be ordered by the Court.

Currently, Cook is set to be sentenced on July 26, 2010. It is common at sentencing hearings for the Court to order restitution to the victims as identified by the United States Probation Office. As to the amount and timing of restitution and the specific handling of claims, we cannot speculate.

Question 12: What is happening with the case?

Our web site provides the most current information concerning the Receiver’s public activities in the case. It contains the Receiver’s public filings and relevant Court Orders in the civil case brought by the SEC and CFTC case, as well as relevant filings and Orders from the criminal case. We have also provided links to the Court’s and the U.S. Attorney’s web sites about the case. To protect the integrity of our ongoing investigation, we cannot make public all of our current efforts, however we make every effort to make our work as transparent as possible.

June 29, 2010 FAQ

Thank you for your continued questions. Because we do not want to compromise our investigation, we cannot disclose exactly what we have done, where we have looked and to whom we have spoken. Nevertheless, we have endeavored to answer questions that deal with the most common lines of inquiry submitted by you. We have selected actual and representative questions that have been submitted to us as a means to convey information to you.

Our priority is to locate and return the money that you lost in this Ponzi scheme, and we are focusing all our resources directly on those tasks. As we informed many of you, we are committed to being as transparent as possible about our work; however, we cannot use up our very limited resources responding to questions. We will do our best to continue providing you with information on a regular basis through our motions, receiver reports and statements in open Court, and in response to your questions in this Q & A format. We anticipate being able to respond to your questions in this Q&A format on a roughly monthly basis.

Question 13: My husband and I were investors through Bo Beckman and without our knowledge Trevor Cook. Mr. Beckman, when represented by Andy Luger, had told us that they had been able to trace our investment to Crown Forex SA. Are you planning to ask Mr. Beckman or Mr. Luger about investors’ money that can be traced to Crown Forex SA?

We have interviewed Mr. Beckman about his involvement in this matter and are continuing our investigation into his role. Beyond that, we cannot disclose the details of our investigation. As discussed in answers to previous questions and in earlier Receiver Reports, we have filed a claim with the Swiss liquidators responsible for the Crown Forex liquidation for approximately $66 million on behalf of Receivership entities. The Swiss liquidators are evaluating all such claims and we await their decision. The liquidators have not provided us with any information other than that they are evaluating all claims.

Question 14: You have subpoenaed 250 people and at last count we heard you have interviewed about 50. When will we learn who is on the subpoena list and who has been interviewed? Thanks.

We have served the Court’s Orders on over 400 financial institutions. We also have served subpoenas on approximately 250 individuals and institutions. We have also interviewed numerous individuals. We cannot at this time release the details of who we have served and interviewed, although more details on these activities will be made public in our final report to the Court. As noted above, disclosing such information at this point would compromise our ongoing investigation.

Question 15: Were most of the “preferred clients” who got their money back in June mostly Dale Madison clients?

No. As stated in our prior court filings most of the “preferred clients” were investors recruited by Cliff Berg.

Question 16: In regards to Gary Saunders, there is a $2.1 million discrepancy between the amount sent to him and the amount that was forwarded to Panama for the casino investment based upon the accounting in the Receiver report.  Why doesn't the Receiver at least sue him for the $2.1 million discrepancy; couldn't it potentially lead to assets overseas?  It is reported that he went to Saxo Bank in London in October/November 2009 to obtain money for the project.  Couldn't he have provided knowledge of overseas assets?   Ed Baker was not a relief defendant either, yet the Receiver has gone after him for $3.8M.

We have interviewed Mr. Saunders about his involvement in this matter and are continuing our investigation into his role. Beyond that, we cannot disclose the details of our investigation.

In general, our decision to pursue any legal claim requires careful consideration and weighing of the following four factors:

  1. the amount of any potential recovery;

  2. the chances of actually collecting that amount;

  3. the chances of succeeding in proving the claim in court;

  4. the amount in investor funds that will be used up in pursuing, proving and collecting on the claim.

If we legally pursued every person or entity who played a role in Mr. Cook’s Ponzi scheme, we would very quickly use up all investor funds. We cannot do that and have to be very judicious in our decisions.

Question 17: Do you know if there are any plans for the Judge or DOJ to order a lie detector test?

We cannot comment on either the Court’s or Department of Justice’s plans in this regard. We have recommended to the government that it submit Mr. Cook to a lie detector test prior to his sentencing on July 26, 2010 for the purposes of locating assets

Question 18: Does the Receiver or the Court plan to make public the investors and amount of money lost?

See the answer to Question 8. Our understanding is that Judge Rosenbaum will make public a list of victims and the amount of loss in the criminal case.

Question 19: I understand that there are approximately 584 true investors. The number of investors comes from records recovered from Mary's computer, but many of those investors had closed their accounts before the scheme fell apart.  Has the Receiver investigated the closed accounts as to legitimate closures or pay outs for special people?

See the answer to Question 18. We believe that there are a few hundred more investors than the 584 who lost money in this Ponzi scheme.

We are tracing the money in and out of Receivership accounts to ensure that only those investors who actually lost some or all of their principal receive restitution. We also are investigating whether any individuals received any money back as “interest” or received some sort of financial benefit, whether any individuals were tipped off about the SEC investigation or had their accounts cashed out as a result of the investigation, and the circumstances of individuals who cashed out their accounts before the scheme fell apart and the amount that they received in relation to the amount that they put in.

August 12, 2010 FAQ

Question 20: Why has there not been a distribution of $6 to $7 million to investors who have been waiting for one to occur?  It seems to me that the distribution amount seems to get smaller because of your fees. The fees are seemingly very regular but discovery of additional funds has not occurred.

The timing and amount of any distribution will be directed by the Court. I have no control over when and how much to distribute. However, there are several parts of this question where I can elaborate.

First, the Receivership estate is not getting smaller. Rather, it is currently at least twice as large as it was when the Receivership began—and this includes all expenses and fees. Moreover, additional funds are being added regularly to the estate.

Second, fees are being paid on a regular basis because there are many employees who have been working tirelessly on behalf of the investors. These employees need to be paid. They have done a tremendous amount of hard work locating, retrieving and liquidating assets. You can see some, but certainly not all, of that hard work reflected in assets that are continuously located and added to the Receivership estate and in the substantial court filings made to date that are all aimed toward that same end. In addition, the people on my team have worked at a discounted rate throughout the Receivership and continue to do so.

Third, the Receivership’s fees and expenses are scrutinized by the SEC, CFTC and the United States Attorney’s office on a monthly basis and are approved by the Court only after full and careful review of a highly detailed billing and expense records. These detailed records cannot be made public because they set forth with specificity the Receiver’s ongoing efforts. Details of our ongoing efforts must remain confidential because public disclosure could compromise our investigation and, consequently, our ability to recover assets for victims. We are as transparent as possible in detailing everything we can in our publicly filed motions to the court concerning the retrieval and liquidation of assets, claims against third-parties and requests for payment of fees and at the hearings on those motions. You can be assured that if the Receivership were not adding value, the Court would not allow it to continue or approve any payment for our efforts.

Fourth, more than half of the total expenses to date have nothing to do with my fees. They have to do with paying investigators, computer specialists, tax experts, accountants, forensic experts, appraisers, security guards, insurers, auctioneers, warehouse personnel, contractors, trade creditors, lawyers, web designers, and management companies, to name a few. The expenses also relate to hiring the necessary personnel to help us locate and repatriate assets in foreign lands such as Panama, Canada, and Switzerland. All of these expenditures have been essential to my mandate of locating, preserving, and returning assets to investors.

Lastly, the six or seven million that you speak of would be only two to three million without our efforts.

Question 21: We, who are in the lawsuits against Entrust and possibly Associated [Bank], originally brought claims against Entrust before the CFTC/SEC enforcement actions and before the Receivership was established. Jack [Harper, an attorney for some of the investors,] met with the SEC, CFTC, and you (the Receiver) to discuss your position as it related to any claims we would be pursuing against Entrust, Associated Bank, etc. After Jack received assurances from you, the SEC, and the CFTC that the stay in the federal case did not impact our right to pursue private lawsuits against these organizations or people who you would not be pursuing, and there would not be any claim against any money we were able to obtain, we decided to join in the lawsuit. We have invested a lot of time and thousands of dollars with the understanding that any possible proceeds would have no impact on anything we would obtain from the receivership. Since we are hearing the opposite now, could you please explain to me what happened to change this. Was there a misunderstanding in the beginning? Did circumstances change? Did you get some new information that changed your position on this?

There was obviously a misunderstanding from the beginning. My position has not changed from the start of the Receivership and there has been no change in circumstances.

I believe that under the law you are entitled to restitution in an amount equal to, but in no event greater than, your actual loss. And, in cases such as this where there is not enough money to pay all the victims in full, the amount of restitution will be proportional to your actual loss.

To the extent that you recover any amount, that amount is no longer a loss. Therefore, you would not be entitled to restitution for what you have already recovered. This is the law and has been the law of restitution for ages. See 18 U.S.C. § 3664(j)(2) (“Any amount paid to a victim under an order of restitution shall be reduced by any amount later recovered as compensatory damages for the same loss by the victim in any [Federal or State civil proceeding]”). I would not and could not agree to anything different.

As I told Mr. Harper when we met at the start of the Receivership, the stay in the SEC and CFTC cases did not impact your right to pursue a private lawsuit against Entrust and Associated Bank. Because such a lawsuit would not impact the Receivership estates, I told Mr. Harper that the Receiver had no objection to any investors pursuing private actions against these entities. However, I never told Mr. Harper that any money that you might recover through a private lawsuit would not be deducted from your claim for restitution from the Receivership.

Indeed, this issue never came up in our discussions. Given that the law of restitution is well-settled and crystal-clear that a victim is entitled to restitution but only up to the amount of the actual loss suffered and no more, there was no reason for Mr. Harper and I to be discussing what would happen if there was a recovery. In my mind, it has always been that if investors recover outside of the Receivership then they have reduced their loss by the amount of the recovery. In other words, investors cannot make a claim to the Receiver where they otherwise have recovered for the same loss.

If you succeed in your private lawsuit against Entrust and Associated Bank, you undoubtedly will keep the money that you would recover. You would not share it with the other victims. Therefore, unless you are willing to share the money that you recover with all the victims of the fraud, then your claim for restitution must be reduced by what you keep.

Also, it is worth noting again that the foregoing is my view on the law of restitution and how distributions should be calculated. However, I am not your attorney and am not advising you as such. Ultimately, questions concerning the size and timing of any distributions will be decided by the Court.

Question 22: I am one of those unfortunate people victimized by the Cook Kiley scam. They have stolen most of my life savings and at 64 years old I will never be able to recover from this. Our attorney Jack Harper of Messerli & Kramer, P.A. has advised us that you have accumulated $6.7 million and could make a partial distribution if so inclined. You would be helping me and I suspect many others more than you could imagine if you would agree to do a partial distribution.

The decision to make a partial distribution is not mine to make. The Court will decide when to make a distribution. Nonetheless, I will certainly pass along your circumstances and concerns to the Court.

Question 23: To the extent that a client incurs expenses or fees in pursuing a third-party claim, will these expenses be offset against the amount of the third-party recovery as measured by the Receiver?

No. An investor who chooses to engage his or her own attorney for purposes of recovering from the fraud is liable for his or her own attorney fees and costs.

Question 24: If the answer to No. 23 is “no,” how will the expenses incurred in pursuing third-party claims be factored into the distribution analysis?

See above. An investor’s expenses incurred in pursuing third-party claims will not be factored into the distribution analysis.

Question 25: Will the offset be 100%, or will the Receiver consider a smaller percentage offset as part of the distribution plan?

The offset will be 100% of any recovery.

Question 26: If our clients do not recover the full amount of their investments from third-parties, and the amount of recovery plus the pro rata distribution from the Receiver do not “make the client whole” with respect to their loss, will an offset still be taken?

Yes.

Question 27: What is the Receiver’s position with regard to investors who have unresolved third-party claims at the time the Receiver makes the final distribution?

Those investors will be paid their pro-rata share but such investors will be under obligation to return the amount distributed to them up to the amount recovered from any third party.

Question 28: How does the sentencing of Trevor Cook impact your investigation and recovery efforts?

It is unlikely to have any significant effect. To date, Mr. Cook has not disclosed any significant assets that were unknown to us.

Question 29: Because of the latest discovery, people are getting creative ideas about where Trevor Cook might have hidden other assets. Was Trevor questioned about additional hidden assets at other places? Since he came from Investment Rarities and other gold coin businesses, how do we not know they haven't hidden assets similarly dozens of times in different places?

Mr. Cook has been extensively questioned about all assets that we are aware of and whether he had any hidden assets anywhere and with anyone around the world. He claimed that there were no hidden assets anywhere. However, recently, he disclosed hidden assets ($200,000 in cash and about $200,000 in silver and gold coins) that his brother was hiding. There is no way for us to know whether there are more hidden assets.

Question 30: Was the secret passageway in the mansion searched? Was it searched behind the walls with some type of scanner?

Yes. An extensive manual search was conducted but, given our limited resources, and continual cost-benefit analysis, we have not engaged in any type of search that we had no reason to believe would yield results. We had no reason to believe that a search of the mansion with scanners would have uncovered any hidden assets.

Question 31: Cook gave Gary Saunders $9.8 million to purchase the Panama Bay land, yet the sellers of the land received only $7.7 million, according to the Receiver's Third Status Report. Can clawbacks be used to get back $2.1 million from Saunders? Or, can the discovery process from Saunders of a Summary Proceeding be used to extract  a verifiable accounting as to the $2.1 million?

Mr. Saunders and the whereabouts of the $2.1 million are still under investigation and we cannot comment further at this time.

Question 32: Was Cook asked in the lie detector test about the approximately $44 million that is separate from investor money (the alleged corporate profits that Kiley told me about and Cook told others about)?

We cannot respond to questions concerning any lie detector test because we did not administer any such test. Those questions should be directed to the United States Attorney’s Office and the FBI.

Question 33: Was Cook tested about CFX SA, the Fased payment, etc.?

See the response to Question 32.

Question 34: Have you interviewed Beckman? Allegedly he and Cook hated each other. Could he not have some incriminating evidence?

We have interviewed Beckman. He is still under investigation and we cannot comment further at this time.

Question 35: How does Cook’s performance in the lie detector test effect his plea bargain?

We are not a party to the plea bargain and cannot comment on Cook’s performance or its effect on the plea bargain. That is an issue for Judge Rosenbaum to decide. The plea agreement required Cook’s cooperation with the Receiver in recovering assets. If asked by the Court to comment on the record, I will do so.

Question 36: I have heard Kiley and Mahmoud were not cooperative in their interview. Have they given any helpful information to you or any of the agencies such as the FBI?

Mr. Kiley invoked his Fifth Amendment rights when we tried to interview him. He has not provided any helpful information. Mr. Mahmoud was subpoenaed for documents and interviewed. We cannot make any further comment at this time. Any questions concerning whether government agencies (such as the FBI) have received information should be directed to the U.S. Attorney’s Office or the agency directly.

Question 37: Prosecutor Joe Dixon said at the July 12 meeting that once Cook is sentenced, there would likely be a restitution order and a partial reimbursement. Since the summary actions against the preferred clients for $7.4 million and other recent developments, can you speak to the likelihood of a disbursement and an approximate amount?

I cannot. Chief Judge Davis and Judge Rosenbaum will decide if a partial disbursement will be made, when it will be made, and the amount (if any).

