Prison sentences for financial guru Wade Cook, wife
Wade Cook made millions of dollars in the 1990s selling tax tips and investment strategies to individual investors. Cook's financial schemes produced...
Seattle Times staff reporter
Wade Cook made millions of dollars in the 1990s selling tax tips and investment strategies to individual investors.
Cook's financial schemes produced far more negative returns Thursday when a federal judge sentenced him to seven years and four months in prison for repeatedly defrauding the IRS.
U.S. District Judge Thomas Zilly also ordered Cook, 57, to pay $3.75 million in back taxes on roughly $9.5 million of underreported income generated by sales of Cook's books, tapes and seminars.
Zilly sentenced Cook's wife, Laura, 54, to 1-½ years in prison. She is jointly responsible for paying the back taxes.
The hefty prison terms are the culmination of a lengthy and complex inquiry that began with an IRS audit in 2003.
The U.S. Attorney's Office in Seattle formally charged the Fall City couple in December 2005.
In February, after a lengthy trial, a federal jury found Wade Cook guilty of three counts of filing false income-tax returns, for the years 1998, 1999 and 2000; three counts of income-tax evasion; and one count of obstructing the IRS.
The jury deadlocked on all charges against Laura Cook, but she pleaded guilty in April to one count of obstruction rather than endure a second trial.
Zilly said Thursday that many of Wade Cook's supporters had written to describe his good works on behalf of his family, his church and the community.
"He is in many ways an upstanding citizen," Zilly said. "But there is another rather dark side of Mr. Cook that has to be considered."
In 1990, Zilly noted, Cook was indicted on 19 charges of investment fraud in Arizona and eventually paid more than $500,000 in fines and restitution.
In 1997, the IRS found Cook owed $4 million on more than $10 million in underreported income; and in 2000, the Federal Trade Commission consolidated actions against Cook in 14 states for deceiving investors and imposed $2.7 million in judgments against him.
"You would think someone of Mr. Cook's expertise would get the message," Zilly said.
Instead, Zilly said, the Cooks tried to evade income taxes in the late 1990s by directing $9.5 million of royalties from Cook's investment products into a "charitable remainder trust" so as not to report it as income.
"No taxes were ever paid on those royalties," Zilly said Thursday. "All of this money was transferred from entity to entity for the benefit of the Cooks."
Angelo Calfo, Cook's attorney, said he will appeal Wade Cook's conviction. "This case isn't over," Calfo said. "I think there's a real question about whether those verdicts [against Mr. Cook] are going to stand."
Zilly also had harsh words for Laura Cook, who he said lied to government investigators on at least two occasions, then attempted to have false testimony introduced as evidence at trial.
"That's very troubling that you participated in the fraud, that you lied about it to the government, and then you tried to use it at trial knowing it was a lie," Zilly said, explaining why he imposed a sentence three months longer than the 15 months the government recommended.
"I believe that is absolutely necessary under all the circumstances," Zilly said.
The Cooks will be free on bond until they start their prison terms in five to six weeks.
David Bowermaster: 206-464-2724
Copyright © 2007 The Seattle Times Company
UPDATE - 09:46 AM
Exxon Mobil wins ruling in Alaska oil spill case
NEW - 7:51 AM
Longview man says he was tortured with hot knife
Furniture & home furnishings
"All Vintage Sale" in Queen Anne Sat. Dec. ...
***CKC Brindle Parti Goldendoodles***
***CKC Labradoodle Puppies***
POST A FREE LISTING