A federal jury convicted three Minnesota men for their role in the $194 million Ponzi scheme masterminded by Trevor Cook that ranks as the second-largest Ponzi scheme in Minnesota history. Jason "Bo" Beckman, 42, Gerald Durand, 62, and Patrick Kiley, 73, were convicted of all charges and immediately taken into custody. The three were convicted of 12 counts of wire and mail fraud, one count of conspiracy to commit mail and wire fraud, and two counts of money laundering. In addition, Beckman was convicted on two counts of wire fraud, two counts of mail fraud, two counts of filing a false tax return, and one count of tax evasion. Durand was also convicted on two counts of concealing a material fact from the United States and three counts of filing a false tax return. Each likely faces over one hundred years in prison if sentenced to the maximum term for each count.
Cook's scheme, only second in Minnesota history to Thomas Petters' $3.65 billion Ponzi scheme, purported to achieve above-average returns through trading in commodities and futures. Partnering with two firms, Crown Forex SA and JDFX Technologies, Cook pitched risk-free returns to potential investors, attempting to allay any concerns by explaining that Crown Forex was operated by Jordanians that complied with Islamic sharia law and thus could not charge him interest on the loans he took out. Additionally, investors were told that transactions closed daily and thus were not subject to risk from being held overnight. In total, Cook and his associates raised nearly $200 million from over 700 investors. Yet, only $104 million of that amount was used to trade currency, of which $68 million was lost. The remaining amounts were used to pay investor returns and fund the personal and business expenses of the schemers.
According to prosecutors, Cook used Beckman, Kiley and Durand to pitch the scheme to potential investors. Both Kiley and Durand hosted radio shows hosted on Christian broadcast radio. Kiley, by far the most successful conduit for new investors, brought in nearly two-thirds of all investors to Cook's scheme, and boasted that he had forty years of experience in the financial industry despite never graduating from college and previously selling appliances and other consumer products. According to Kiley, the opportunity to invest in Cook's scheme had previously only been open to banks and international corporations, but available to Kiley's audience - whom he called "truth seekers" - in order to "protect them from an impending economic collapse." Kiley would then close each show with a prayer. Beckman conducted numerous seminars touting the scheme and also solicited affluent clients through his company, Oxford Private Client Group.
The criminal trial had several notable incidents, including the order by Chief United States District Judge Michael Davis to allow several attorneys hired by Beckman to break the attorney-client privilege concerning their conversations with Beckman in his ultimately unsuccessful bid to purchase a stake in an NHL team. The trial also saw Beckman give heated testimony about his lack of knowledge concerning Cook's scheme.
Judge Davis has not yet scheduled a sentencing date.
A copy of the indictment against the three men is here.