Question 38: What has been discovered about the relationship between Crown Forex SA and CGI Forex?

We do not have any jurisdiction outside the United States so we cannot subpoena either Crown Forex or CGI Forex to learn of their relationship. In addition, the Swiss liquidators have not provided us with any information or documents from Crown Forex so we have no means of ascertaining the relationship between the two companies. From evidence received from Receivership entities, it appears both Crown Forex and CGI were being run by the same people and as part of the same group of companies.

Question 39: What is the status of the investigation in Mauritius concerning Basel Financial owned by the same consortium as Crown Forex SA albeit sans Cook? Because of the connection, how might it help us?

See the response to Question 38. We have no jurisdiction outside the United States. Although we cannot comment specifically on Basel Financial, we have received requests from government agencies regarding our knowledge of various entities outside the United States and have given our complete cooperation in hopes that additional money can be recovered for Cook’s victims.

Question 40:  Could you give an opinion of how Cook’s recent lie detector performance might affect his plea or what your recommendation to Judge Rosenbaum might be?

No. Judge Rosenbaum has been kept fully informed of the scope and details of Cook’s interaction with the United States Attorney’s Office and with us. If Judge Rosenbaum requests my opinion on the record, I will provide it. Otherwise, I have no comment.

Question 41: Would it benefit your investigation if the sentencing were further delayed and if others were charged?

At a certain point, there is nothing further to be gained by delaying Cook’s sentencing. As to charging others, that is not within the area of my responsibilities and I do not want to speculate on who might be charged and how that might impact our investigation.

Question 42: What is the status of James Pieron of JDFX/IB Tech of whom Cook invested $15 million and who held the partner stock? What about the other European brokerages who have been identified as holders of registry funds?

James Pieron has put JDFX into liquidation claiming that the adverse publicity surrounding Cook has destroyed his business. We are investigating this matter further and evaluating our options. As to the other European brokerages, we have no jurisdiction outside the United States. At our request, Cook executed general powers of attorney to further our ability to repatriate foreign assets. We have received information and documents from some foreign institutions and are still in the process with others.

September 23, 2010 FAQ

Question 43: Do we yet know the potential benefits ARIF [Association Romande des Intermédiaires Financiers—a self-regulated non-profit private rights association in Geneva, Switzerland dedicated to the prevention and the fight against laundering] registration and Swiss regulation might have for our matter?

No. We are still waiting for the Swiss Liquidators of Crown Forex SA to provide us with information regarding the $66 million claim submitted to them on behalf of UBS Diversified. To date, we have received no information from the Swiss Liquidators. Until we receive information, there is nothing that we can provide to ARIF.

As we mentioned in our previous answers, we do not have jurisdiction outside the United States. Accordingly, we cannot compel any person or entity outside the United States to comply with our requests.

Question 44: Was there any applicable insurance in connection with Crown Forex?

We do not know. We have not received any documents whatsoever from Crown Forex, S.A. including any that might relate to any insurance that it may have had. Nonetheless, any possible claims for insurance or other compensation are premature until the claim with the Swiss liquidators has been decided.

Question 45: Why is the interim distribution set at $2,250,000 rather than the full amount of $5,427,265? My thought, along with most other victims, was to get OUR money back before it is all used up on fees, etc. That doesn't seem to be the case. So far the victims have gotten $0.00. Expenses and fees incurred to date are $2,281,519. Does that seem fair?

The interim distribution is designed to provide some measure of relief for victims before the Receivership is concluded and a final distribution is made.

Those working on behalf of the Receivership have added value to the Receivership and it is fair that they receive reasonable compensation for their efforts. When the Receivership began there was only approximately $1.9 million cash available for all the victims. Today there is $5,427,256 in cash. That is a net gain of $3,627,256.

The net gain does not include other substantial amount of work that the Receivership staff has been done on behalf of the victims. This other work includes tracking down additional Receivership assets, filing motions to retrieve and liquidate those assets, litigating in Panama, working with U.S. Probation, the FBI, the IRS, the SEC and CFTC, helping investors submit and substantiate claims for restitution, and preparing for an interim distribution. The Receiver, his staff, and his vendors, continue to work at a discounted rate to minimize the burden on the investors to the extent possible. In some cases, the Receiver has been able to secure critical services to the Receivership at no cost whatsoever.

The interim distribution alone is more than the $1.9 million that would have been available but for the Receivership. The interim distribution is $2,250,000 in civil restitution plus $362,700 in criminal restitution, for a total of $2,612,700. (The $362,700 available for criminal restitution is a Receivership asset that Chief Judge Davis has authorized to be used for criminal restitution.)

If the entire $5,427,256 is distributed now as you suggest, there would be no money left to fund the clawback actions against those who received preferential treatment, the clawback actions against the mortgage companies, the Panama litigation, the retrieval of money from Switzerland, the sale of the Canadian property and the retrieval of those assets, or the orderly and equitable distribution of money to the more than 800 victims in this fraud. A full distribution will end the Receivership immediately and end any chances of recovering the preferential payments, the Panamanian assets, the Canadian assets or the Swiss funds, which in turn are worth somewhere between $5 to $10 million.

Please note that any victim is free, at any time, to ask Chief Judge Davis to terminate the Receivership.

Question 46: Trevor Cook hired and paid a team of lawyers hundreds of thousands of dollars to defend himself with victims' money. Why isn't that being clawed back? Why is it any different than clawing back salaries, commissions, etc. as stated in the Receiver's Fifth Status Report?

The Court decided this issue in January 2010 and ruled that the lawyers had earned the money and were entitled to keep it.

Question 47: How is the clawing back of commissions going to work if the sales representative received more in commissions than he or she "invested" with Cook? Are you going to sue the sales representative for the full amount of the commissions? Can the sales representative avoid paying this back by declaring bankruptcy? What if the sales representative claims he or she spent the money and can't pay it back? What steps will you take to prevent him or her and others similarly situated from hiding money?

As stated in our answer to Question 16, the Receiver's actions are governed by the Court's Orders and a cost-benefit analysis on a case-by-case basis. Unless we can foresee a net gain for the Receivership estates, we will not take legal action on a given matter. In short, our mandate is to maximize the recovery for the victims. At a minimum, the Receiver will make adjustments to any claims submitted by sales representatives (or others who received money or other benefits from the Receivership entities) to reflect the Receivership assets they have already been paid. The Receiver cannot advise what sales representatives may or may not do other than to reiterate that they, like every other individual or entity with Receivership assets, are governed by the Court's Orders.

Question 48: Trevor Cook had key associates or plausibly, accessories, co-conspirators and accomplices, who have yet to be charged, even a year after the news of the crime hit the press. Now that Cook has been sentenced, is it plausible that the investigation will wind down due to lack of resources, leaving Cook's associates free to bank our money or assets purchased with our money? For example, the Receiver is aware of an alleged accessory to Cook's crime, who holds an interest in foreign land purchased around 2008 using funds mostly, if not entirely traceable to Cook. Purportedly, in 2008, this individual did not have sufficient personal assets to purchase such a real estate interest, leaving us to suspect that his real estate interest must have been a gratuity from Cook in return for that individual's complicity. No individual should be allowed to walk away with ill gotten gains or assets racked up by helping Cook secure investors to fleece, launder money, or by other wrongful acts. That is not just or equitable. If the Receiver cannot or will not pursue such assets, could the Receiver suggest a way for the public to do so?

As stated in the answer to Question 47, the Receiver is governed by the Court's Orders and a cost-benefit analysis in everything we do. Some meritorious claims cannot reasonably be pursued because the cost of litigation would outweigh any potential recovery. Other meritorious claims have not been pursued because, although there is a potentially high judgment, it would probably not be collectible. We understand investors' frustrations on these points—and share them. We would like to ensure that no one be allowed to gain from this fraud, no matter how small the gain. However, we must remain focused on our goal of maximizing recovery for the victims and leave pursuit of wrongdoers and ill-gotten gains to the government authorities.

At some point which likely will be in the next year or so, we will have exhausted the claims that make sense for us to litigate. At that point, the Receiver will ask Chief Judge Davis to terminate the Receivership. The public can thereafter continue to urge the SEC, the CFTC and the United States Attorney's Office to pursue charges or claims against any of Cook's associates and assets that might still exist.
 

October 20, 2010 FAQ

Question 49:  On the FAQ page of your site you mention a $66 million claim submitted on behalf of UBS in the Swiss bankruptcy of Crown Forex.  How would the payment of this claim affect the victims of this case?  Furthermore, when are these claims supposed to be paid or rejected?

We have inquired, but have yet to receive information from the Swiss authorities about how or when they will process the claim.
 

Question 50:  You state that you are actually only going after $5 to $10 million more? How did we go from $66 million to $5million?

As explained in Question 49, the $66 million figure relates to the claim that UBS submitted in the Swiss bankruptcy of Crown Forex.  Because that claim is being handled in confidence by the Swiss government, we do not have any estimation of whether that claim will be recognized or if so, in what amount.  We are not optimistic about the chances of any recovery on the $66 million claim pending before the Swiss liquidators and therefore have not included it in any of our projections.


The $5 to $10 million referenced in response to Question 45 relates to actions where we have information or control.  Specifically, the $5 to $10 million includes our estimated returns on the clawback actions in Chief Judge Davis' Court, as well as the litigation in Panama, sale of the Rainy Lake property in Canada, and expected return of approximately $1 million the Receiver found in an account Cook held at UBS in Switzerland.
 

Question 51:  Why do you keep saying we have no jurisdiction outside of the United States?  Haven't you hired overseas lawyers to work on our behalf? Is there anybody (i.e. FBI) that WOULD have jurisdiction outside of the US?

We cannot impose American laws on foreign countries.  Each country is a sovereign nation and has its own laws and procedures.  There is no court, governmental agency or law enforcement agency in the United States that has any jurisdiction in a foreign country.  There are a number of mutual assistance treaties in which one government can ask another government for help.  But these are merely requests and cannot be mandated.  In addition, these requests take years and perserverance to yield results.

We have asked for the assistance of foreign authorities but are at their mercy as to if, when, and how they will help and the extent of any help that they might offer.  Our overseas lawyers are assisting our efforts in Panama, Canada, and Switzerland, but they cannot compel anyone to comply with our requests unless we have a good faith factual and legal basis to (1) invoke the mutual assistance treaties in place in their respective countries or (2) file a lawsuit under the laws of their respective countries as was done in Panama and Canada.

If we were to hire overseas lawyers to follow-up on every possible lead, hunch, or speculative tip that we have received, we would very quickly deplete all the assets of the Receiver Estate.  We have hired overseas lawyers only where we have identified specific and existing assets and where we believe we have a good chance of recovery, such as, in Panama, Canada, and Switzerland.
 

Question 52:  I am writing after reading Dan Browning's recent article in the Star Tribune on October 18, 2010.  I sent a completed form and documents to Justin Delfino in Chicago and also completed a separate claim to you via certified mail.  The documents sent to you included copies of bank cashier checks, other checks and bank documents to substantiate the amount I actually deposited with Pat Kiley.  I have not heard anything back from you indicating that my claim has been accepted or verified, is lacking documentation, is incomplete, or is inaccurate with respect to the amount that I demonstrated that I had deposited.  The article states that out of 1,200 investors, the Receiver has only verified 668 claims, with losses totaling $142 million.

In light of the fact that it appears you will be asking Chief Judge Davis to set a deadline of January 14, 2011 for investors to file a claim, and that many investors have filed incomplete claims and others failed to account for withdrawals, how do we know if our claim has been accepted or verified or if you need additional documentation to clarify any possible irregularities before the possible cut-off date?

As soon as the Court approves the interim distribution and the procedures for claim processing and final accounting, which we expect to be in early November 2010, we will send out letters to all known investors.  The letters will inform investors whether they will be receiving an interim distribution and, if so, the amount of their recognized claim and the amount of the pro-rata interim distribution that they will receive.

In the meantime, please feel free to contact us by telephone on the Receiver hotline (local: 612-436-9664, toll free: 877-316-6129) or email (info@cookkileyreceiver.com) to confirm that we have all the information from you that is necessary to process your claim.  
 

Question 53:  I am interested in entering into an agreement with you for a finder's fee for all bank accounts found in foreign countries held by any of the individuals involved in the Oxford Global Ponzi Scheme, including but not limited to:  Cook, Kiley, Beckman, Durand, Saunders, etc.  I am requesting 10% of all monies found by me and returned to the USA by you for disbursement to the victims.  Are you willing to consider this offer?

Unless you actually find a foreign account that we are not aware of and you actually provide substantial assistance in successfully returning the funds in that account to us in the United States, then your offer has no value to us.  If you are able to locate such an unknown account and you in fact substantially assist us in successfully repatriating the money to the Receivership, then we would be willing to pay a finder's fee of no more than 3%.

Question 54:  If I am an investor who worked for Cook and received some form of compensation or other benefit from Cook, will I get an interim distribution?

No.  We are in the process of adjusting your claim to take into account the amount of cash or other benefits that you have already received from Cook.  After your claim is adjusted, we will notify you of our determination and provide you with an opportunity to be paid out based on that amount or contest our determination.

In the final accounting, all investor claims will be adjusted to ensure that everyone, employee or not, receives an equal pro rata share in proportion to the amount that they have actually lost.

Question 55:  Henry Mahmoud, at the hearing, told an investor that it was still possible for Cook to communicate with one of his minions concerning the transfer of funds to hidden locations.  Is this true?  What steps have been taken to prevent this from happening?

We do not and cannot know the veracity of such statement.  Cook is under Court Order to disclose and return all assets.  It is our understanding that all telephone calls to and from the jail are monitored.  However, there is no way to prevent Cook from communicating with the outside world.  Not all of his constitutional rights are terminated by his imprisonment.
 

Question 56:  At the hearing Kiley compared our matter to the REFCO theft, where he alleges that most of the money was found in an offshore bank in Pakistan.  What credence do you place in this possibility?

None.

Question 57:  Please confirm how my share of recovered assets will be determined.

The final amount you will receive cannot be determined yet, but reasonable estimates of your percentage are possible. The general formula we will follow is:


[{Total Invested} - {Total Received (if any)}] /  Total of All Recognized Claims x Total Amount of Distribution = Payout




 

Until the final accounting is completed, we cannot say exactly what the total amount of all recognized claims will be, but it will likely be somewhere between $150 to $160 million.  With this estimate, investors should be able to get an approximate calculation of their percentage of the total recovery.

November 29, 2010 FAQ

Question 58: Why are you not optimistic about the potential recovery of the $66 million Crown Forex claim?

The Swiss authorities took over and are liquidating Crown Forex SA because it was insolvent and incapable of paying its creditors.

Question 59: How many times and in what manner have you contacted the Swiss Liquidators regarding the $66 million claim?

We have attempted on many occasions to contact the Swiss Liquidators by correspondence, telephone and personal contact through two different sets of Swiss counsel that we have retained to assist us in Switzerland. The liquidators have treated the Crown Forex SA bankruptcy as highly confidential and have not shared any substantive information with us. They informed us that they could not provide us with any information until such time as they had completed their claim review process. Once that process is completed, they will draw up and publish a schedule of accepted claims. They said that this process will take time measured in months.

The most recent information we have is that the liquidators are preparing to finalize the inventory of assets and liabilities of Crown Forex SA. The draft inventory will then be submitted for approval to the Swiss financial market authority, FINMA. Once approved by FINMA, each deemed creditor of Crown Forex SA will be informed if its claim has been accepted or rejected. Creditors whose claims have been rejected by the liquidators will have a right to sue the bankruptcy estate to overturn this rejection.

