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Monday, May 14, 2012

Can you trust Schepke's judgment?

This story shows why blindly following your ideology is a really super bad idea. 
Poor judgment.

Trial begins in major investment scheme
Article by: DAN BROWNING
Star Tribune
April 20, 2012 - 9:20 PM

A federal prosecutor spent nearly three hours Friday explaining to jurors in Minneapolis how the government expects to prove that three former associates of Trevor Cook helped him to defraud hundreds of investors in the second-largest Ponzi scheme in Minnesota history.
Assistant U.S. Attorney David MacLaughlin detailed myriad entities that he said the defendants used as part of Cook's bogus currency investment scheme, which he said bilked nearly 700 mostly elderly investors out of more than $190 million.
He described a separate scheme in which one defendant allegedly used investor funds to try to defraud the National Hockey League into believing he was a billionaire so he would qualify to buy a piece of the Minnesota Wild. And he said jurors would learn how the defendants reeled in investors through radio programs and investment seminars.
Cook pleaded guilty to running the scheme and is serving a 25-year federal prison sentence. MacLaughlin said he wouldn't call Cook to testify because he's a scoundrel and a liar.
In a nod to the complexity of the case, MacLaughlin told the jury of nine women and seven men that he'd just given the longest opening statement of his career, "and I've been doing this for 15 years."
"If the case seems like a mess," MacLaughlin said, "it's a mess on purpose."
The defendants didn't want anyone to "untangle the spaghetti," he said. "But it's not about unwinding the spaghetti."
MacLaughlin said the case boils down to a question of whether the defendants lied to investors. He promised jurors that they'd see that in documents and hear about that from victims themselves -- one of whom is 96.
"This is a case about people getting hurt," MacLaughlin said. "Very, very badly hurt."
The three defendants, alleged to be among Cook's top lieutenants, are:
• Jason "Bo" Beckman, 42, of Plymouth, a securities broker who claimed to be one of the nation's top money managers and who attempted to buy into the Wild hockey team.
• Gerald Durand, 61, of Faribault, an entrepreneur and longtime Twin Cities salesman.
• Patrick Kiley, 73, of Minneapolis, another longtime Twin Cities salesman who promoted Cook's currency investment program on some 200 radio stations and a Christian amateur radio network.
Each defendant faces various counts of wire and mail fraud, money laundering and conspiracy. Beckman and Durand also face several tax charges. Durand faces an additional count of concealing cash transactions.
Beckman's attorney, Douglas Altman, reserved his opening statement until he puts on the defense. In the past, Beckman has insisted he was duped by Cook and was a victim himself.
Durand's attorney, Brian Toder, agreed with the government about Cook's "despicable character."
"He's a drunk and a gambler. He would go down to Rio de Janeiro two or three times a year and do terrible things," Toder said. But the attorney said Durand broke away from Cook about June 2008, making Durand "more of a whistleblower than anything else."
Until the break, Toder said, Cook's strategy seemed to be working and Durand believed it was legitimate.
Cook's on the list of potential witnesses for Kiley.
H. Nasif Mahmoud, Kiley's attorney, said his client was fooled by Cook. He blamed Cook for misrepresenting Kiley on a website and in correspondence as a "senior economist" with more than 40 years of investment advisory experience for big corporations.
"You can't hold Mr. Kiley responsible for something he did not know about and was not involved in," Mahmoud said.
MacLaughlin and his co-counsel, Assistant U.S. Attorney Tracy Perzel, anticipated that strategy. MacLaughlin said the government would prove that there was no meaningful accounting or record-keeping at any of the myriad business entities involved in the alleged scheme and what existed was a fiction. None of the defendants did anything significant to alert investors long after they had evidence that the investment program was a sham, he said.
Jurors can expect to hear from Christopher Pettengill, a former associate who pleaded guilty and is cooperating with the government in hopes of getting a lighter sentence. They'll also hear from several "unindicted co-conspirators," including former Star Tribune business columnist Gene Walden, who worked closely with Beckman, and James Pieron, a Michigan entrepreneur who formerly had a tech company in Switzerland.
Gordon Schepke, a 73-year-old retired pipefitter from Troy, Mich., was the first witness to take the stand. He said he and his wife listened to Kiley's radio show every week for years and that he talked with Kiley on the phone for hours before they invested about $500,000 in cash, collectible coins and precious metals stocks.
Schepke said he was influenced by Kiley's age, purported investment experience and record of financial success, together with his conservative Christian values.
"I built up a personal trust in him," Schepke said. "Now that I look back on it, I feel like I was being groomed like a pedophile would groom a child."

23 comments:

  1. The following blurb from the court documents filed in this case indicate that Mr. Schepke lost a lot more than $500,000. According to the complaint, he lost over $750,000. But who among us hasn't invested 3/4 of a million dollars in a company that we learned about over short-wave radio?

