Clerical Error Complicates Payments to Ponzi Scheme Victims

Funds are being distributed to victims of Trevor Cook's Ponzi scheme, but a recent clerical error resulted in some investors receiving more money than they were supposed to-and until they return the extra funds, assets won't be distributed to other victims who were underpaid.

A receiver has been recovering assets from Trevor Cook's $194 million Ponzi scheme and distributing them to victims of the fraud-but a recent administrative mistake resulted in some investors getting more than their share of the funds, while others received less.

The U.S. District Court clerk's office has been assisting the receiver by periodically distributing checks to the 723 defrauded investors, according to a report by the Star Tribune. But at the end of March, a clerical error resulted in 92 investors receiving more money than they were supposed to-while 91 investors were underpaid.

For example, Bill Krisko of Bloomington-who invested about $1.5 million in Cook's scheme-was expecting a check for more than $10,500 but received only about $1,100.

R.J. Zayed, the receiver in the case, told the Star Tribune that the error had “a very real impact on many of the victims who have already been through so much.”

“Unfortunately, I have limited power to correct the situation,” he told the Minneapolis newspaper.

The U.S. Treasury Department, which issued the check, won't compensate the shortchanged victims until those who were overpaid return the extra money they received. Nearly all of those investors have returned the extra money, but a handful have resisted doing so, Zayed told the Star Tribune.

Those investors are “victimizing other victims,” and they should understand that the Treasury Department “will collect the money back from them one way or another-and that is not an outcome that will be good for anybody,” Zayed said.

Richard Sletten, the clerk of the court, told the Minneapolis newspaper that the court is “working to rectify this situation as expeditiously as possible,” and he expects that the error “will be resolved in the very near future.”

Trevor Cook pleaded guilty in 2010 to one count of mail fraud and one count of tax evasion and was subsequently sentenced to 25 years in prison.

According to the plea agreement, Cook-with the help of others-raised millions of dollars from investors by purportedly selling investments in a foreign currency trading program. Cook, a money manager, instead used the funds to make payments to other investors and give money to Switzerland-based brokerage firm Crown Forex, SA, in an effort to deceive Swiss banking regulators. Three of Cook's former associates are currently on trial, the Star Tribune reported.

To learn more about the distribution of assets to victims of Cook's fraud, as well as the recent clerical error that has complicated the process, read the full Star Tribune story here.