The inventory of claims will be made available to all creditors, which will also have a possibility to challenge other creditors’ claims, but not to the general public.

These next steps are expected to happen in 2011.

Question 60: Since you have been unsuccessful in securing even a response from the Swiss liquidators handling the $66 million Crown Forex claim (i.e. how they will evaluate the claim, when the claim will be decided, etc.) perhaps we can help. If you provided us with the contact info for the liquidators, we could all contact them every day until they responded. Perhaps having the faces behind the names would compel them to respond.

The Swiss liquidators contact information can be found at http://www.crownforex.info.†‡

Question 61: “There are a number of mutual assistance treaties in which one government can ask another government for help. But these are merely requests and cannot be mandated. In addition, these requests take years and perseverance to yield results.” Have we made these requests? If the receivership is not pursuing these assistance treaties, we would like to know how to do it and who to contact so that we can continue to pursue this once the receivership is terminated.

Requests under a mutual legal assistance treaty, or MLAT, can only be made by one government to another government. Because the Receiver is not part of the government, he cannot make an MLAT request. We understand, however, that the United States Attorney’s Office has made an MLAT request to the Swiss authorities. For more information, please direct your inquiries to the United States Attorney’s office at 612-664-5600.

We have requested the SEC’s Office of International Affairs (“OIA”) to formally request the Swiss Authorities to assist us in our investigation and to help repatriate any assets that are found in Switzerland. OIA has made this request and we are awaiting a response from the Swiss authorities.

Question 62: What are the tax consequences of the distribution checks for those investors who had the money in IRAs? The IRS directed us to publication 202-45, and it appears that the IRS may treat the distribution checks as disbursements from the IRA accounts and, for anyone under the age of 59.5 years, charge a 10% penalty on the distribution checks from the Receiver. To ensure that the distribution is not a taxable transaction and avoid the 10% penalty, can we rollover our distribution to another eligible retirement plan within 60 days of the distribution?

The Receiver cannot provide any tax advice related to your investment or any distribution made from the Receivership. Please consult your tax advisor regarding the tax consequences of these issues.

The IRS has regional offices that may be able to assist you. A list of IRS regional offices can be found at http://www.irs.gov/localcontacts/index.html.†‡ Also the IRS has a Taxpayer Advocate Service that may be able to help you. For more information please visit http://www.irs.gov/advocate/index.html.†‡

Question 63: We recently received the interim civil and criminal restitution distribution checks for the loss suffered by us due to the actions of Cook and others. Thank you for your efforts on our behalf. We are confused about the status of Associated Bank. Are some of its assets frozen and available for the receivership? If so, how, how much, and what is the status of the receivership claim against Associated Bank? We were not able to find any of this information in your latest status report. If large amounts of money were at the bank, and the bank might have played a role in the fraud, why was Associated Bank not named as a "relief defendant"? We see from your earlier FAQ that there is a separate private lawsuit involving some of your claimants and the bank. What is your understanding of the nature of those claims, and why are those claims not being brought under the receivership? Thank you for all of your assistance.

No deposits remain at Associated Bank. Although approximately $100 million flowed through the accounts that Cook and others opened at Associated Bank, only $970,000 was found in those accounts at the time that the Court entered its asset freeze order in November 2009. The Receiver seized the $970,000 and those funds became part of the interim civil distribution.

The SEC and the CFTC brought the two civil lawsuits that created the receivership. Those agencies were the ones who named the “Relief Defendants” in the lawsuits. The Receiver had no say in who was named as a Relief Defendant.

The private lawsuit brought by certain investors against Associated Bank is based on a theory that the bank was negligent and owed a duty to those investors in handling the accounts that Cook and others opened at the bank and used to perpetuate the fraud. The Receiver is not part of and has no role in this lawsuit.

In the meantime, the Receiver’s investigation into Associated Bank is ongoing and, as such, we cannot comment further on this matter.

 

December 16, 2010 FAQ

Question 64:  Do you know whether the IRS will in certain circumstances allow fraudulent losses of IRA funds to be deducted from income for tax calculations?

Please see our answer to Question 62.  The IRS issued guidance concerning treatment of losses arising from Ponzi schemes that can be found at the following sites:
The IRS Commissioner identified revenue rulings and procedures related to Ponzi schemes at: http://www.irs.gov/Businesses/Corporations/Reporting-Losses-Resulting-from-Ponzi-Schemes.
Embedded in the foregoing link are links to the actual revenue ruling:  http://www.irs.gov/pub/irs-drop/rr-09-09.pdf; and the revenue procedure:  http://www.irs.gov/pub/irs-drop/rp-09-20.pdf.
 We urge investors to consult either a tax advisor or contact the IRS directly about tax issues stemming from your investment or any distribution from the Receivership that you may receive.

Question 65:  Do you know whether I can write-off the entire amount of my investment (in or outside of an IRA) for tax purposes and treat your distribution as ordinary income?

Please see our answers to Questions 62 and 64.

Question 66:  From a tax standpoint, do we take the loss against our taxes now or do we wait in the event we will receive reimbursement?

Please see our answers to Questions 62 and 64.

Question 67:  I was an IRA account holder at Entrust and I called the IRS and they said that the distribution checks would be a "distribution" from my IRA and therefore, since I am not 59 ½ years old, there would be an additional 10% penalty.  They said that the receivership would issue 1099-R's and that the IRS would get copies.  On my 1040 form, why can't I treat the distribution as "other income," especially if you will not issue any 1099-R's for these checks?

Please see our answers to Questions 62 and 64.

Question 68:  Are the accounts and assets Jason Beckman has in MN, TX, FL and any other states, frozen?

Beckman is not a defendant or a relief defendant in the two civil cases, SEC v. Cook, et al. and CFTC v. Cook, et al. However, to the extent Beckman is in the possession, custody or control of any Receivership assets, they are subject to the Court's Asset Freeze Order and belong to the Receivership.

Question 69:  Where do you stand on pursuing Kiley and what he has embezzled from us?

The SEC is proceeding in its civil case against Kiley, SEC v. Cook, 09-cv-3333 (D.Minn.), which is the same case in which the Receiver was appointed. The Receiver has already seized property from Kiley and to the extent additional assets are located in his name, those will be seized as well.

Question 70:  Is Kiley still in the country or where does he presently live?

The Receiver understands that Kiley presently lives in Minnesota.  He has appeared before Chief Judge Davis on a number of occasions.

Question 71:  Should someone put this in front of the news media, Fox News for instance, to see if their investigative department can do something about this as they have with other folks by putting the embezzlement in front of the public?

This matter has received extensive media coverage in the Twin Cities and also national coverage by CNN and the New York Times.

Question 72:  Obviously the distribution from the Cook settlement was a joke compared to what we had invested.  Is this all we will receive?

No.  We acknowledge that the interim distribution was small compared to your investment. We understand, and share, your frustration and are doing our best to maximize recovery while minimizing expenses.  We anticipate that there will be another distribution in the future.

Question 73:  Shouldn't Millennium Trust and Entrust have some monetary responsibility in this situation as they were the custodians and collected fees?

We cannot advise any investor about potential claims they may have against third parties such as Millennium Trust and Entrust.  We are presently analyzing our options with respect to providers such as Millennium Trust and Entrust. Our course of action with regard to these entities will be guided by a cost-benefit analysis as discussed in response to previous requests.

Question 74:  It has been reported that Jason Beckman has been driving a Maserati in his neighborhood. Is this the same Maserati sold by Trevor Cook?

We do not know what car Beckman is driving around his neighborhood.  Cook sold a Maserati to a local dealer on October 20, 2009.  The dealer had no notice of Cook's fraud and paid fair value for the car.  By the time Receiver was appointed, the car had been sold by the dealer to a third party.  Since being appointed, the Receiver has taken possession, custody and control of all known assets that Cook had, presumably, including the money paid by the dealer for the Maserati.

Question 75:  I was reading the article about the lawsuits filed in the Bernie Madoff case, and I was wondering in the Trevor Cook case, if there is a deadline for filing against alleged possessors of registry assets? Also, after looking at the SEC's Proposed Case Management Plan for Pat Kiley, are all fourteen disclosures, etc; open to the public, or are they closed hearings?

The statute of limitations applicable to the Receiver's claw-back actions is six years from the Receiver's discovery of the facts leading to the claw-back claim.  In contrast, the applicable statute of limitations in the Madoff case was two years.

We don't understand the remainder of the question, specifically what is meant by the 14 disclosures.  All hearings and filings in this case are public.

Question 76:  Investors are aware of the limitations of the Receiver's jurisdiction as mandated by the appointment order.  However, other receiverships have jurisdiction to sue foreign entities, and custodial institutions both here and abroad in wide ranging claw back actions. The Receiver obviously has some jurisdiction in Panama and we appreciate the comment in the lastest FAQ #63 concerning Associated Bank.  Do you foresee a time when the Receiver's mandate could be expanded to that comparable to the Madoff, Petters and Hecker cases?

Our mandate is broad and international in scope.  However, as stated in response to Question 16, our decision to pursue any legal claim requires careful consideration and the weighing of the following four factors:

     1.     the amount of any potential recovery;
     2.     the chances of actually collecting that amount;
     3.     the chances of succeeding in proving the claim in court;
     4.     the amount in investor funds that will be used up in pursuing, proving and collecting on the claim.

If we filed a lawsuit against every person or entity that played a role in, or benefitted from, Cook's Ponzi scheme, then we would very quickly use up all investor funds.  We cannot do that and have to be very judicious in our decisions.
Filing international lawsuits requires retaining foreign counsel, getting the Receivership Orders in this case and the Receiver recognized in a foreign jurisdiction, and then completing the typical litigation process in that country.  Given the limited resources available to the Receiver, and balancing the four factors discussed above, the Receiver is only pursuing litigation in Panama at this time.

Question 77:  According to reports, one of the areas in which Trevor Cook has not cooperated is PFG Best. Per the Hlavacek declaration, "approximately $46 million was transferred to accounts held by PFG Best, Inc. for the purpose of trading in futures and foreign currencies" [Hlavacek at 20]. It is later stated that, "All but $12,208 of the remaining $35.3 million was lost in trading by Cook." However, Exhibit 12 of the SEC Exhibit 21 that purports to detail activity concerning this entity is merely an incomplete list of withdrawals with some deposits listed. Where could one obtain a comprehensive and accurate statement of all activity including any alleged trading?  There are those who allege the "losses" are merely withdrawals. Have you interviewed Nolan Schiff?  Would his collected fees be subject to claw back?  Have you interviewed investors who claim their money was moved out of PFG into other institutions such as CFX SA?  How do we know that there are not substantial receiver assets associated with this entity?

Our investigation into the activities of Cook, others, and the Receivership entities at PFG Best is still ongoing and we cannot comment further at this time.

Question 78:  Our understanding of the impending FINRA arbitrations with Beckman is that if the plaintiffs win, settlement assets will come from the insurance and assets of the sponsoring companies, one of which is Western International Securities, and that the settlements received will reduce the plaintiff's claims with the receivership in the amount received.  Is this correct and is there other possible impact on the receivership other than this reduction in claim?

At this juncture we are not privy to the terms of any settlements that Mr. Beckman may have entered into in the FINRA arbitrations.  However, to the extent that investors recover for their losses in this Ponzi scheme in another forum, their claims to the Receiver will be reduced by the amount of their recovery.

Question 79:  I would like to challenge the Receiver's recognized claim amount that was detailed in a recent correspondence to me.  Do I need to file the challenging affidavit with the Court or any of the government agencies?

Not at this time.  In the Court's November 1, 2010 Order, Chief Judge Davis approved a claim finalization procedure whereby the Receiver informs each victim of his or her recognized claim amount and provides 30 days for them to accept or challenge that amount.  If the investor chooses to challenge, the affidavit and supporting documentation must be submitted to the Receiver in the first instance, not the court.  If the Receiver and challenging investors are not able to resolve the difference, a process will be put in place for judicial resolution.

 

January 17, 2011 FAQ

Question 80:  What legal proceedings not involving the Receiver are you aware of with allegations stemming from the scheme?

We are aware of the following legal proceedings:

Grad et al. v. Associated Bank
 

Filed:                             October 27, 2009
Venue:                           Wisconsin Circuit Court, Brown County
Cite/Docket No.:              09-cv-2949
Status:                           Dismissed, Pending Appeal
Plaintiffs:                        Herman Grad, Marya Grad, Keith Gillam, Murielle Vendette Gillam, Ivan Velev, Maia Veleva
Defendant:                      Associated Bank
Appeal:                          Wisconsin Court of Appeals, District 3 (10-ap-1461)

In re Mack et al.

Filed:                              November 15, 2010
Venue:                            Arizona Corporation Commission
Cite/Docket No.:             S-20768A-10-0463
Status:                           Open
Plaintiff:                          Arizona Corporation Commission
Defendants:                   Joseph Mack and Helen Marie Mack d/b/a Secure Retirement Solutions, Mack Financial Group, LLC, 
                                      Darin Whittington and Gina Whittington

McDonald et al. v. Entrust Group, et al.

Filed:                              February 2, 2010
Venue:                           Minnesota District Court, Hennepin County
Cite/Docket No.:             27-cv-10-2253
Status:                           Open
Plaintiffs:                        Louise Beatty, Timothy Beatty, Gunvant Bhatt, David Bratt, Mark Cobb, Allen Collins, James Devito
                                      Craig Engel, Stephen Flemmons, William Fravel, Karen Gladstone, Bonnie Gloth, Harry Grusche,
                                      Sandy Grusche, Curtis Harvey, Dan Haynes, Diann Haynes, Edward Hemenway, Robert Herr,
                                      Edith Hoeppner, Shirley Jacobs, Joseph Kalina, Donald Kincaid, Karl Kokotan, Stephen Laube,
                                      Donald Lindberg, Thomas Los, Joan McDonald, Phillip McDonald, Michael McGonnell, Paul Migliorelli,
                                      Jacquelyn Miller, Russell Miller, Donald Moran, David Nielsen, Barry Owens, Robert Pajor,
                                      Mary Patterson, Michael Patterson, Jerome Reynolds, Robert Roiger, Robert Roof, Greg Rutter,
                                      Gordon Schepke, Kathlyn Schepke, David Smith, Dwight Smith, Edgar Stephenson, 
                                      Linda Stephenson, Mark Sticha, Ronald Stolpman, Lawrence Treiber, Daryl Vossler, 
                                      John Walencik, Stanislaw Zukowski
Defendants:                  Entrust Midwest LLC, The Entrust Group


Steinberg v. Entrust Midwest et al.

Filed:                             January 18, 2010
Venue:                          Northern District of Illinois
Cite/Docket No.:           10-cv-332
Status:                          Open
Plaintiff:                         Ronald Steinberg
Defendants:                  Entrust Midwest, LLC, The Entrust Group, Inc.


In re NRP Financial

Filed:                             September 24, 2009
Venue:                           FINRA
Cite/Docket No.:             09-05297
Status:                          Noted as settling on October 6, 2010 for $50,000

In re Western International Securities

Filed:                             September 14, 2010
Venue:                           FINRA
Cite/Docket No.:             10-03946
Status:                           Pending

In re NRP Financial and Western International Securities

Filed:                             May 1, 2010
Venue:                           FINRA
Cite/Docket No.:             10-01907
Status:                           Pending

In re Western International Securities

Filed:                             November 17, 2009
Venue:                           FINRA
Cite/Docket No.:             09-06587
Status:                          Arbitration Pending

In re Oxford Private Client Group

Filed:                             September 9, 2009
Venue:                           FINRA
Cite/Docket No.:             UNKNOWN
Status:                           Pending


 

May 26, 2011 FAQ

Question 81: In light of all the money that has been dissipated by the alleged perpetrators such as Beckman et al, and the fact that the FINRA settlements have been escrowed, why can't the Receiver file a motion to escrow the preferred clients’ funds until the outcome of the upcoming trial?