    Plaintiffs Gordon and Kathlyn Schepke

    260. Plaintiffs Gordon and Kathlyn Schepke (“the Schepkes”) first learned of the foreign currency arbitrage program through Kiley’s radio show, “Follow the Money,” to which they listened on short-wave radio.
    261. On his radio show, Kiley represented that investments in the program were placed in individual accounts, that there was “no risk” to principal, and that he did not make money unless the investors made money.
    262. In early 2006, the Schepkes contacted Kiley at the telephone number
    provided on his radio show. In subsequent telephone conversations, Kiley reiterated that the program involved no risk, that the investments were safely held in individual accounts
    at the long-standing Swiss institution Crown Forex SA, and that the funds could be accessed “24/7” with just a telephone call. Kiley’s business card identified him as “Chief Economist/Technical Analyst” for “UBS REFCO IFX MILLENIUM RJO PFG Wealth Management Clearing Brokerage Foreign Exchange IRA’s.” Exhibit 30a.
    263. Prior to investing, the Schepkes received a telephone call from Kiley’s
    partner, Cook, who indicated that he “was coming to town” and would like to visit them at their home to discuss investing in the program. The Schepkes declined this invitation.
    264. Based on these representations, the Schepkes invested in the foreign
    currency arbitrage program in March 2006. The Schepkes understood that they were investing with Kiley, Cook, and Universal Brokerage FX. The total amount of the Schepkes’ investment in the program is $705,106.16.

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    1. The amount of Schepke's loss will be determined by what funds the receiver recovers. Various assets have been seized from the Ponzi operators and their associated ventures. Schepke will probably get some of his investment back, he will be lucky if he gets back 50%.

      An expensive education, sometimes the boogeyman turns out the person who is warning you to watch out for the boogeyman.

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  2. Thanks for bringing this to our attention. Mr. Schepke showed tremendous gullibility and greed in his own finances. He finds an investment opportunity through his short wave radio and then hands over half a million of his hard-earned savings because: "Above all that, (Kiley) was a Christian, and he was a conservative...I had personal trust in him." (Twin Cities newspaper quote of Gordon Schepke). I can see this leading to Mr. Schepke giving a petitioner to the planning commission the green light just because they are a "Christian and a conservative", also might he be biased against, say a non-Christian or someone he perceives as a Democrat or RINO? Such obvious stupidity has no place on our planning commission.

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  3. This is the man Mayor Daniels appointed to our planning committee? He will be voting on decisions using our tax dollars? How sad for Troy.

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  4. There is a true irony in all of this.

    Mr. Schepke is a member of the Tea Party, which screams up and down the the government can do no good for anybody, ever. Does Mr. Schepke believe, the way the Tea Party does, that the "free market" produces the best outcome all the time?

    The first irony is this: Government regulation is designed to prevent the type of schemes that Mr. Schepke invested in. You know, the kinds of government regulations that Fox News says is killing America.

    The second irony: Who does Mr. Schepke turn to when he loses all his money? The government, because the courts system is a branch of government.

    So we have a Anti-Government, free market advocate losing all his money in a illegal ponzi scheme who turns to the government (which he hates) to get his money back.

    The cognitive dissonance is astounding.

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  5. Truer words were never spoken. Have to wonder how many Tea Partiers out in this big ol' world have taken government assistance when on hard times...you know, welfare, food stamps, medicare, medicaid. Bet Gordon, after losing all that money, is heavily relying on Social Security to live right now.

    I do feel bad for Mr. Schepke. The same crap happens every day to thousands of Americans, victimized by blood-sucking human leeches for whom no punishment is severe enough, in my opinion. Now we know, perhaps, why he's so darn tin-foil hat angry all the time. But should he be in a position to make any decision for the rest of us in our city? No freakin' way. CQ, CQ...do you read me? This is Troy, Michigan...come rescue us from these ideologues...

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  6. Yes, the government to the rescue. Imagine that.

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  7. CNN has good coverage of the scam Gordon Schepke fell victim to:
    http://money.cnn.com/galleries/2010/news/1007/gallery.cook_kiley_photos/index.html
    The fraudster used Gordon Schepke's money for decadence in a Minneapolis mansion: "Wild parties," according to people who worked there. One of Cook's former employees said she would buy hundreds of dollars of alcohol for the office every few weeks. They would also bring in prostitutes and strippers."
    Here's the CNN broadcast story which, near the end, talks about how the de-funded SEC can't protect investors: http://www.youtube.com/watch?v=prF7WK8LFDE&feature=relmfu

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  8. Wait - this is the link to the story that talks about the SEC:
    http://www.youtube.com/watch?v=sbTXCpJaEGU&feature=relmfu
    You'll see a whole string of stories on YouTube looking at the Christian Shortwave Radio investment scam produced by CNN Money.

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  9. Listen to this audio clip of the radio show that Gordon Schepke listened to with his shortwave radio. Full tilt conspiracy kookery.

    Here is a link to a three minute segment of Kiley's radio show.

    http://www.youtube.com/watch?v=Q593C3UKi6o

    Welcome once again truth seekers around the world, both American and international. The information that I bring to you on these broadcasts are the facts, because they are documented and verified. And believe me I don't come to persuade you of anything, but instead to warn you. Because these broadcasts are about you, and I do mean you.

