A Redding, California man has been convicted of a series of federal criminal charges stemming from his operation of a fraud scheme that defrauded elderly victims out of nearly $5 million, United States Attorney Debra W. Yang announced today.
After deliberating for five days, a federal jury late Friday convicted Christopher Peter Cook, 36, of four counts of mail fraud and eight counts of money laundering. The jury that convicted Cook heard 14 days of testimony, including several elderly individuals who said the scheme cost them their life savings. During the time of the scheme, Cook lived in several Southern California cities including Long Beach, Trabuco Canyon and Rancho Santa Margarita.
Christopher Cook’s brother – Perry Cook, a 29-year-old resident of Kirkland, Washington – pleaded guilty during the course of the trial to two counts of mail fraud. Perry Cook previously lived in Long Beach, Trabuco Canyon and Snohomish, Washington.
United States District Judge Gary L. Taylor, who presided over the trial, is scheduled to sentence both defendants on May 17.
The evidence presented at trial showed that Christopher Cook and others operated several companies from July 1995 until July 1998. Those companies included CD Services, Inc. (CDSI), which had offices in Long Beach and Laguna Hills; Nationwide CD Corp. (NCD) in Laguna Hills; Leisure World Financial in Seal Beach; and U.S. Financial Advisors in Redding.
These companies solicited senior citizens to invest in certificates of deposit which the Cooks and co-schemers told victims were identical to those at local banks. The Cooks and their associates promised victims that their CDs had higher interest rates than those offered at local banks, and that the CDs could be withdrawn at any time. Additionally, victims were told that the CDs would be held by a third party custodian, namely CDSI.
In fact, CDSI and the other companies were controlled by Christopher Cook and the co-schemers. CDSI placed the money invested by the elderly and widowed victims into CDs that had maturities of up to 25 years, and they commingled victims’ monies to purchase jumbo CDs exceeding the FDIC insurance limit of $100,000. CDSI also diverted significant percentages – up to 52 percent – of victims’ monies to members of the scheme to pay “commissions.”
When victims asked to withdraw their monies, the Cooks and representatives at CDSI explained that an “early withdrawal penalty and market valuation” of up to 50 percent would be assessed in order to disguise the fact that the scheme diverted victims’ monies for the personal benefit of the Cooks and other co-schemers.
CDSI targeted elderly victims, many of whom lived in Orange County’s Leisure World retirement community.
CDSI and NCD were placed into receivership by the California Department of Corporations in July 1998. The receiver appointed in the case was able to recover some of the victims’ monies.
During the course of the scheme, the Cooks and the co-schemers solicited more than $12 million from elderly and infirmed investors. From that total, approximately $4.8 million was diverted to the Cooks and their associates.
When he is sentenced, Christopher Cook faces a maximum statutory penalty of 180 years in federal prison. Perry Cook faces a maximum prison term of 10 years.
This case was investigated by the Federal Bureau of Investigation, the United States Postal Inspection Service, IRS-Criminal Investigation and the California Department of Justice.