The Receiver will not comment on pending litigation.

Question 82: How much money is currently in escrow concerning the current FINRA settlements?

We have been informed by the lawyers for the FINRA Claimants that the amount in escrow is approximately $3.4 million.

Question 83: What is the status concerning the proposed settlement with Ed Baker’s insurance company?

Chief Judge Davis approved the Receiver’s Miller-Shugart Agreement with Mesa and Ed Baker by Order dated March 15, 2011. Pursuant to the agreement, Mesa stipulated to the entry of judgment against it and in favor of the Receiver in the amount of $1MM, plus costs, fees and interest. Ed Baker also stipulated to the entry of judgment against him and in favor of the Receiver in the amount of $500,000, plus costs, fees and interest. The Court in the Hennepin County Action entered judgment against Mesa and Baker and in favor of the Receiver on March 22, 2011.

Pursuant to his rights under the Miller-Shugart agreement, the Receiver filed suit against Baker and Mesa’s insurer, Arch Insurance Company, on May 20, 2011. In that case, which is titled Zayed v. Arch Ins. Co., 11-cv-1319 (D. Minn.), the Receiver seeks, among other things, an award for all damages sustained as a result of Arch’s breaches of contract with Mesa and Baker, including but not limited to the amount of the judgments entered against them in the Hennepin County Action and attorneys’ fees.

Question 84: Can you give an update on Crown Forex SA?

We are still awaiting the liquidators’ decision on the claims filed on behalf of receivership entities. We will provide further information when we receive it. In other words, there is essentially no change or updates to report since our responses to Questions 3, 38, 42, 43, 44, 49, 50, 51, 58, 59, 60 and 61.

In the meantime, we filed a motion for an order for rule to show cause against Charles Hendrickson. The details can be found on our website under “Receiver Filings” here.

Question 85: Following the May 23 hearing with Kiley, do you intend to interview him again? Aren’t there some limits to the use of the Fifth Amendment in civil cases? How does that bear on Kiley pleading the fifth previously at your office?

We do not presently intend to interview Mr. Kiley. Given his public statements and court filings professing, and continuing to profess, his innocence and complete lack of knowledge concerning the Ponzi Scheme or the whereabouts of the millions of dollars that were stolen from investors, we do not believe that an interview would produce any results of benefit to the investors to justify the expense of preparing for and interviewing him. In addition, he previously asserted his Fifth Amendment privilege when we tried to seek information from him. Should the SEC and CFTC depose him, we will submit our questions at that time.
 

Question 86: If the escrowed $3.4 million comes into the registry, will you make another interim distribution?

If the Receiver prevails on his current motion to prevent the distribution of the $3.4 million to the FINRA Claimants, that amount will be frozen and it will not be distributed until such time as the Receiver or the investors’ class as a whole (as described in our motion papers) prevail on, or settle, their claims against NRP and Western.

On a related note, if and when we receive the $1.2 million that are being held by the Swiss authorities, we will ask the Court for permission to allow us to distribute that amount in another interim distribution.
 

June 24, 2011 FAQ

Question 87:  From the criminal information filing related to Chris Pettengill, were any registry funds placed in R.C.G.F. (Resolute Capital Growth Fund) that might be recovered?

We are investigating this issue, but chances of recovery seem very unlikely.  It appears Resolute Capital Growth Fund, a fund based in the British Virgin Islands, was liquidated years ago.

Question 88:  In light of the recent recovery from Switzerland and your comment in the filing, when can we expect another interim disbursement?

We plan to file a motion seeking permission from the Court to distribute the Swiss funds in the next few weeks.

Question 89:  According to my understanding, the Receiver and Mr. Harper are still interested in the Associated Bank matter.  What possibilities do you foresee in regard to this?

We consider Associated Bank to be an ongoing investigation and cannot comment further at this time.

Question 90:  What is your assessment of the Swiss "DEPOSIT PROTECTION SCHEME" [iv] in relation to recovery at Crown Forex?  Why is this matter taking so long?

We do not know why the litigation of Crown Forex is taking this long.  We are looking into the deposit protection scheme mentioned, but do not believe it is likely to result in significant, if any, recovery because of the CHF 100,000 per client limit.  Though many clients were told that they had individual accounts at Crown Forex, we do not believe that to be the case.  We hope to learn more upon learning the liquidators' decision on the Receiver's pending claims.

Question 91:  If I give you information that leads to a substantial recovery, will you consider paying a finder's fee?

We continue to receive variants of this question, which is addressed in response Frequently Asked Question 53, and the answer has not changed.  While we welcome tangible information not already known to us that would result in additional recovery, we believe that any such recovery should equally benefit the entire class of victims.  We cannot favor one person over any other.  As such, in the appropriate set of circumstances, we are willing to consider asking the Court to allow reasonable compensation for substantive work or information that in fact brings overall value to the receivership.

Question 92:  Can you provide an accounting as to where the investors' money went?

The SEC provided a full accounting in the Scott Hlavacek Declaration in Support of Plaintiff's Ex Parte Motion for Asset Freeze, Appointment of Receiver, and Other Emergency Relief. Click here to see the Hlavacek Declaration.

August 17, 2011 FAQ   

Question 93: When will Pettengill’s name be added to the receivership estates? When do you plan to interview him?

Neither the SEC nor the CFTC has filed a civil lawsuit against Pettengill seeking to impose a receivership over him or his assets. Although Pettengill is not named in the three pending civil receivership cases, the Court’s Receivership Orders in those cases are broad enough to encompass any asset in Pettengill’s custody, possession or control that can be traced to the Receivership Estates or to any Receivership asset. In addition, criminal forfeiture provisions will apply in the context of the criminal case against him.  

Question 94: In light of the following quote in the Star Tribune, what is being done to investigate the possibility that falsified accounting and trading records were used to hide assets?

“An IRS criminal investigator working on the case has reviewed a set of e-mails between Cook and some unidentified cohorts in which they discussed trades, fund transfers, meetings and "falsification of financial records," Rice said. At least one of the e-mail accounts ends with the Internet domain name theoxfordpcg.com , she said -- an account associated with Beckman's firm.”

Article by: DAN BROWNING , Star Tribune, June 16, 2010
http://www.startribune.com/business/96398139.html?page=3&c=y

Though Beckman and his company were only recently added to the Receivership, we have been investigating his involvement with Cook and their joint activities from the beginning of the Receivership in November 2009. Thus, we have been aware that Cook and his cohorts used the domain theoxfordpcg.com to send emails relating to trades, fund transfers, meetings, and ‘falsification of financial records.’ We reviewed the numerous seized computers and boxes of paper records for leads and have given copies of all them to the various government agencies investigating Cook and his cohorts. The result of the FBI’s and IRS’s investigation into this and related issues is the criminal cases that were filed against Pettengill, Beckman, Kiley, and Durand.  

Question 95: What are the statute of limitations guidelines concerning FINRA claims that might be brought in our matter? According to a Texas attorney the limit in Texas is only 2 years for negligence claims and 3 years for fraud claims. Are the limits different in our venue and how might various statutes of limitations affect our matter? What is the discovery rule date (terminus ad quem) for our potential FINRA claims?

We cannot provide any legal advice regarding any potential claims that any investor may bring against any third party, whether through the court systems, FINRA or otherwise. We suggest that you contact a lawyer who can analyze your specific situation and advise you of the applicable statute of limitations and other issues.  

Question 96: I have heard that some investors have filed or settled their FINRA claims, but that such claims or settlements have been stayed or enjoined. Should I wait to bring my FINRA claim until sometime later?  

Again, we cannot provide legal advice regarding claims that any investor may have, whether through the court system, FINRA or otherwise, and suggest contacting a lawyer to analyze your specific situation. Please note that the Court’s Receivership and Asset Freeze Orders enjoin investors from commencing or continuing any lawsuit or proceeding (including FINRA arbitrations) if those lawsuits or proceedings may in any way affect a Receivership asset.

However, the Order Continuing Appointment of the Temporary Receiver in the CFTC’s case, 09-cv-3332, does state that “actions may be filed to toll any applicable statute of limitations.” (See Docket No. 96 at IV.A.) Accordingly, it is the Receiver’s position that an investor may file a FINRA claim (or any other type of lawsuit) so long as the filing is solely for the purposes of tolling any applicable statute of limitations. We suggest you discuss this matter with your attorney to determine if, how, and when you should proceed.  

Question 97: We were appreciative of your advocacy but justifiably disappointed in previous adverse rulings concerning attorney fees. In the case of H. N. Mahmoud, the grand jury indictment stated that the funds transfer to Mahmoud for $100K constituted wire fraud on the part of Mr. Kiley [grand jury indictment, p. 23]. Do you think in light of that you will be able to recover those funds in a cost effective manner? 

We have not yet decided whether to attempt to recover that money wired to Mr. Mahmoud. As with all such decisions, we will carefully balance the potential recovery against the amount it would take to recover the money and our belief on whether the Court would order the money returned under the specific circumstances of the transfer.  

Question 98: Exclusions from the upcoming interim disbursement included one or more FINRA claimants. Have any of the current FINRA claimants received settlements that have not been escrowed? What is the status of FINRA activity? 

On April 29, 2011, the Receiver filed a motion to enjoin the distribution of $3.4 million in settlement funds that were secured through a FINRA arbitration by Dale and Ann Woodbeck, David Dent, Justin Bussler, Laura Owen, Ronald Bisson, Sr., Anne E. Quiggle, Susan R. Gorman, Evangeline M. Olson, Charlotte Olson and the Charlotte J. Olson Family Trust, the Charlotte J. Olson Charitable Remainder Trust. The settlement money is being held in escrow pending Chief Judge Davis’s decision on the Receiver’s motion. The next hearing on that issue is scheduled to take place before the Court on September 16, 2011, at 8 a.m. We are not aware of any additional settlement payments to these individuals.

Question 99: Are the owners and principals of Crown Forex SA such as Ibrahim Hasanian and Shadi Swais living in countries that have extradition agreements with the U.S.? 

We do not know the current whereabouts of Hasanian and Swais. 

Question 100: How many total claimants are there? What is the amount of claimed losses? How much is a particular distribution? How much more will be recovered? How much cash does the Receivership have on hand?  

We file status reports on the Receivership that address these and other issues of interest approximately every 60 days and direct all interested people to those reports, all of which are available on the Receivership’s website. In addition, the most recent claim and distribution information can be found on the filings section of the website.

There are a total of 725 recognized claimants with losses equaling $158,879,471.06. As of August 2, 2011, the Court has approved the distribution of, and the Receiver has distributed or caused to be distributed, $3,814,479.96 on a pro rata basis. This translates to approximately 2.5 cents for every dollar lost to the fraud.  

Question 101: Statements and statutes in the complaint indicate the Justice Department claims they intend to “seek forfeiture of any other property of said defendants up to the value of the above forfeitable property.” (U.S. v. Beckman et al). However, to this point, there has been little if any cooperation on their part with the civil recovery, an example being the Swiss magistrate who travelled to the U.S. to interview Cook unbeknownst to the Receiver until after his departure. The Justice Department has alluded to a practical wall of separation between the criminal prosecution and the civil recovery that seems at odds with this statement in the U.S. v. Beckman et al complaint. Could you please explain the practical legalities of this seeming incongruity? 

No. This question concerns various statements that the Justice Department has purportedly made and it should be addressed to the Justice Department. Please note, however, that the Justice Department has fully cooperated with, and is continuing to fully cooperate with, the Receiver to the extent allowed by law. This cooperation has been from the inception of the Receivership, and has provided substantial and invaluable assistance to the Receiver in fulfilling the Court’s mandate.  
 

October 12, 2011 FAQ

Question 102: I would expect no objection to Judge Davis' approving the motion to hire subcontractors on contingency; but would it help to have a group of investors present to show support for the Receiver's motion? We had a dozen or so for the last hearing date that was rescheduled.  

All are welcome to attend. The purpose of the hearing is to present the credentials of our chosen counsel. Please note that there will not be any discussions of any future plans, potential claims, third parties, or non-public information.

Question 103:  Will there be a detailed explanation of the Receiver's plans and does Judge Davis plan to entertain questions from the audience? I assume the 2004 CVRA applies to this hearing as well.  

There will be no explanation of the Receiver's plans. Also, we do not anticipate that Chief Judge Davis will entertain questions from those in attendance.  The CVRA (Crime Victims' Rights Act) only applies to criminal cases and does not apply to civil cases such as the receivership cases.

Question 104:  Will impending statute of limitation concerns be addressed?  

No. Given that the applicable statutes of limitations vary based on the types of claims that are being asserted, we recommend that investor victims consult with their own counsel on such matters.

Question 105:  How many firms will present plans at this hearing?  What third-party entities will be discussed?  

Two sets of attorneys will be presented; no third-party entities will be discussed.

Question 106:  Could you please forward the files from current cases being litigated by the contingency fee attorneys who the Receiver is proposing?  

We are not going to post or distribute files or materials relating to other cases not involving the Receivership. Information on other cases is available from public sources such as Pacer.

Question 107:  Why has the court system or you or whoever allowed the FINRA matter hearing to be continually postponed-now to a point past the statute of limitations to pursue the matter in federal court?  If this is not an important issue, shouldn't you or someone at least explain why it isn't?  I am not a FINRA attorney, but why postpone the hearing past this date?  

The District of Minnesota has one of the busiest dockets in the nation.  In this instance, Chief Judge Davis has had back to back, multi-week trials, including a terrorism trial, which necessitated rescheduling the Receiver's motions.  The Receiver does not believe that the new hearing date will negatively impact any Receivership claims that he will bring in the future.  If you have concerns about statute of limitation issues relating to your own claims, we urge you to consult a lawyer.  Please see our answer to FAQ 96 for additional information.
 

March 29, 2012 FAQ

Question 108:  Can I sue [X,Y,Z] relating to my investment with or losses from the Ponzi scheme?  Will the Receiver seek to stay the lawsuit?  If I commence a lawsuit and win, how will that money be treated with respect to my claim with the Receiver?

We have gotten numerous questions throughout the receivership about particular litigation targets.  Although there are a number of possible targets that we believe are culpable and subject to liability, the Receiver cannot pursue claims against all of them due to lack of resources and in some cases, concerns over collectability of potential judgments against them.  If you are interested in pursuing a claim against any person or entity in connection with your investment in the Ponzi scheme, please contact Russ Rigby by email (rrigby@carlsoncaspers.com) with the identity of the person or entity and the nature and basis of your claim.  The Receiver will advise you within a short time thereafter whether he would seek a stay of your action.

If the Receiver decides he will not seek to stay your action and you prevail, the Receiver will not assert a claim over the money you recover.  However, you will not be included in future distributions from the Receiver until the percentage recovery for all investors surpasses your recovery percentage (less expenses).  For example, if you have a $200,000 claim with the Receiver and obtain a $150,000 judgment against someone based on that investment (after paying $50,000 in attorneys' fees), you will not receive future distributions until the net recovery for all investors surpasses 50%.
 

