The sole remaining member of Wade Cook Financial Corp.'s audit committee quit this week, complaining that he couldn't obtain information about the stock seminar company's finances.
Board member Everett Sparks, who joined the cash-strapped company's board five months ago, said in an interview that he was disturbed by Wade Cook Financial's financing of homes and cars for favored employees when it was behind on employee paychecks and other obligations. The company's other three audit committee members quit in June.
The Seattle company, founded by Wade Cook in 1989, runs seminars and publishes books on how investors can make money trading stocks. Its own stock portfolio lost 89% in 2000 and 60% last year, according to the company's Web site.
"What I couldn't understand is, if he's so good at trading, why do they have these money problems?" said Sparks, a petroleum industry executive from Arlington, Texas. "It just doesn't add up."
Troy Romero, an attorney for the company, said committee members had full access to the company's financial information.
In a government filing, the company traced many of its problems to earthquake damage at its headquarters in February 2001, the Sept. 11 terrorist attacks, the stock market's decline and news reports of Federal Trade Commission actions against the company.
Janice Leysath, a former chairwoman of the audit committee, said in her letter of resignation that the company spent money on "bogus trips, jobs, fees and mortgage payments" for friends and relatives of CEO Cook. The company denied the allegations.
The FTC in February filed a motion in federal court to hold Wade Cook Financial in contempt, saying it violated an October 2000 settlement with the agency. The agreement required Cook to refund millions of dollars to customers who falsely were told the firm's seminars would teach them how to make 20% or more a month on their investments.
The FTC also alleged Wade Cook Financial continued making misrepresentations to customers after the settlement.
The company's stock rose 10 cents to 40 cents Thursday on the over-the-counter Bulletin Board.