Local Businessman Accused of Bankruptcy Fraud
Lynn E. Baker-often referred to as Ed Baker-was not a target of legal action when investigators were uncovering Trevor Cook's $190 million fraud scheme, although Cook invested funds from defrauded investors into Baker's firms.
However, Baker-who filed for Chapter 7 bankruptcy protection in June-now faces fraud allegations of his own, stemming from his bankruptcy filing.
John R. Stoebner, the trustee in Baker's bankruptcy case, filed a lawsuit on Thursday in U.S. Bankruptcy Court in Minnesota accusing Baker of making fraudulent transfers to hinder creditors' efforts to collect funds.
Baker, of Excelsior, is founder, chairman, and CEO of Mesa Holdings, Inc., a holding company of investment advisory firms. According to Stoebner's complaint, Cook invested roughly $3.75 million in Mesa Holdings-all of which was obtained from defrauded investors during Cook's massive Ponzi scheme.
Cook was sentenced in August to 25 years in prison for his involvement in the $190 million fraud scheme.
According to the suit, Baker has not adequately explained where the $3.75 million went and has not properly disclosed transfers of funds between Mesa Holdings and his other entities, including Baker Capital, LLC-which “appear to originate, at least in part, from funds deposited by Trevor Cook with Mesa Holding[s].”
Baker allegedly made the transfers “with the intent to hinder, delay, or defraud creditors,” and made false statements regarding his assets in his bankruptcy filing.
For example, in 2007 Baker allegedly provided a financial statement to Private Bank Minnnesota indicating that Baker Capital was valued at about $4 million, and his personal property amounted to approximately $445,000. In his bankruptcy filing, however, he said that Baker Capital was worth only $9,000, and he hasn't adequately explained why the assets depreciated so dramatically.
In January of this year, Baker signed a promissory note to his sister, Karen Baker, totaling $25,000. Baker then allegedly used proceeds from the loan “to make various fraudulent transfers solely for the benefit of his adult daughter,” including college bills.
Among other allegations, the suit states that Baker incurred charges at Minnetonka Country Club without informing the club of his bankruptcy filing, failed to disclose credit card accounts, and didn't turn over $37,853 in federal and state tax refunds from 2009.
Stoebner's suit seeks an order denying the discharge of Baker's debts and requiring him to turn over the tax refund.