April 6, 2012 FAQ

Question 109:  My Third Distribution check came with a cover letter that stated the total of all my distributions. Does this mean there will be no more distributions coming?

No.  The Receiver’s efforts to recover and distribute additional funds to the victims of the fraud are still ongoing. The Receiver's Third Interim Distribution was mailed on or around March 28, 2012 and included a letter noting your total distributions as of the date of that check. We provided that information to help you keep a running total of the Receiver’s distributions to-date.

The Receiver’s next distribution will be mailed in or about the end of April 2012 and will consist of the proceeds of the Receiver’s settlement with Western International Securities and NRP Financial. Those checks will be accompanied by a letter and notations on the face of checks advising that by cashing them, you will give up any claim you may have against NRP and Western. Please take this into consideration when determining whether to cash either or both of those forthcoming checks.

Question 110:  I saw something that said the Court put conditions on the distribution checks. Can I cash the check I just received (and what happens if I do)?

The Third Interim Distribution, which was mailed on or around March 28, 2012, does not involve any waiver or release of claims.

The release of claims relates to the proceeds of the settlement agreements with Western International Securities and NRP Financial. The Receiver’s distribution of the proceeds of those settlements will be mailed in or about the end of April 2012. Those checks will be accompanied by a letter and notations on the face of the checks advising that by cashing them, you will give up any claim you may have against NRP and Western. Please take this into consideration when determining whether to cash either or both of those forthcoming checks.

Question 111:  Did the Third Interim Distribution check include the proceeds from the Receiver’s settlements with NRP and Western?

No. See the answer to question 110 above.

Question 112:  If I do not want to give up my claims against NRP and Western, what do I do with the checks I receive for the proceeds of the Receiver’s settlements with those entities?

The Receiver expects to mail the checks with the proceeds of the Western International Securities and NRP Financial settlements in or about the end of April 2012. If you do not want to give up your claims against NRP or Western, please return the uncashed check or checks to the Receiver with a letter, signed by you, stating that you have declined to accept the proceeds from the NRP and/or Western settlements.

Question 113:  My name (or address) is wrong on my distribution check. How do I fix this?

Please contact my staff (local: 612-436-9664, toll free: 877-316-6129 or email: info@cookkileyreceiver.com) to update your information.

Question 114:  My mother was a victim of Cook’s scheme, but she has passed away. What do I need to do to update her claim?

Please contact my staff (local: 612-436-9664, toll free: 877-316-6129 or email: info@cookkileyreceiver.com) to change the claimant information for your mother’s claim.

Question 115:  After speaking with my accountant, I do not want to receive any future distributions and wish to abandon my claim. How do I make this happen?

The Receiver’s Final Claims List has been approved by the Court and the Recognized Claim Amounts for the 723 claimants have been entered as the final claim amounts for civil restitution in the civil cases of SEC v. Cook et al., 09-cv-3333 (D. Minn.), CFTC v. Cook et al., 09-cv-3332 (D. Minn.) and SEC v. Beckman et al., 11-cv-574 (D. Minn.). If you wish to be removed from this list, and excluded from all future distributions, you must complete a notarized affidavit stating your desire to be removed from the list. The Receiver will then make a motion with the Court to amend the Final Claims List. Please contact my staff (local: 612-436-9664, toll free: 877-316-6129 or email: info@cookkileyreceiver.com) to obtain the appropriate paperwork and for further instructions.

Question 116:  My accountant needs to know how much money will eventually be recovered and returned to me.

The Receiver’s efforts to recover and ultimately distribute additional funds to the victims of the fraud are still ongoing. With the pending distribution of the NRP Financial and Western International Securities settlement proceeds, which the Receiver expects to mail in or about the end of April 2012, each recognized claimant will have received approximately 4.3 cents back for every dollar lost.

The Receiver anticipates that additional funds will be distributed in the future; however the timing and amount of any future distributions cannot be determined at this time. Ultimately the size and timing of any distribution will be decided by the Court. More information about the Receiver’s previous distributions can be found here.

Question 117:  I invested with Bo Beckman. Can I sue him?

See the answer to question 108 above.

Question 118:  I never spoke to Pat Kiley or Trevor Cook, and would not have invested but for my broker [X,Y,Z]. I think he knew something was wrong and didn’t tell me or get my money out, and now he won’t talk to me. Can I sue him?

See the answer to question 108 above.

 

April 12, 2012 FAQ

Question 119:  What is the status of the criminal cases stemming from this Ponzi scheme?

The criminal trial for Jason Bo-Alan Beckman, Gerald Durand, and Patrick Kiley is scheduled to begin on April 19, 2012 at 9 a.m. before Chief Judge Michael J. Davis in Courtroom 15 at the Federal Courthouse in Minneapolis (11-cr-228 D. Minn.).

Christopher Pettengill pleaded guilty to criminal charges in 2011 (11-cr-192 D. Minn.). He currently is awaiting sentencing.

Trevor Cook pleaded guilty to criminal charges in 2010 and was sentenced to 25 years in prison (10-cr-75 D. Minn.). He is serving this time in the federal penitentiary in Greenville, Illinois.

Please note that although these criminal charges and pleas stem from the same Ponzi scheme at issue in the SEC and CFTC cases in which the Receiver was appointed, the Receiver is not involved in the criminal actions. For more information, please visit the U.S. Attorney's website here.

 

May 2, 2012 FAQ

Question 120:  I heard some checks were issued in the wrong amounts. How do I know if I got the right amount?

Due to an administrative error in the Clerk’s office, some of the U.S. Treasury checks for pro rata shares of the Third Distribution were issued for incorrect amounts. The cover letters accompanying the Third Distribution checks show the correct amount. At this point, the Clerk’s office and my office have contacted, or attempted to contact, everyone who received a check in the wrong amount. If you have not heard from the Clerk’s office or my office and believe your check is incorrect, please contact my staff (local: 612-436-9664, toll free: 877-316-6129 or email: info@cookkileyreceiver.com).

Question 121:  My check does not match the amount in the cover letter; it is for MORE than the letter says. What do I do?

You must return the excess. If you have not yet cashed the U.S. Treasury check, please mail it to the Receiver at: Receiver RJ Zayed, c/o Carlson Caspers, 225 S. 6th St., Ste. 4200, Minneapolis, MN 55402, as soon as possible and we will return it to the Clerk of Court. The Clerk’s office will then issue you a new check in the correct amount. If you have already cashed the U.S. Treasury check you still must return the excess. Please send a check payable to "Clerk of Court USDC MN" for the amount you received in excess of the pro rata amount indicated in the cover letter to the Receiver at: Receiver RJ Zayed, c/o Carlson Caspers, 225 S. 6th St., Ste. 4200, Minneapolis, MN 55402, as soon as possible, and we will deliver it to the Clerk.

Please note that if you refuse or delay in returning the excess funds you received, you are holding up the payment to investors who were inadvertently underpaid.

If you have any questions, or need assistance with this process, please contact my staff (local: 612-436-9664, toll free: 877-316-6129 or email: info@cookkileyreceiver.com).

Question 122:  My check does not match the amount in the cover letter; it is for LESS than the letter says. What do I do?

You do not need to do anything at this point. The Receiver is working with the Clerk's office to correct the problem. You will receive another U.S. Treasury check to bring your total for the Third Distribution to the pro rata amount indicated in your cover letter. Please know that we are doing everything we can to assist the Clerk’s office in resolving this situation as soon as possible.

If you have any questions or concerns about this process, please contact my staff (local: 612-436-9664, toll free: 877-316-6129 or email: info@cookkileyreceiver.com).

May 3, 2012 FAQ

Question 123:  When will I receive my portion of the Receiver’s settlement with NRP and Western?

The checks for your pro rata share of the Receiver’s settlement with NRP and Western (the "Fourth Interim Distribution") are being prepared and scheduled to be mailed on Monday, May 7, 2012. These checks will be issued from the Receiver’s bank account and will state in the memo line that by cashing them you release any claims you may have against NRP and/or Western. Please take this into consideration when determining whether to cash either or both of these forthcoming checks. More information about these checks can be found here. These checks are separate from and in addition to the Third Distribution that was mailed on March 28, 2012.

 

May 7, 2012 FAQ

Question 124:  I just received two checks in the same envelope from the Receiver.  Are these for the rest of my share of the Third Distribution?

No. On May 7, 2012, my office mailed two checks to each of 711 claimants for their pro rata shares of the proceeds from my settlements with NRP and Western. These checks are issued from the Receiver’s bank account and state in the memo line that by cashing them, you release any claims you may have against NRP and/or Western. Please take this into consideration when determining whether to cash either or both of these checks. More information about these checks can be found here. These checks are separate from and in addition to the Third Distribution that was mailed on March 28, 2012.

If you have any questions or concerns about these checks, please contact my staff (local: 612-436-9664, toll free: 877-316-6129 or email: info@cookkileyreceiver.com).

 

May 17, 2012 FAQ

Question 125:  I just got “settlement” checks from the Receiver. Is this the end of the cases?

No. The Receiver's most recent distribution, the Fourth Interim Distribution, provides victims with their pro rata shares of the proceeds of the Receiver’s settlements with Western International Securities and NRP Financial. Western and NRP are two registered investment advisors that Jason Bo-Alan Beckman was affiliated with during the course of the Ponzi scheme. The Receiver had made claims against both Western and NRP based on their actions and inactions while Beckman worked under them. The Receiver has now settled his claims against Western and NRP and, in the Fourth Interim Distribution, provided the money from those settlements to victims. The checks with the Western and NRP settlement money were accompanied by a letter and notations on the face of the checks advising that by cashing them, you will give up any individual claims you may have against NRP and/or Western. Please take this into consideration when determining whether to cash either or both of those checks. More information about the Fourth Interim Distribution, as well as prior distributions, can be found here. If you have any questions or concerns about this distribution, please contact my staff (local: 612-436-9664, toll free: 877-316-6129 or email: info@cookkileyreceiver.com).

The Receiver’s efforts to recover and distribute additional funds to the victims of the fraud are still ongoing. Please see the latest Status Report here for more information about our ongoing efforts.

Although separate and apart from the Receiver’s work, please note that the criminal case against Jason Bo-Alan Beckman, Patrick Kiley, and Gerald Durand also is ongoing. See FAQ 119 for more information.

Question 126:  I was underpaid in the Third Distribution. I should have gotten 3.5% but I got less than 1%.

To-date the recovery rate in this fraud totals 4.3%. The Receiver has distributed this amount over the course of four interim distributions in the civil cases. Receivership funds in the amount of $363,700 also were distributed as restitution in the criminal case against Trevor Cook. The funds have been distributed as follows:
 

  Rate Date
Criminal Restitution 0.2% November 10, 2010
First Interim Distribution 1.6% November 10, 2010
Second Interim Distribution 0.7% August 2, 2011
Third Interim Distribution 1.0% March 28, 2012
Fourth Interim Distribution (NRP/Western) 0.8% May 7, 2012
Total 4.3%  

The Receiver’s work to recover and distribute additional funds is ongoing.

If you have any other questions or concerns, please contact my staff (local: 612-436-9664, toll free: 877-316-6129 or email: info@cookkileyreceiver.com).

Question 127:  My March check (Receiver’s Third Interim Distribution) was incorrect and I didn’t receive the full amount. If I cash my Western/NRP checks am I releasing my claim to a supplemental check?

No. If you were underpaid in the Third Interim Distribution and you cash the Western and/or NRP checks you will still receive a correction check to bring you to the full amount you should have received in the Third Interim Distribution.

The Receiver’s Third Interim Distribution was mailed on March 28, 2012. Some of the Third Interim Distribution checks were issued in the wrong amount. If you were paid less than what you were owed in the Third Interim Distribution, a correction check will be sent to bring you to the same pro rata distribution level as everyone else. The correction checks for the Third Interim Distribution have not yet been mailed. If you were overpaid in the Third Interim Distribution you are required to return the amount that they were overpaid.

The Receiver’s Fourth Interim Distribution was mailed on May 7, 2012. It is separate and apart from the Third Interim Distribution that was mailed in March. The Fourth Interim Distribution consists of money from the Receiver’s settlement with Western and NRP. The Fourth Interim Distribution (Western/NRP checks) does not correct the underpayment that some people received in the Third Interim Distribution. Correction checks for the Third Interim Distribution have not yet been mailed. If you were underpaid in the Third Interim Distribution and you cash the Western and/or NRP checks you will still receive a correction check. However, by cashing the Western and/or NRP checks you do release any individual claims you may have against Western and/or NRP. Specifically, if you cash the NRP check, you will give up any claim you may have against NRP. If you cash the Western check, you will give up any claim you may have against Western. More information about the Western and NRP checks specifically, and the Receiver’s other distributions, can be found here.

If you have any questions or concerns about these distributions or any other issues, please contact my staff (local: 612-436-9664, toll free: 877-316-6129 or email: info@cookkileyreceiver.com).

Question 128:  If I cash the Western and NRP checks am I giving up my right to future distributions from the Receiver?

No. By cashing the checks you are only giving up your rights to sue NRP and/or Western. You still will be included in any future distributions by the Receiver.

While the Receiver’s efforts to recover and distribute additional funds to the victims of the fraud are still ongoing, there are no additional distributions scheduled at this time. Ultimately the Court will determine the timing and amount of any additional distribution or distributions.

(Of course, all victims who were underpaid in the Third Interim Distribution will still receive correction checks to bring them to the same pro rata distribution level as everyone else.)

Question 129:  If I decide not to cash and I return the NRP and Western checks so that I may pursue my own claims against NRP and Western, how will that decision affect my pro rata share of future distributions?

By returning the NRP and/or Western checks, you have chosen not to participate in the Receiver’s settlement with NRP and/or Western. That choice means that your percentage of recovery from the Receiver will always be less than that of those victims who elected to participate in the Receiver’s settlement with NRP and Western.

If you file a lawsuit against NRP or Western and recover any money, that amount will be yours to keep. However, that amount will be factored into how much you receive in future distributions made by the Receiver. Specifically, if the amount that you recover places you at a greater percentage of recovery than the percentage of recovery that the other victims have achieved through the Receivership distributions, then you will not receive any further distributions from the Receivership until the other victims have reached the same percentage of recovery as you.

If you file a lawsuit against NRP or Western and do not recover money, the Receiver will not make up the difference in percentage of recovery between you and the victims who elected to participate in the Receiver’s settlement with NRP and Western.

 

May 30, 2012 FAQ

Question 130:  I think I should have more money coming from NRP and Western and I do not wish to give up any rights to pursue such money. Should I cash the NRP and Western (4th Distribution) checks?

There will be no more money coming from NRP or Western through the Receivership. The Receiver has settled all claims against Western and NRP on behalf of the Receivership Entities. The Fourth Interim Distribution represents the entirety of the recovery that the Receiver will get from NRP and Western. Anyone who cashes either or both of their Fourth Interim Distribution checks will waive any additional claim he or she may have had against NRP and/or Western.

If you think you have claims against either NRP and/or Western, we recommend that you consult a lawyer to determine: (1) whether you should cash the checks from the Fourth Interim Distribution and (2) whether you should pursue your own claim against NRP and/or Western outside of the Receivership.

 

June 29, 2012 FAQ

Question 131:  Now that Beckman, Durand, and Kiley are in jail, will I get more money?

If you already have a Recognized Claim in the civil cases, you will be included in civil distributions of any funds the Receiver recovers from Trevor Cook, Pat Kiley, Bo Beckman, Gerald Durand, and Chris Pettengill.

