Byline: DAN BROWNING; STAFF WRITER
It appears that the investigation into Trevor Cook's $194 million international Ponzi scheme is far from over.
A half-dozen federal search warrants unsealed Wednesday in St. Paul reveal that one of Cook's longtime associates has agreed to plead guilty in the case and is working with federal agents zeroing in on Gerald Durand, a Faribault entrepreneur.
Durand was deeply involved in the decisionmaking at Cook's enterprise, court records indicate. The two had done business together since the 1990s, starting out in coins. In February 2008, Durand traveled to Switzerland to investigate a report that Crown Forex SA, which was handling Cook's currency trades, was teetering on the edge of bankruptcy and had just $1 million left in its accounts.
Durand abruptly vacated the offices where he and Cook worked in the Van Dusen mansion in Minneapolis in June 2008. Cook pleaded guilty in August and is serving a 25-year sentence in the fraud.
A sworn statement filed Monday by FBI special agent Eileen Rice identifies the associate who is working with authorities as "Cooperating Defendant #1" or "CD#1." It says the associate told law enforcement that Cook agreed to pay Durand $5,000 to $15,000 a month if he would not tell investors about the fraud and if he would not try to poach any of Cook's investors. Payments continued through June 2009.
Durand could not be reached for comment, but he has denied wrongdoing in earlier interviews.
Rice wrote that she's seen evidence that Durand has tried to conceal his assets or involvement with different companies. He transferred ownership of his home into his wife's name during a bankruptcy proceeding, admitting that he was trying to protect it from creditors, she said. He uses a bank account in her name as well.
Bank records cited in the affidavit indicate that Durand may have significantly underreported his income from Cook's currency program.
Investigators searched his house, bank deposit box, person, an office and storage locker. They hauled off volumes of business records, computer equipment, storage media, tax records, books relating to investing in gold and Latin America, as well as boxes of "tax avoidance books."
Rice indicates that Durand has gone back into the investment marketing business. An unidentified radio employee reported meeting with Durand to discuss the purchase of radio and Web advertising for a new venture called Financial Fortitude, which is helping to market an Eden Prairie start-up called Vincent Capital Group.
On April 2, an undercover agent attended a seminar put on by Vincent Capital. Rice noted that Durand was seated at the back of the room with another former Cook associate, whom she did not name. At the currency investment seminar, prospects received a brochure with the business cards of Dale L. Francis, 41, of New Prague and Ryan Litfin, 29, of Excelsior, attached.
Francis is a former business associate of Durand's. They've had several civil judgments levied against them in the past. He could not be reached for comment.
Litfin said he's the sole owner of Vincent Capital, which hasn't done any deals yet. He denied any wrongdoing. Durand, he said, has "no role whatsoever" in running the company, but acknowledged that he's done some marketing consulting for the firm.
Litfin said he was shocked when federal agents came to interview him about the seminar.
Eric Phinney, 34, of Monticello, owns Financial Fortitude. He described it strictly as a marketing company and said it's got about $10 in the bank. Phinney said although he's the sole owner, he has discussed a partnership with Francis.
Coin dealer colleagues
Durand, 60, and Cook, 38, go back to at least the late 1990s. Durand had been a supervisor at a Bloomington coin dealership called Investment Rarities Inc., and Cook was a salesman there. Durand eventually broke away in 1999 and started International Strategic Assets Inc., a publicly traded Internet marketing company, and Cook went to work for one of its subsidiaries selling collectible coins.
Investment Rarities sued Durand, Cook and a number of other related parties in 2000, alleging that they stole their valuable marketing lists. The suit quickly settled for a nominal sum after Durand resigned as CEO of International Strategic Assets and the firm went out of business.
But according to Rice's statement, Durand wasn't done with his former coin customers. Rice said that Durand "used leads from his employment in the precious metals industry" where he and Cook had worked to solicit and secure investors for Cook's currency investment scheme.
Durand told a broker whom he trained to pitch the currency investments that "the lists of potential investors to cold call were made up of people who had purchased gold or expressed an interest in gold sales," Rice wrote in a statement used to obtain the search warrants.
She indicates that the scheme went back as far as 2004, when Cook and Durand met with CD#1 and claimed they were making returns of 15 to 16 percent, and paying investors 12 percent returns.
Rice's statement draws from a number of unidentified sources who worked alongside Cook and Durand, including CD#1.
Rice said that the cooperating defendant invested $1 million in the program in May 2006, telling Cook to leverage the money to make up to 60 percent returns. CD#1 then joined Durand and Cook as one of the company's leaders and helped secure investors, she said.
Rice said that Cook paid this person $30,000 a month through August 2008, long after CD#1 had realized that the $1 million investment had been lost or spent. In March 2008, CD#1 transferred $400,000 from one of the Cook business entities to Durand for him to invest in "the purported production of a movie."
Dan Browning - 612-673-4493
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