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Investment guru sentenced in fraud

August 04, 2007|From the Associated Press

SEATTLE — Former investment guru, author and speaker Wade Cook has been sentenced to more than seven years in prison and ordered to pay millions in back taxes on underreported income as part of a tax evasion case.

Cook was sentenced Thursday in federal court for repeatedly defrauding the Internal Revenue Service.

U.S. District Judge Thomas Zilly 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.

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

She pleaded guilty in May to obstruction of justice rather than face a new trial. She admitted creating documents in an effort to evade taxes on income she and her husband received from 1998 to 2000.

Zilly sentenced her 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, said he would appeal.

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

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, Wash., filed for Chapter 11 bankruptcy protection.

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