The Receiver’s efforts to recover and distribute additional funds to the victims of the fraud are still ongoing, however there are no additional distributions scheduled at this time. Ultimately the Court will determine the timing and amount of any additional distributions.

Question 132:  Do I need to submit a claim with the Receiver against Pettengill, Beckman, Durand, and Kiley?

If you have already submitted a claim, you do not need to submit any additional information to the Receiver regarding your losses in this Ponzi scheme. Please note, the deadline for submitting a claim to the Receiver for civil restitution has passed. On November 1, 2010, the Court established January 14, 2011, as the Claim Bar Date. Any claims for civil restitution that were not postmarked or received by January 14, 2011, are barred.

Question 133:  I just got a form in the mail requesting information relating to my loss. Do I need to fill this out?

Earlier this week, the U.S. Probation Office mailed a letter, along with various forms, to all known victims or possible victims of these defendants related to this Ponzi scheme. If you have already submitted your financial loss information (i.e., claim information) to the Receiver, you do not need to re-submit that same information to the Probation Office; the Receiver has made all victim claim information available to the Probation Office on your behalf. However, if you wish to provide any additional information to the Probation Office relating to Beckman, Durand and/or Kiley, you should complete the Victim Impact Statement (also available here) and return it to Leah Heino with the Probation Office. Any additional information you provide will be available to Chief Judge Michael J. Davis for consideration during sentencing.

Question 134:  The letter I received from the U.S. Probation Office said I can get an Abstract of Judgment to go after assets of the defendants.

As the letter from the Probation Office explains, if you are awarded restitution by the Court, you may request that the Clerk of the Court issue an Abstract of Judgment to you, certifying that a judgment has been entered in your favor in the amount specified by the Court. However, please be aware that the Court’s Receivership Orders remain in place and that the Receiver is the only person authorized to pursue assets of the defendants at this time. Thus, you may not file or record any Abstract of Judgment until further notice from the Receiver or the Court.

 

July 3, 2012 FAQ

Question 135:  The form I got from the Probation Office asks me about any compensation received for my loss. Do I need to include distributions from the Receiver?

If you have been part of the Receiver’s Interim Distributions, the Receiver has provided this information to the Probation Office. You may simply state “I have received distributions from the Receiver.” However, if you have received any other compensation relating to your loss, you still need to detail those recoveries.

If you have concerns about this form, please contact Leah Heino with the U.S. Probation Office (612-664-5413 or Leah_Heino@mnp.uscourts.gov).

 

July 13, 2012 FAQ

Question 136:  Now that the CFTC has filed a lawsuit against PFG, and PFG has filed for bankruptcy, is all hope lost for the Receiver to recover from PFG?

No. The facts and legal situation involving PFG continue to evolve. The Receiver is assessing the situation and will proceed with his claims either in the bankruptcy case or in federal district court.

Question 137:  I see that Chief Judge Davis has administratively closed the Receiver's case against PFG. Does this mean that the Receiver's claims against PFG are moot?

No. See above.

 

October 26, 2012 FAQ

Question 138:  I didn’t cash my 4th Interim Distribution (Western/NRP) checks. How does this affect my future distributions, if any?

You still will be included in any future distributions by the Receiver. However, by opting out of the Receiver’s settlements with NRP and Western, either by returning the NRP and/or Western checks or by having chosen not to cash them within 90 days, your percentage of recovery from the Receiver will always be less than that of those victims who elected to participate in the Receiver’s settlement with NRP and Western.

While the Receiver’s efforts to recover and distribute additional funds to the victims of the fraud are still ongoing, there are no additional distributions scheduled at this time. Ultimately the Court will determine the timing and amount of any additional distribution or distributions.

Question 139:  I see Judge Nelson has issued an Order in the Buysse case. What does this mean to the Receiver’s efforts to claw back money from those insiders?

On September 27, 2012, Judge Nelson issued an Order addressing several matters before the Court, including the parties’ motions for summary judgment and to exclude the proposed expert testimony. A summary of this Order can be found here.

This case is currently scheduled for trial before Judge Nelson in Courtroom 7B, U.S. Courthouse, 316 North Robert Street, St. Paul, MN, beginning on Monday, January 14, 2013, at 9:00 a.m.

Question 140:  When is the trial for the Berg Investors?

This case is currently scheduled for trial before Judge Nelson in Courtroom 7B, U.S. Courthouse, 316 North Robert Street, St. Paul, MN, beginning on Monday, January 14, 2013, at 9:00 a.m. More information on this case can be found here.

Question 141:  When is the sentencing in the criminal case?

The three defendants (Pat Kiley, Bo Beckman, Gerald Durand) remain in federal custody pending sentencing. Chris Pettengill also is awaiting sentencing. Chief Judge Michael J. Davis has scheduled sentencing hearings to take place on January 3, 2013, at 1:00 PM for Mr. Beckman, 2:00 PM for Mr. Durand, 3:00 PM for Mr. Kiley, and 4:00 PM for Mr. Pettengill. For more information about the criminal action, please visit the U.S. Attorney's website here.

Question 142:  What is the Arch case about and what’s happening in that case?

The Receiver entered into a Miller-Shugart settlement with Ed Baker and his companies. Pursuant to the rights acquired under that settlement, the Receiver filed suit against Baker’s insurance carrier, Arch Insurance. The parties have filed motions for summary judgment in the case and a hearing before Judge Schiltz is scheduled to take place on November 14, 2012 at 2:00 p.m. in Courtroom 14E, U.S. Courthouse, 300 South Fourth Street, Minneapolis, MN. More information on this case can be found here.

 

December 12, 2012 FAQ

Question 143:  I read that Bo Beckman has offered to write a check to investors for $19 million in exchange for a lenient sentence in his criminal case. Where is the money?

Mr. Beckman’s actions speak louder than his words. He stands convicted by a jury for his role in stealing millions from investors, by using lies, false promises, and misrepresentations to pry hard-earned money from innocent victims who trusted him. He has long been subject to—and continues to be subject to—Chief Judge Davis’s Orders requiring him to return any and all Receivership assets directly or indirectly in his possession, custody, or control, including the alleged $19 million that he now professes to control. To date, however, Mr. Beckman has failed to return any money whatsoever. Instead, he told the Court he needed a loan from the Receivership to pay for his family’s most basic living expenses. The Court directed the Receiver to loan Mr. Beckman $5100 for this purpose, and directed Mr. Beckman to promptly repay the loan. Mr. Beckman has not only failed to repay that loan, but he has repeatedly asked the Court to give him more money.

Mr. Beckman’s latest filing is nothing more than a desperate attempt for leniency by a convicted felon who continues to manipulate his victims' emotions for his own benefit. The Receiver has uncovered no evidence to suggest that Mr. Beckman is in control of $19 million. In the highly unlikely event that he is in such control, Mr. Beckman is under Court Order to immediately turn the money over to the Receiver.

 

December 19, 2012 FAQ

Question 144:  Is there anything happening with PFG? Is the Receiver’s case still pending?

Chief Judge Davis administratively closed the Receiver’s lawsuit against PFG after regulators filed civil fraud charges against the company in July 2012 and the company, in turn, filed for bankruptcy. The Receiver has now filed his claims in the PFG bankruptcy proceedings and is awaiting the bankruptcy trustee’s response. The Receiver will post more information about the status of his claims when it becomes available. More information about the complaint the Receiver brought against PFG (prior to its bankruptcy) can be found here.

 

January 2, 2013 FAQ

Question 145:  Does the Receiver have any statistics on the demographics of the victims of this fraud?

Information concerning financial losses suffered by 724 losing investors has been independently researched and confirmed by the Receiver and the Court as part of the claim recognition process. The following loss data is based on the Second Amended Final Claims List that has been recognized by the Receiver and the Court:

  Maximum Recognized Claim Amount $ 7,010,184.96
  Minimum Recognized Claim Amount $ 48.00
  Mean (Average) Recognized Claim Amount $ 219,479.19
  Median Recognized Claim Amount $ 100,000.00
  Mode $ 50,000.00
  Net Recognized Claim Amount $ 158,902,930.52

Additional data about the investor pool, such as age, net worth, etc. was collected from files the Receiver seized from Van Dusen and Tiffany Court reflecting over 1200 applicants to the currency program. The Receiver engaged a team of interns who volunteered their time to compile and summarize this information. The investor demographic data summarized below is based on information that investors provided on their applications to the currency program; this information has not been independently verified by the Receiver. The summary below is intended to give an overview of the investors in this fraud based on the information that the Receiver has uncovered to-date.

 

Residence

This fraud spanned the globe. Investors were located throughout forty-six (46) states and several foreign countries. Nearly one-third (29%) of the people who invested in this fraud were Minnesota residents. Click here to view graphic representations of the geographic distribution of the victims of this scheme.

 

Age

The average age of victims of this fraud is sixty-six (66).1 Over ninety percent (91%) are at least fifty (50) years old. Eighty-two percent (82%) are fifty-five (55) and older. There are only twelve (12) victims under the age of forty (40). Click here to view graphic representations of the ages of the victims of this scheme.

 

Net Worth

Half (50%) of those who invested in this fraud self-reported their total net worth as $500,000 or less when they signed up for the currency program. Less than a quarter (23.6%) of investors self-reported their net worth as at least $1 million.

At least 133 people lost over half (50%) of what they reported as their net worth. At least 107 victims who lost at least half of their net worth were age fifty-five (55) and older. Sixty-eight (68) victims who lost half of their net worth were age sixty-five (65) and older. At least sixty-one (61) people lost at least eighty percent (80%) of their net worth. At least fifty-two (52) people lost at least ninety percent (90%) of their net worth.

Click here to view graphic representations of the self-reported net worth of investors in the scheme.

 

Annual Income

Almost three quarters (73%) of the investors in this fraud self-reported their annual income as less than $100,000. Over thirty percent (31%) of the investors self-reported their annual income as under $50,000.

At least 197 victims would need to use at least half (50%) of their annual income for the next five (5) years to replace their losses. At least 124 victims would need to use at least eighty percent (80%) of their annual income for the next five years to replace their losses. At least 114 victims would need to use at least ninety percent (90%) of their annual income for the next five years to replace their losses.

Click here to view graphic representations of the self-reported annual income of investors in the scheme.

 

1 Age is calculated as of December 31, 2012.

 

April 12, 2013 FAQ

Question 146:  How can I claim my loss on my tax return? My accountant says he needs a tax ID number. Also, did my loss occur in 2009?

The Receiver cannot provide any tax advice related to your investment or any distribution made from the Receivership. We urge investors to consult either a tax advisor or contact the IRS directly about tax issues stemming from your investment or any distribution from the Receivership that you may receive.

The IRS has regional offices that may be able to assist you. A list of IRS regional offices can be found at http://www.irs.gov/localcontacts/index.html. Also the IRS has a Taxpayer Advocate Service that may be able to help you. For more information please visit http://www.irs.gov/advocate/index.html.

See also Questions 62 and 64.

 

May 29, 2013 FAQ

Question 147:  Please comment on the status of the Crown Forex SA liquidation and the Receiver’s claims on behalf of the Receivership entities.

The liquidators have yet to either accept or reject the Receiver’s claim on behalf of UBS Diversified, one of the Receivership entities. As we mentioned in our previous answers (see, among others, FAQs 38, 39, 42), we do not have jurisdiction outside the United States. Accordingly, we cannot compel any person or entity outside the United States to comply with our requests. Additional information on the Crown Forex liquidation can be found at http://www.crownforex.info

 

June 7, 2013 FAQ

Question 148:  In your Fifth Interim Distribution motion, you talk about excluding people “so that the Receiver's distributions do not put any investor ahead of the others in terms of recoveries.” How does that work?

See Questions 21, 108, and 129.

The Fifth Interim Distribution will be 1.2% of the pro rata losses in this fraud, bringing the Receiver’s overall distribution rate to 5.5%. Adjustments will be made to ensure that no investor is put ahead of the others as a result of the Receiver’s distributions.

For example, an investor who opted out of the Receiver’s Fourth Interim Distribution to pursue her own claim against Western and then recovered 20% of her loss directly from Western will not receive any portion of the Receiver’s Fifth Interim Distribution, or any future distribution, until the median recovery rate for all claimants reaches or exceeds 24.3%.

Similarly, an investor who reached a settlement with a third party for 1% of his loss will receive an adjusted pro rata distribution rate of 0.2% in the Fifth Interim Distribution, so that the total recovery rate for this investor from the Receiver and other sources adds up to 5.5%.

Additionally, the three claimants who have not yet returned the excess amount incorrectly transferred to them in last year’s Third Interim Distribution will be excluded from the Fifth Interim Distribution. These claimants’ pro rata shares will be credited to the Clerk of Court until such time as the entire excess has been returned or offset.

Finally, the Berg Investors and Dot Anderson are not included in the Fifth Interim Distribution.

More information about the Receiver’s distributions can be found here.

 

September 3, 2013 FAQ

Question 149:  What’s happening with Associated Bank? Is the Receiver’s case still pending?

On January 29, 2013, the Receiver filed a lawsuit against Associated Bank in the United States District Court for the District of Minnesota (13-cv-232), alleging claims for aiding and abetting fraud, breach of fiduciary duty, conversion, and false representations and omissions. The Receiver is represented by contingency fee counsel in this matter.

On May 17, 2013, Judge Doty heard oral argument on Associated Bank's motion to dismiss the lawsuit. A ruling on the motions is expected later this year.

More information about the Associated Bank case can be found here. See also pages 3-4 of the Fifteenth Status Report here.

 

October 4, 2013 FAQ

Question 150:  I received something in the mail from Switzerland talking about my claim. Is this legitimate?

In 2009, the Swiss regulatory authority, FINMA, put Crown Forex S.A. into bankruptcy. Philippe von Bredow and Laurent Winkelmann were appointed as the liquidators. The liquidators have now issued their decisions on claims that were filed in that Swiss proceeding. If you have recently received correspondence from Mr. Bredow and Mr. Winkelmann, it likely relates to a claim filed on your behalf in the Swiss bankruptcy proceedings.

Question 151:  Was the Receiver's claim in the liquidation of Crown Forex S.A. granted? If not, is the Receiver going to pursue the claims?

No. The Receiver's claim, which was filed in the name of UBS Diversified FX Growth, LP, was rejected because the liquidators determined that UBS Diversified FX Growth, LP did not have accounts at Crown Forex; in other words, the accounts that were the basis for UBS Diversified FX Growth, LP's claimed losses at Crown Forex S.A. were fake. In addition, the letter rejecting the Receiver's claims advises that the Swiss liquidators count among their assets a damages claim filed in Switzerland against UBS Diversified FX Growth, LP and Trevor Cook, among others.

According to correspondence received from the liquidators, total claims filed in the Crown Forex S.A. proceedings in Switzerland, including but not limited to the Receiver’s and individual investors’ claims stemming from the Cook Ponzi scheme, were approximately $592MM (USD). Of those, approximately $17.3MM (USD) were allowed. Assets available to satisfy those claims total about $3MM (USD).

The Receiver has consulted with Swiss counsel about the process, cost and likelihood we would succeed in appealing the liquidators' rejection of Receiver's claim in Switzerland. In short, the cost would be high and there would be little upside to any course the Receiver could pursue in Switzerland at this point. The Receivership would, as an initial matter, have to pay Swiss counsel to pursue the action. If we lost, and the court in Switzerland affirmed the rejection of the Receiver's claim, the Receiver would then have to pay the liquidators' costs, as well as court fees, for the appeal. If we won, and the court in Switzerland overturned the liquidators' decision and granted any part of the Receiver's claim, the liquidators have advised that they will simply deduct any recognized claim amount from their damages claim against UBS Diversified FX Growth, LP and Trevor Cook.

