Wade Cook sentenced to 7+ years in prison

[Demosthenes]

Last updated August 3, 2007 12:07 a.m. PT

Former investment guru Wade Cook, wife sentenced in tax case
THE ASSOCIATED PRESS

SEATTLE -- Former investment guru, author and financial seminar leader Wade Cook and his wife have been sentenced in a tax evasion case.

Cook was sentenced Thursday in federal court to seven years and four months in prison for repeatedly defrauding the Internal Revenue Service.

U.S. District Judge Thomas Zilly also ordered Cook to pay $3.75 million in back taxes on roughly $9.5 million of underreported income generated by sales of Cook's financial advice books, tapes and seminars.

In February, Wade Cook was convicted of tax evasion, filing false tax returns and obstructing justice. The jury was deadlocked on all counts against his wife Laura, who kept the books.

In May, Laura Cook pleaded guilty to obstruction of justice, rather than face a new trial. She admitted that she created documents on her home computer in an effort to evade taxes on income she and her husband received between 1998 and 2000.

Zilly sentenced Laura Cook to 1 1/2 years in prison.

The case centered on government claims that the Cooks created a complex web of interrelated trusts and limited partnerships, shifting money among the various entities to avoid paying taxes.

Cook's lawyer Angelo Calfo has promised to appeal the conviction.

The Cooks, who didn't testify during the trial, had contended they merely loaned themselves money from a trust that was supposed to become a gift to the Church of Jesus Christ of Latter-day Saints, but government lawyers said the couple never intended to repay the money and thus it was taxable income rather than loans.

They were unable to repay the loans mostly because of the stock market collapse in 2001, their lawyers argued.

Cook, a former cab driver, wrote three get-rich books on his "meter-drop" theory of investing - "Wall Street Money Machine," "Wealth 101" and "Business by the Bible" - and conducted hundreds of seminars in the 1990s on asset protection, stock market investing, real estate acquisition and avoidance of income tax.

At one time his net worth was estimated at more than $200 million.

He shut down his operations in February 2003, a month after his publicly traded company, Wade Cook Financial Corp. of Tukwila, sought Chapter 11 bankruptcy protection.

[Yogi Bear]

Wade Cook gets 88 months in prison
Laura Cook sentenced to 18 months
By DAN RICHMAN
P-I REPORTER

Self-styled financial guru Wade Cook, 57, was sentenced Thursday to seven years and four months in federal prison for income tax evasion, filing false tax returns and obstructing a tax investigation.

His wife, Laura, 54, was sentenced to 18 months in a separate federal prison after pleading guilty in May to obstructing the investigation.

"Mr. Cook is in many ways an upstanding citizen, but there is another, rather dark side to Mr. Cook that needs to be considered by the court," U.S. District Judge Thomas Zilly said before imposing sentence, addressing a courtroom packed with family members.

As for Laura Cook, he said, "It's very troubling to me -- that not only did you participate with your husband in the fraud, but you lied under oath twice and tried to use that false testimony in trial before me."

Zilly, who presided over the Fall City couple's four-week trial last winter, let the couple remain free for the next five to six weeks to get their affairs in order before surrendering to federal marshals.

Wade Cook's attorney, Angelo Calfo, said he plans to immediately appeal Cook's conviction, hoping to keep him out of prison. Laura Cook agreed when she entered her guilty plea not to appeal her sentence.

Zilly also ordered the Cooks to pay $3.8 million in federal taxes on the $9.5 million in royalties they earned but failed to declare between 1998 and 2000.

During the hearing, Wade Cook was animated, grinning at his family and occasionally laughing and shaking his head in apparent dismay as Assistant U.S. Attorney Robert Westinghouse argued before the judge. But his demeanor changed considerably after Zilly pronounced sentence.

Seemingly stunned, he sat for 10 minutes with his head in his hands. Ten feet away, Laura Cook stared down at the counsel table. Some of their daughters cried.

But, as Westinghouse noted during his remarks, "Wade Cook is as defiant today as he was the day he was charged. He blames everyone but himself."

Asked afterward to comment on the outcome, Cook remarked, "I'm not going to tell you that this judge is an asshole. I'm not going to say that."

Then, speaking to someone nearby, he added, "He probably wants me to say Westinghouse is a criminal and a liar, but I'm not going to say that, either."
Westinghouse said the judgment in each case "is clearly appropriate. ... The court clearly considered all the factors it was required to consider."

Calfo asked that Wade Cook serve his time at Sheridan, a medium-security facility for men 90 minutes south of Portland. Jeffery Robinson, an attorney for Laura Cook, asked that she serve her sentence at Geiger Correctional Center in Spokane.

Wade Cook's sentence of 88 months is well below the 121 months requested by the U.S. Attorney's Office. Laura Cook's sentence is higher than the 15 months the prosecutors sought.

Zilly said his sentencing of Wade Cook was influenced by presentencing reports that in 1990, Cook was indicted in Arizona on 18 charges of fraudulently selling unregistered securities and conducting illegal enterprises.

He said he also found significant that the Federal Trade Commission had consolidated actions in 14 states against Wade Cook for improperly taking money from investors and had imposed penalties of about $2.7 million.

He noted that the Cooks filed no personal income tax returns between 1993 and 1996. And he concluded that the intricate network of corporations and trusts the Cooks set up was "sophisticated," increasing the maximum sentence he could impose.

To Laura Cook, he said, "You have led in many respects an exemplary life." But, he noted, she had also admitted signing falsified tax returns for three years in a row, creating a backdated promissory note in an attempt to make income look like a non-taxable loan and lying under oath in two separate investigatory hearings.

The Cooks' case stretches back before 2003, Zilly noted.

"It was only because of the defendants' foot-dragging, concealment, obstruction that this investigation lasted as long as it did," Zilly said.

A federal jury convicted Wade Cook on Feb. 20 on seven counts of tax fraud, while Laura went free because jurors couldn't agree on verdicts in her case.

The jury found Wade Cook guilty of evading federal income tax from 1998 through 2000 on royalty payments of $9.5 million, filing falsified tax returns in those years and obstructing federal investigations into his actions.

As part of the tax fraud, the Cooks created a fictitious limited partnership purportedly for the benefit of the Mormon church, of which they are members. But no funds ever flowed to the church.

At its peak, Tukwila-based Wade Cook Financial Corp. employed 550 people and brought in annual revenue of $118 million from seminars, books and tapes on investment and tax strategies.

The Cooks spent $487,000 to maintain their estate, $360,000 to buy 10 cars, $200,000 to buy at least nine horses and $217,000 as a donation to The Church of Jesus Christ of Latter-day Saints, according to the prosecution.

They live on a horse ranch, which they said they have put up for sale, and once had a net worth of $200 million.

"There is nothing wrong with buying property or jewelry or cars," Zilly said during the sentencing hearing. "But most people pay taxes."

The prosecution said that since formal proceedings began against the Cooks in December 2005, the couple have been at liberty, and Wade Cook has continued to do business over the Internet, selling advice on investment strategies -- and tax write-offs.

P-I reporter Dan Richman can be reached at 206-448-8032 or danrichman@seattlepi.com.

[grixit]

The Motley Fool was warning about him in 1999: http://www.fool.com/specials/1999/sp990 ... cook01.htm

[The Observer]

I suppose this court decision was trying to get me to say that Cook was a greedy, underhanded, lying, cheating, fraudulent felon, but I am not going to say that.