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Undercover Trader Helps Bring Down $190 Million Ponzi Scheme

Undercover Trader Helps Bring Down $190 Million Ponzi Scheme

As a trader who felt he had a responsibility to the investment community and beyond, Ty Schlobohm, helped bring down a $190 million Ponzi scheme based in Minneapolis. The white collar crime operation headed by Trevor Cook weaved its way through Europe by placing trades through a bankrupt Swiss firm. Ty Schlobohm decided to tell the public about his role in the investigation to encourage other finance professionals to report violations.

Mr. Schlobohm learned about the Minneapolis based fund that Trevor Cook operated from a friend. Schlobohm had a background in raising capital for hedge funds and only became interested in Oxford Global Advisors after he learned the fund was earning a 12 percent return on supposedly risk-free investments. Schlobohm informed Cook at a meeting that he would invest $500,000 in the fund and could raise $500 million for the fund if Cook could provide audited figures on the fund.

Cook made a presentation of the fund’s investment strategy to Schlobohm. During the presentation Cook displayed “live” trading information but Schlobohm noticed the presentation was actually a demo instead of a live trading session. Schlobohm identified more inconsistencies in the fund’s description and also discovered red flags in Cook’s background. Believing, that the fund’s numbers were statistically impossible to create, Schlobohm prepared a personal report that detailed what he perceived as fraud and sent it to the FBI in March, 2009.

Thereafter, Schlobohm was soon working in conjunction with the FBI and attended numerous meetings to gather more information on the fund’s practices. Once authorities had gathered enough preliminary evidence, they subpoenaed Trevor Cook’s records which led to his bank accounts being frozen and assets seized. Cook pled guilty to the fraud and tax charges and was sentenced to 25 years in prison on August 25.

Source: Star Tribune, “Feds’ Man on Inside Agonized as Scam Went On,” Dan Browning, 10/31/10

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