The Receiver also notes that the communication from Crown Forex SA liquidator offers to transfer a civil claim that the liquidator claims to have against Cook or UBS Diversified (among others) for a fee. The Receivership Orders prohibit precisely such a suit as to Cook and any Receivership entity. The Receiver takes no position on the viability of civil claims in Switzerland or elsewhere against any of the other individuals or non-receivership entities that the liquidator believes he has civil claims against.

Question 152:  I received something from Switzerland saying my claim was rejected. I thought I had a Recognized Claim with the Receiver?

Claims filed in the Swiss bankruptcy of Crown Forex S.A. are separate and distinct from claims filed with the Receiver in the United States. A rejection of your claim in the Swiss proceedings has no bearing on your claim with the Receiver. However, if your claim in the Swiss proceedings was granted, the amount you receive from the Swiss liquidator will be deducted from your claim with the Receiver as this amount is no longer a loss to you.

Question 153:  The information from Switzerland says I need to pay a fee (or fees?) to pursue my claim. Do I have to do this? Should I pay these fees and pursue my claim?

The Receiver cannot provide legal advice regarding claims that any investor may have. We suggest contacting a lawyer to analyze your specific situation. See also FAQ 151 and 152. Please be advised that you do not need to pay a fee to maintain your Recognized Claim with the Receiver.

Question 154:  I received some documents from Switzerland. Do I need to give them to the Receiver?

If you made a claim in the Swiss liquidation proceedings of Crown Forex S.A. and it was granted, in accordance with Chief Judge Davis's Receivership Orders you are required to provide the Receiver with a copy of that decision so that your claim with the Receiver can be adjusted accordingly. See FAQ 108, 151 and 152. However, please note that no adjustments to your claim with the Receiver will be made until and unless your claim is actually paid by the Swiss liquidators. If your claim in the Crown Forex S.A. liquidation was rejected, you may send the Receiver a copy of the materials you received for your claim file. Any information you wish to send to the Receiver can be sent to:

R.J. Zayed, Receiver
c/o Carlson Caspers
225 S. 6th St., Ste. 4200
Minneapolis, MN 55402
Email: info@cookkileyreceiver.com
Fax: 612-436-9605

Question 155:  I just got some documents from the Receiver that are in French. What are they, why did he send them to me, and what am I supposed to do with it?

As discussed in FAQs 150-154, the Receiver’s claims in Switzerland that were pending before the Liquidator of Crown Forex, S.A. (“CFSA”) were denied. The Receiver has investigated his options, consulted with his Swiss counsel, and determined that it is no longer cost-effective for him to pursue his claims in the CFSA liquidation proceedings in Switzerland. However, in addition to the Receiver’s claims, a number of rejected claims were sent to the Receiver for several victims. Those are the documents that are in French and that some of the victims have received from the Receiver. The Receiver cannot provide any legal advice concerning what, if anything, should be done in connection with those documents or the CFSA liquidation. Although the Receiver will not seek to stay any action that victims may choose to pursue in connection with the CFSA liquidation, the Court’s Orders remain in place, and people are stayed from pursuing any action against or affecting any receivership entity.

Question 156:  I saw the Judge entered an Order in the Associated Bank case. What does this mean for the Receiver?

On September 30, 2013, Judge Doty issued an order granting Associated Bank’s motion to dismiss the Receiver’s claims. The Receiver is currently evaluating the next steps in this action.   The Order, as well as other filings and information about the case, is available here.

 

November 26, 2013 FAQ

Question 157:  What is ‘Nexus Direct IRA, LLC’ and why do they say I have an account with them?

Todd Grill, former owner of Entrust Midwest, is advising investors that he formed a new company called Nexus Direct IRA, LLC. Based on information investors have communicated to the Receiver, it appears that Mr. Grill has attempted to convert all accounts previously held at Entrust Midwest to his new company.

Question 158:  Why is Todd Grill charging me fees for money I lost to the Cook scheme?

The Receiver cannot offer you any tax or legal advice. If you have questions or concerns about your relationship with Entrust or Nexus Direct, you should consult an accountant and/or attorney.

The value of any investment you made with a Receivership Entity is zero, regardless of where your Receivership account was held. Any money “invested” with a Receivership Entity (Oxford Global, UBS Diversified, Crown Forex, etc.) was stolen upon receipt by the perpetrators of this scheme.

Question 159:  I don’t want to pay fees to Entrust or Nexus Direct IRA, LLC for the account where my losses occurred; can I close this account?

The Receiver cannot offer you any tax or legal advice. If you have questions or concerns about your relationship with Entrust or Nexus Direct, you should consult an accountant and/or attorney.

However, please note that you do not need to maintain an account at Entrust, Nexus, or any other financial institution that may have been associated with your investment to receive future distributions from the Receiver. Whatever you may choose to do with your Entrust account will have no impact on your Recognized Claim Amount with the Receiver. As with the first five interim distributions, checks for pro rata shares of any future distribution will be sent directly to the victims.

Question 160:  I can’t believe Todd Grill is still trying to charge me fees. Can I sue him?

The Receiver cannot offer you any tax or legal advice. If you have questions or concerns about your relationship with Nexus Direct or Todd Grill, you should consult an accountant and/or attorney.

However, the Receiver will not seek to stay any action that victims may choose to pursue against Nexus Direct or Todd Grill. Additionally, should you succeed in your efforts, the Receiver will not assert a claim over the money you recover. However, you will not receive any future distributions from the Receiver until the percentage recovery for all investors surpasses your recovery percentage.

Question 161:  Will there be any more money recovered, and will we receive any more distributions? My accountant needs to know how much I’m going to get.

The Receiver cannot provide any tax advice related to your investment or any distribution made from the Receivership. We urge investors to consult either a tax advisor or contact the IRS directly about tax issues stemming from your investment or any distribution from the Receivership that you may receive.

The IRS has regional offices that may be able to assist you. A list of IRS regional offices can be found at http://www.irs.gov/localcontacts/index.html. Also the IRS has a Taxpayer Advocate Service that may be able to help you. For more information please visit http://www.irs.gov/advocate/index.html.

See also Questions 62 and 64.

The Receiver’s efforts to recover additional funds for the victims of this fraud are ongoing, however there are no additional distributions scheduled at this time. Ultimately the timing and amount of any distribution is determined by the Court.

 

June 27, 2014 FAQ

Question 162:  What’s happening in the Receiver’s case against Associated Bank?

On September 30, 2013, Judge Doty issued an order granting Associated Bank’s motion to dismiss the Receiver’s claims. The Receiver has filed an appeal with the United States Court of Appeals for the Eighth Circuit. The court has not yet set a date for oral argument on the Receiver’s appeal. Documents related to the Receiver’s appeal, and other information about this case can be found here.

 

August 20, 2014 FAQ

Question 163:  I do not understand the recent PFG filings. Why did the Receiver settle his claim against PFG when PFG owes the Receivership $48 million?

During the course of this Ponzi scheme, Cook and his cohorts transferred approximately $48 million to trading accounts at Peregrine Financial Group, Inc. (“PFG”). Cook and company proceeded to lose over $30 million in those accounts. When he was appointed by the Court, the Receiver engaged in an extensive investigation and analysis of Cook’s dealings with PFG and determined that PFG had violated industry rules, regulations, guidelines and practices by ignoring red flags and enabling Cook to run accounts there. Based on his investigation of PFG’s dealings with Cook, the Receiver, with the assistance of contingent fee counsel at the law firm of Reid, Collins & Tsai, filed a lawsuit against PFG in February 2012 to recover at least $48 million under the Minnesota Uniform Fraudulent Transfer Act. The Receiver’s lawsuit took an unexpected turn when PFG’s CEO, Russell Wasendorf, Sr., as part of a failed suicide attempt, acknowledged that PFG was a large investment fraud in and of itself. Criminal and civil charges were soon filed against Wasendorf and PFG filed for bankruptcy, which effectively stayed the Receiver’s lawsuit against the company.

A party cannot recover money on a litigation claim until there is a judgment on the merits. At the time PFG went into bankruptcy, the Receiver had asserted litigation claims against PFG, but the case had not moved beyond the preliminary stages. After PFG filed for bankruptcy, laws that protect bankruptcy debtors precluded the Receiver from continuing to litigate against PFG in Minnesota. To try to obtain a judgment against PFG, the Receiver would have had to continue his litigation against PFG in the context of PFG’s bankruptcy case in Chicago, and PFG’s bankruptcy trustee would have defended the claims on a variety of factual and legal grounds. The Receiver felt he had a strong case against PFG, but there are no guarantees in litigation, especially when litigation involves a bankruptcy debtor. Even if the Receiver had prevailed on the merits he could have ended up with a judgment of damages that was much less than the $48 million he was seeking, including zero. And even if he had litigated the claim and won a money judgment, in the end, that money judgment would not have been paid to the Receiver right away. Instead, the Receiver would have obtained a general unsecured claim in the PFG bankruptcy for the amount of the judgment. Whether, when and in what amount the Receiver would be able to collect on that claim would be subject to a variety of factors beyond the Receiver’s control.

Based on extensive cost-benefit analysis of all of the facts, circumstances, and law surrounding the Receiver’s claims against PFG, and considering PFG’s status as a debtor in bankruptcy, the Receiver determined that it was in the best interest of the victims of the Cook Ponzi scheme to negotiate a settlement with the PFG bankruptcy trustee for an allowed claim in the PFG bankruptcy proceedings, rather than continue with extended litigation to an uncertain end. To achieve this end, the Receiver engaged in negotiations with the PFG bankruptcy trustee that spanned over the course of nearly a year. Ultimately, after consulting and securing approval of Chief Judge Davis, the Receiver and the PFG bankruptcy trustee settled for an allowed general unsecured claim in the PFG bankruptcy in the amount of $10 million. The settlement was then approved by the bankruptcy court overseeing the PFG bankruptcy proceedings. With this settlement, the Receiver replaced the uncertainty and time associated with litigation with an allowed claim now, in an established amount. The settlement puts the Receiver in essentially the same position he would have been in if he had won a money judgment against PFG for $10 million. This was the first step in being able to collect any funds from the PFG matter that can, in turn, be distributed to the victims of the Cook Ponzi scheme.

Question 164:  Why is the Receiver selling his claim in the PFG bankruptcy, rather than collecting on it from the bankruptcy trustee?

As described in response to question 163, above, in May 2014 the Receiver settled his litigation claim against PFG for an allowed general unsecured claim of $10 million. However, because PFG is in bankruptcy, that settlement is not automatically collectable. Rather, the Receiver’s settlement is a claim against the PFG bankruptcy estate and whether or not the Receiver obtains any payment on that claim is subject to factors that are not within the Receiver’s control, such as the total amount of assets the PFG bankruptcy estate ultimately has available to pay to its general unsecured creditors. Given this situation, the Receiver has two choices with the PFG bankruptcy claim: (1) hold the claim to see whether, when and how much of it would be paid out by the PFG bankruptcy estate or (2) sell the claim now and return the proceeds to the victims of Cook’s fraud.

In determining the best course of action, the Receiver considered numerous factors about the PFG bankruptcy, such as:

The Receiver also considered numerous factors about the Cook Ponzi scheme victims, such as:

For all of these reasons, the Receiver has determined that selling the Receivership’s claim in the PFG bankruptcy is the more assured and prudent path to returning funds to the victims of Cook’s fraud.

Question 165:  Why is the Receiver selling his claim in the PFG bankruptcy for only $1.355 million?

Having decided to sell the PFG bankruptcy claim, the next question was how best to accomplish that result. Bankruptcy claims are assets that can be sold. One way to obtain the best price for a bankruptcy claim is by holding a public auction sale. The Receiver has determined that an auction sale of the PFG bankruptcy claim is the best vehicle to obtain maximum value for the Receivership’s claim in the PFG bankruptcy. That auction sale will be held on September 16, 2014.

In laying the groundwork for the sale, the Receiver was able to secure what is known as a “Stalking Horse Bid,” which means that a third party has agreed to pay a minimum of $1,355,000.00 for the Receivership’s claim in the PFG bankruptcy. That is not necessarily the final price that will be paid for the claim. Rather, $1,355,000.00 is the guaranteed minimum opening bid for the claim at the auction sale. The Receiver has already been marketing the claim, and will continue to actively market his claim, to attract every potential buyer who may be interested in bidding on the Receivership’s PFG bankruptcy claim. All qualified bidders will be allowed to participate in the auction sale. Bidding will open at $1,355,000.00 and any subsequent bids must be in increments of $25,000.00. At the end of the auction sale, the Stalking Horse Bidder has the right to “top” the highest bid by $50,000.00.

Question 166:  Who can buy the Receivership's claim in the PFG bankruptcy?

Entities or individuals who wish to participate in the auction sale of the Receivership’s claim in the PFG bankruptcy must agree to and execute the Terms of Sale (available here) or be otherwise qualified by the Receiver. The winning bidder at the end of the auction must then pay a non-refundable 10% deposit, which will be credited at the closing of the sale. Further information about the claim or the auction can be obtained by contacting Angela Somers at asomers@rctlegal.com (212) 344-5208 or Anne Bahr at abahr@rctlegal.com (212) 946-9405.

Question 167:  When and where will the auction sale of the Receivership's claim in the PFG bankruptcy take place?

The auction sale will be held on September 16, 2014, at 1:00 pm EDT. The auction will take place at the offices of the Receiver’s Special Counsel, Reid Collins & Tsai LLP at One Penn Plaza, 49th Floor, New York, New York 10119. Bidders can participate either in person or by phone. All bidders must execute terms of sale and be pre-qualified prior to the auction. The bidding will begin at $1,355,000.00. Overbids must be increments of at least $25,000.00. Bidding will continue until the highest and/or best bid is determined subject to other auction terms, which are available here. Further information about the claim or the auction can be obtained by contacting Angela Somers at asomers@rctlegal.com (212) 344-5208 or Anne Bahr at abahr@rctlegal.com (212) 946-9405.

September 22, 2014 FAQ

[UPDATED - October 9, 2014]

Question 168: What happened at the auction sale of the Receiver’s claim in the PFG bankruptcy?

The auction of the Receiver's claim in the PFG bankruptcy was held on September 16, 2014. The winning bid was $1,430,000.00. The net to the Receivership from the sale will be $1,001,000.00 (sale price, less 30% fee due to Receiver's contingent fee counsel for their work on the PFG matter in District Court and through auction sale of bankruptcy claim). The winning bidder has deposited 10% of the sale price with the Receiver. Payment in full is due to the Receiver at closing which must occur within 40 days of the Court's approval of the sale. The sale proceeds must then be held in escrow for a period of time while the claim is recorded in the PFG bankruptcy has having been transferred from the Receiver to the winning bidder. The Court is scheduled to hear the Receiver's motion to approve the sale on October 15, 2014. As soon as the sale is approved and closed and the escrow period has expired, the Receiver will promptly move to distribute the proceeds.

October 9, 2014 FAQ

Question 169: When will the Receiver distribute the PFG auction sale funds?

The Receiver intends to file a motion seeking approval to distribute the proceeds from the PFG sale as soon as the funds are available. The Court, along with the Terms and Conditions of Sale (available here), govern that anticipated distribution. Below is a summary of the steps that must occur, and the time periods associated with each, before the anticipated distribution of the PFG claim proceeds can be made:

In sum, because some of the events that must take place are variable, the Receiver cannot project exactly when an interim distribution of the PFG proceeds will occur. If all goes as planned, we are hopeful to be able to mail checks to investors by the end of this year.