    It's about money, specifically yours. It's about politics, and a very sad state of affairs that they have the audacity to call an economy. On this particular broad cast I'm going to be covering, I'm going to be giving you a warning on a particular asset that the financial, the conventional financial field is about to lay on you.

    I'm going to cover another way to...ahh... own gold. A much smarter way because the government has plans for the gold that you are physically holding.

    Also on this broadcast, Obama when he was giving you a coded message saying we cannot continue on with unsustainable debt.

    Also, how the GM bankruptcy is going to affect you, your IRAs, 401ks and so forth. Also credit cards, and the...another subject. When the economic breakdown occurs in the United States of America... Martial Law!"


    Listen for yourself. There is more at the clip.

    Listen to this and then decide for yourself: Are you gullible enough to believe this nonsense? Clearly some people were.

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  10. He invested in foreign currency arbitrage - a very high risk investment even if you have many investing years left. In addition to the $700+K, he also gave the guy $140K in gold and silver because he was convinced the Government was going to take his precious metals. The whole thing shows extremely poor judgement and a lack of financial acumen. How can he dare say someone like our city manager is doing a good or bad job with a total lack of financial knowledge? I assume he is attacking taxes because it's his largest household bill and without a way to pay, he needs to fight them with all his might. Taking us all down with him. So much for the conservative belief of "responsibility and accountability". He made the investment, don't make us all pay. I would be happy to help the guy, but I won't let him take down my quality of life.

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    1. A court filing by the court appointed receiver in this Ponzi makes an interesting allegation concerning how this Ponzi was marketed to the investors.


      "31. The Ponzi Principals told customers they would use Shariah compliant banks to hold one side of the hedged transaction. They claimed that Shariah compliant banks are prohibited by religious doctrine from charging interest on currency loans. Therefore, the Ponzi Principals claimed, the Currency Program would earn interest on one side of the hedge, but would not be required to pay interest on the other."

      See page 12 here: http://www.cookkileyreceiver.com/news-and-updates_539_2896152168.pdf

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  11. Are we also going to look into John Szerlag's personal investment strategies?

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    1. Sure...just Google "John Szerlag ponzi" and see if you get anything like is there for Schepke.

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    2. Having seen the thought and care with which Mr. Szerlag has managed Troy's finances, I wouldn't have any problem letting him direct my personal investments.

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    3. Well that's not the point. But I shouldn't expect anyone here to get the point. I'm sure you are all advocates of truth justice and the American way.

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    4. Hey, anonymous...what is your point? Schepke's lack of judgment and financial acumen is public knowledge. I've researched John Szerlag. What is public knowledge about him is that he is a competent, experienced and successful city manager.

      There really is no comparison here.

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    5. Anonymous,

      You're deflecting. The issue isn't John Szerlag. The issue is Gordon Schepke.

      Is the fact that Schepke flushed his life savings down the toilet relevant to his opinion of John Szerlag's ability to run this city?

      Our Mayor has deemed Gordon Schepke qualified to be on the planning commission because he has a "good heart."

      I don't care about Schepke's heart. I care about his brain. And it appears that Schepke is a doddering old fool, incapable of managing his own affairs, much less the affairs of this city.

      If we have a mayor that thinks that Schepke is capable, then we have a mayor who is an idiot.

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  12. A Tin Foil hat strategy to investing that left him with...wait for it...tin.

    Oh the humanity...

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  13. Here is a three minute audio clip from the Patrick Kiley radio show "Follow the Money".

    http://www.youtube.com/watch?v=Q593C3UKi6o

    I previously submitted a comment with a partial transcript of this clip. If the moderator found something offensive in the comment other than the transcript, could only the transcript portion and the link in the previously submitted comment be posted?

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  14. Let's continue on the irony theme - the next time you see Mr. Schepke, ask him how many IMMEDIATE family members he has working for the Federal Government. They are the true patriots of that family, giving exceptional service to this country every single day. These fine Americans are what Janice and the TCU would call "looters". I wonder if their salaries, along with social security, will be what keeps Mr. Schepke afloat in his golden years. He is an out and out hypocrite and I feel very sorry for him. I don't think he understands the contridictions.

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  15. I googled John S., and didn't find anything related to being duped financially, any arrests for soliciting, any PPOs issued against him, any racial slurs made publically or on facebook, no bigotry against gays, no unpaid taxes, no church/state lines crossed, etc. (like you will find with many of Janice's supporters). But I did find plenty of good stuff about him. I trusted my investment (my home) with John. I can't same the same about the Mayor, a couple of really bad CMs, and people Janice is putting on committees.

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    1. That's the point. The bottom line. We have entrusted this well-run community to a group of people who are not qualified, but have been so outspoken it's like a cacophony of dimwits. And the rest of the community has chosen to listen to them. Henderson himself railed against the Police Department last summer all over social media, but he sure has changed his tune now that he has properly informed himself. And not that he is accountable. Too bad he didn't bother to get informed before being a main contributor the department being radically cut to the point of being "reactive" instead of "proactive." What will it cost to return to the previous level of service? A LOT more than it would have cost to fight to retain it. It's so frustrating to watch. And who does Henderson stand by? Mr. Schepke. Daniels. Why? Cuz he's being busy being "right."

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