FOR IMMEDIATE RELEASE
2009-253
Washington, D.C., Nov. 24, 2009 — The Securities and Exchange Commission has obtained an emergency court order freezing the assets of a self-proclaimed Minneapolis-based money manager, a nationally syndicated radio personality and four companies they controlled in a foreign currency trading scheme that raised at least $190 million from more than 1,000 investors.
Additional Materials
The SEC alleges that Trevor G. Cook and Patrick J. "Pat" Kiley sold unregistered investments through shell companies by misrepresenting that they would deposit each investor's funds into a separate account in the investor's name to trade in foreign currencies and generate annual returns of 10 percent to 12 percent. They also misrepresented that their foreign currency trading program involved little or no risk and that investors' principal would be safe and could be withdrawn at any time. Kiley pitched the investments on his financially themed "Follow the Money" show that he hosted on radio stations nationwide.
According to the SEC's complaint, filed in U.S. District Court for the District of Minnesota, Cook and Kiley instead pooled investors' funds in bank and trading accounts in the names of entities they controlled. The foreign currency trading they did conduct resulted in millions of dollars in losses. Moreover, they misused approximately half of investor funds collected to make Ponzi-like payments to earlier investors and pay for Cook's gambling losses and purchase of the historic Van Dusen Mansion in Minneapolis.
"Cook and Kiley told investors that their money would be invested safely and profitably," said Merri Jo Gillette, Director of the SEC's Chicago Regional Office. "Instead, they went on a $40 million-plus spending spree with investors' money and lost another $40 million in risky foreign currency trading."
In addition to Cook and Kiley, the SEC charged their unregistered companies UBS Diversified Growth LLC, Universal Brokerage FX Management LLC, Oxford Global Advisors LLC, and Oxford Global Partners LLC.
The SEC alleges that Cook and Kiley misappropriated $42.8 million of investors' money, including $18 million that Cook used to buy ownership interests in two trading firms; $12.8 million that Cook and Kiley transferred to Panama to purportedly finance the construction of a casino; $2.8 million that Cook used to acquire the Van Dusen Mansion and $4.8 million that Cook lost through gambling. Cook and Kiley also misspent approximately $51 million to make Ponzi-like payments to earlier investors. The SEC further alleges that Cook and Kiley placed $108 million of investors' funds into banking and trading accounts in the names of their various shell companies and used some of this money to trade foreign currencies, resulting in losses of at least $48 million.
The Honorable Michael J. Davis of the U.S. District Court for the District of Minnesota issued an Asset Freeze Order against all assets of Cook, Kiley, and the Defendant Companies on Nov. 23, 2009. The court also issued an asset freeze order against several relief defendants for the purposes of recovering investor funds in their possession: Basel Group LLC, Crown Forex LLC, Market Shot LLC, PFG Coin and Bullion, Oxford FX Growth L.P., Oxford Global FX LLC, Oxford Global Managed Futures Fund L.P, UBS Diversified FX Advisors LLC, UBS Diversified FX Growth L.P., and UBS Diversified FX Management LLC. The court also entered a freeze order against certain assets of Cook's in-laws, relief defendants Clifford and Ellen Berg, who received investor funds from Cook. In addition, Judge Davis issued an order appointing a receiver over all of these assets. The court issued the freeze and receivership orders under seal while the assets were being secured, and the seal has now been lifted.
The SEC's complaint charges Cook, Kiley, and their companies with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to the emergency relief already obtained, the complaint seeks preliminary and permanent injunctions and disgorgement from all defendants as well as financial penalties from Cook and Kiley, and disgorgement of ill-gotten gains from the relief defendants.
None of these entities using the UBS name are affiliated with UBS AG, the Switzerland-based global financial services firm.
The SEC acknowledges the assistance of the Commodity Futures Trading Commission, the Swiss Financial Market Supervisory Authority, the National Futures Association, and the Minnesota Attorney General in this investigation.
# # #
For more information about this enforcement action, contact:
Timothy L. Warren
Associate Regional Director, SEC's Chicago Regional Office
(312) 353-7390