June 5, 2015 FAQ

Question 170: I read the decision by the Eighth Circuit reversing the District Court’s dismissal of the Associated Bank case and remanding to the District Court for further proceedings. What happens next?

When the case was originally filed, Associated Bank moved to dismiss the case based on four arguments: (1) that the complaint failed to state a claim for relief, (2) that the in pari delicto doctrine (“unclean hands”) barred the action, (3) that the claims were barred by res judicata based on Grad v. Associated Bank, and (4) that the Receiver lacked prudential standing to pursue the lawsuit. The District Court dismissed the Receiver's complaint based on Associated Bank's first argument. The Eighth Circuit reversed and sent the case back to the District Court for further proceedings.

The District Court is now considering Associated Bank's other arguments for dismissal--in pari delicto, res judicata and standing. On April 14, 2015, the parties re-filed their earlier briefs on these issues. Because these issues were already addressed in the earlier oral argument, the Court has advised that another hearing is not necessary. We expect the Court to issue a written decision on these issues in the coming months.

Question 171: What happened with the Settlement Conference with Associated Bank?

While the District Court considers the remaining issues that had been raised by Associated Bank, the parties agreed to participate in an early settlement conference with Magistrate Judge Mayeron. That settlement conference was held on June 1, 2015, but a settlement was not reached.

August 4, 2015 FAQ

Question 172:  I understand that Judge Doty just denied Associated Bank's motion to dismiss the Receiver's claims. Does that mean the Receiver won the case?

When the Receiver filed the complaint against Associated Bank on January 29, 2013, the Bank responded with a motion to dismiss the complaint, rather than an answer. The Bank made four arguments about why it believed the case should be dismissed, without a need for further litigation. The Court has now rejected each of those arguments and determined that the case should go forward. The Court will now enter a schedule for the balance of the case, including initial disclosures, experts, discovery, non-dispositive motions, dispositive motions and trial.

Question 173:  What happens now that Judge Doty has denied Associated Bank's motion?

Now that the Court has denied Associated Bank's motion, the parties will submit a proposed schedule to Magistrate Judge Mayeron, who will then enter a Scheduling Order for the rest of the case. The Bank will answer the Receiver's Complaint and the parties will begin discovery into their remaining claims and defenses.

Question 174:  What is going on in the Associated Bank Case?

On August 24, 2015, the Court entered an Amended Pretrial Scheduling Order for the case, which can be found here. Among other things, that Order sets the close of fact discovery for April 4, 2016, the close of expert discovery for July 15, 2016, and dispositive motions to be served and filed by October 1, 2016. The case shall be ready for trial as of January 1, 2017. Since the Amended Pretrial Scheduling Order was entered, the parties have commenced written discovery, i.e., interrogatories, requests for documents and requests for admission.

June 6, 2016

Question 175:  What happened at the settlement conference with Associated Bank?

On May 25, 2016, the Receiver and the Bank participated in a settlement conference with Magistrate Judge Mayeron. Despite the Receiver's good faith effort to reach a mutually agreeable resolution, the case did not settle. In short, the Bank was not willing to negotiate in a range that the Receiver believes to be fair and reasonable to resolve the case without a trial.

Question 176:  Aside from the settlement conference, what has been happening in the case?

For the past 10 months, the parties have been conducting fact discovery. Fact discovery is the period in the case when the parties take depositions of witnesses, serve and respond to interrogatories (written questions) and requests for admission, and ask for and produce documents. Final depositions will be taken in the coming weeks.

On June 2, 2016, the parties argued two motions before Magistrate Judge Mayeron. The first was a motion brought by the Receiver to compel Michael Behm to answer questions that he had refused to answer at his deposition last month. Mr. Behm was an employee of the Ponzi scheme and the step-brother of Lien Sarles. Mr. Behm and the Bank entered into a Joint Defense Agreement for purposes of this case and as a result, Mr. Behm refused to answer certain questions based on a claim of a joint attorney-client privilege with the Bank. The Court granted the Receiver's motion, found there was no joint privilege between Mr. Behm and the Bank, and ordered a continued deposition where Mr. Behm will be required to answer the questions he previously refused to answer. The Bank also brought a motion to compel a 30(b)(6) deposition of the Receiver. The Court took this issue under advisement and will decide the issue in the coming weeks. The relevant filings for these two motions can be found here.

The next phase of the case is expert discovery, which is set to be complete by September 19, 2016. The deadline for summary judgment motions is October 1, 2016 and the case is scheduled to be tried on or after January 1, 2017.

Question 177:  Why do we have to wait so long for the Associated Bank case to go to trial?

The Receiver's case against Associated Bank has taken some time because it involved an appeal to the Eighth Circuit at the beginning of the litigation, before discovery even began. The Receiver filed this case on January 29, 2013 and the Bank immediately responded with a motion to dismiss based on four separate grounds. Judge Doty granted the Bank's motion based on one of the Bank's arguments and dismissed the case on September 30, 2014. The Receiver then appealed to the Eighth Circuit, which reversed the dismissal and returned the case to the district court on March 2, 2015. Once back in the district court, the Bank re-filed their motion to dismiss, asking the Court to dismiss the case again based on the other three arguments it had originally made. The Court denied that motion on August 4, 2015 and set a schedule for the case to proceed on August 24, 2015. All of this means that even though the case was filed nearly three and a-half years ago, discovery only got started ten months ago. Based on the current case schedule, the case is set to go to trial in early 2017.

Question 178:  Can the judge decide the case without a trial?

Summary judgment is a proceeding where one or both of the parties ask the Court to decide the case before it goes to trial. The party asking for summary judgment must show that there is no genuine dispute as to any material fact and that it is entitled to judgment as a matter of law, in other words, that the judge can decide the case without a jury. The Bank has indicated that it will file a motion for summary judgment asking the Court to find that it is not liable as a matter of law for the Receiver's claims in this action. Assuming the Bank does file such a motion, the Receiver will oppose it.

Question 179:  Are there any leads in the Panama Papers as to where our money went?

At this point, we have not linked any investor losses to information that is available in the Panama Papers.

Question 180:  Can we expect another distribution soon?

The next distribution has not been scheduled at this time.

January 11, 2017

Question 181:  What is the latest with the Associated Bank case?

Judge Doty held a hearing in the Associated Bank case on December 9, 2016.  The majority of the hearing was dedicated to Associated Bank’s motion for summary judgment.  In that motion, the Bank asked the Court to rule in its favor on the Receiver’s claims (Aiding and Abetting Fraud (Count I), Aiding and Abetting Breach of Fiduciary Duty (Count II), Aiding and Abetting Conversion (Count III), and Aiding and Abetting False Representations and Omissions (Count IV)).  In other words, Associated Bank argued that the Court should rule in its favor as a matter of law and dismiss the case without a trial before a jury.  The Receiver vigorously opposed the motion.  Judge Doty took the Bank’s motion under advisement, along with four other motions filed by the Bank and the Receiver involving certain expert and evidentiary issues.  Public versions of these and all other filings in the case can be found here. 

In the meantime, another settlement conference has been scheduled for February 13, 2017.  This settlement conference will be conducted by Magistrate Judge Steven E. Rau, who was assigned to the case following Magistrate Judge Mayeron’s retirement. 

Question 182:  What were the reasons Associated Bank argued that the judge should decide the case in its favor without a jury?

Associated Bank made three main arguments for why judge should enter summary judgment in its favor and not send the case to the jury:  (1) that there is no evidence anyone at the Bank had actual knowledge of the Ponzi scheme, (2) that there is no evidence the Bank provided substantial assistance to the scheme, and (3) that the Receiver has no evidence of damages.  The Receiver opposed the Bank’s motion on all grounds.  On the Bank’s first two points, the Receiver illustrated how the evidence, when taken as a whole, shows both the Bank’s actual knowledge and substantial assistance of the underlying wrongful acts.  The Receiver further argued that given this evidence, the case must go to the jury.  The Bank’s third argument is that the Receiver needs, but does not have, an expert to prove damages.  The Receiver’s position is that the damages evidence is straightforward and does not require an expert.  The Receiver’s damages are based on the Court’s Third Amended Claims List and the testimony of SEC accountant, Scott Hlavacek.

Question 183:  What other motions did the Bank file?

The Bank filed two additional motions before Judge Doty, each of which has to do with evidence in the case.  In one of these motions, the Bank targets the Receiver’s evidence that Lien Sarles attended a meeting in the spring of 2008 with the fraudsters where the insolvency of Crown Forex S.A. was discussed.  Mr. Pettengill testified that he attended this meeting, along with Mr. Sarles and others from the Ponzi Scheme.  In its motion, the Bank alleges  that Cook and others destroyed documents (e.g., notes) that would have shown Mr. Sarles did not, in fact, attend the spring 2008 meeting.  The Bank alleges that such notes existed, that they were destroyed, and because they were allegedly destroyed, the Court should sanction the Receiver in one of two ways:  (1) by finding that the meeting did not occur or that it did occur but nothing substantive was discussed; or (2) by excluding the Receiver’s evidence of the meeting.  The Receiver responded that the Bank failed to show the legal requirement that the Receiver destroyed evidence or that it acted in bad faith with a desire to suppress the truth and that the Bank failed to show prejudice because it is free to show any evidence it has that would prove the meeting did not, in fact, occur. 

In its other motion, the Bank moved to exclude testimony from the Receiver’s expert, Catherine Ghiglieri.  Ms. Ghligleri is an expert in banking practices directed at detecting fraudulent activity.  Her report catalogs the myriad violations Associated Bank made in the course of opening and servicing the Ponzi scheme accounts.  The Bank moved to exclude her testimony on grounds that it is (1) not relevant to the Bank’s actual knowledge of the scheme, (2) not relevant because it does not concern any individual Associated Bank employee, and (3) not relevant to the Bank’s substantial assistance of the fraud.  In opposing the motion the Receiver argued that Ms. Ghiglieri properly testified on topics within the area of her expertise:  banking practices.  Unlike the Bank’s experts, Ms. Ghiglieri does not extend beyond her expertise to conclude the Bank, in fact, had actual knowledge of the torts.  However, her expertise is necessary to help the jury understand what the Bank was supposed to do with regard to the Ponzi scheme accounts and how it was fully derelict in complying with those duties.  She is the witness who puts the entire catalog of the Bank’s infractions together, her testimony is proper, and she should be allowed to testify.

Question 184:  What motions did the Receiver file? 

The Receiver filed two motions before Judge Doty.  First, the Receiver moved to Exclude Associated Bank’s Damages Expert, Karl Jarek.  Mr. Jarek, a CPA, is the Bank’s damages expert.  Among other things, Mr. Jarek opines that the claim amounts identified in the Third Amended Claims List are unreliable, that the analysis and declaration of Scott Hlavacek is unreliable, and that the proper measure of damages in the case is $0.  The Receiver moved to strike improper legal arguments offered by Mr. Jarek, as well as his set off theory, which is not based on reliable principles and methods. 

Second, the Receiver moved to Exclude Associated Bank’s Banking Expert, Charles Grice.  Mr. Grice spends the majority of his opinion improperly weighing evidence and providing factual and legal conclusions about whether the Bank had knowledge of the underlying torts.  The Receiver argued that Mr. Grice’s opinions about the state of mind of the Bank, its employees, and others is not within his area of expertise, which is limited to banking compliance rules and procedures.

Question 185:  Whatever happened with the money that the Beckmans gave to Hollie’s aunt and uncle, the Edenborg-Gormans?

On August 29, 2016, the Court granted the Receiver’s motion and entered judgment in the amount of $139,871.20 against the Gormans.  The Gormans paid the judgment to the Receivership in full in September 2016.

Question 186:  Can we expect another distribution soon?

After the Receiver recovered $1MM in a settlement with Panama Oxford Investment, S.A. in 2013, the remaining land and bank accounts associated with the Ponzi Scheme’s dealings in Panama became the subject of a governmental freeze instituted under the Mutual Legal Assistance Treaty (“MLAT”) between the United States and Panama. As a result of the MLAT, in October 2016 the Receiver was able to recover an additional $101,500.00 from another Panamanian company, called Orlando Holdings S.A., which had received Receivership funds as part of a real estate transaction that was never completed. Any further repatriation of Receivership funds from Panama is now in the hands of the United States government.

Question 187:  When will the Receiver make another distribution?

At this time, there are no distributions scheduled.

February 17, 2017

Question 188:  We see that the Court granted Associated Bank’s motion for summary judgment. Is the case over?

The Court did grant the Bank’s motion for summary judgment on January 31, 2017. The order with the Court’s reasoning can be found here. The Receiver has already filed an appeal with Eighth Circuit Court of Appeals. Briefs to the appellate court will be filed in March and April 2017. We expect the appellate court will hear oral argument some time later this year, although a specific hearing date will not be scheduled until after the briefs are filed. The Receiver will continue to post briefs and hearing dates as they are filed and scheduled.

Question 189:  We are deeply disappointed by the district court’s decision. Does this mean that we have no chance of recovering the money that was stolen from us and taken in by Associated Bank?

The Receiver shares your disappointment about the summary judgment order. Because we believe the case against Associated Bank is and remains strong, the Receiver has filed an appeal with the Eighth Circuit. The appellate court could either affirm the district court’s summary judgment order or reverse it. If the district court’s order is affirmed, the Receiver will determine if further appellate proceedings are warranted. If the district court’s order is reversed, the case will be returned to the district court for further proceedings.

Question 190:  How long will the appeal to the Eighth Circuit take?

Briefs will be filed this March and April. We expect that the Court will schedule our case for oral argument some time later this year. We do not expect a decision from the Eighth Circuit until the end of this year or early next year.

Question 191:  Is the Receiver continuing to go after the funds that Cook and his cohorts stole?

At this point, the Receiver’s major efforts to identify and collect funds are largely complete. The Receiver is represented by contingent fee counsel in the Associated Bank case, who will continue to serve as main counsel in the appeal. The Receiver will continue to serve as co-counsel in the appeal process. The Receiver also continues to work with investors who have a change in name, address or other status so that our claims list remains current. The Receiver’s phone line and email address remains active for any questions or needs investors may have.

April 3, 2017

Question 192:  When will the Receiver make another distribution of funds?

On March 30, 2017, the Receiver filed a motion with the Court to approve an Eighth Interim Distribution of $500,000.00 to 737 investors identified on the Fourth Amended Claims List. The Receiver’s motion is scheduled to be heard by the Court on April 13, 2017. Details of the filing can be found here. If it is approved, the Receiver will promptly mail out checks to investors.

Question 193:  How much will I get if the Eighth Interim Distribution is approved by the Court?

The distribution rate for the Receiver’s proposed Eighth Interim Distribution will be approximately 0.3%, which will bring the total distribution rate to-date to approximately 7.2 cents for every dollar lost to the fraud (7.2%). Each investor’s check will be based on his or her approved claim amount. Generally speaking, the Receiver's payments to investor victims in the proposed Eighth Interim Distribution will range from $25.26 to $20,074.17, with an average distribution amount of $699.30.

June 9, 2017

Question 194:  I saw that Judge Davis approved the Eighth Interim Distribution on June 8, 2017. When can we expect our checks?

The Receiver is in the process of preparing the checks for the Eighth Interim Distribution authorized by the Court. Those checks will be sent by mail to investors next week.

 

 
 

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