A federal jury this afternoon found former stock-trading guru Wade Cook guilty of seven charges for failing to pay taxes on $8.9 million that the government...
A federal jury this afternoon found former stock-trading guru Wade Cook guilty of seven charges for failing to pay taxes on $8.9 million that the government says he should have reported as personal income from 1998 to 2000.
The jury deadlocked on a charge that alleged Wade conspired to commit tax fraud. It also deadlocked on all eight criminal charges against Cook’s wife, Laura.
Sentencing for Cook has been scheduled for June 22.
“It’s a sad day,” Cook said after the verdict was read.
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The jury deliberated for nearly four full days before delivering its verdict this afternoon to Judge Thomas Zilly in the U.S. District Court in Seattle.
The long deliberations reflected the complexity of the case, which included 15 days of testimony and more than 700 exhibits. The trial ended with closing arguments a week ago. Both Wade and Laura had been charged with one count of conspiracy to commit tax fraud; three counts of filing false income tax returns for the years 1998, 1999, 2000; three counts of income tax evasion for 1998, 1999 and 2000; and one count of obstructing the Internal Revenue Service.
It wasn’t immediately clear if prosecutors would seek to retry the Cooks on any of the charges on which jurors couldn’t reach a verdict.
At the heart of the dispute was a complicated flow of money through a web of partnerships and trusts that the Cooks created — in consultation with their advisers — in early 1998.
The government alleged that the Cooks improperly redirected royalties from Wade Cook’s publications into a trust that, at least on paper, was eventually going to become a gift to the Mormon church.
The government said the royalties were pumped into the trust so the Cooks would not have to report them as personal income, and then the Cooks drained the trust and used the money to support their lavish lifestyle.
Attorneys for the Cooks argued that the money taken from the trust was taken as loans that the Cooks documented and expected to pay back.
However, the collapse of the stock market in 2001 and a Seattle earthquake the same year ravaged Wade Cook’s businesses and undermined the Cooks’ ability to repay the loans, their lawyers argued.
At the height of his popularity in the late 1990s, Cook had four investment books on the New York Times bestseller list.
A former cab driver, Cook used his taxi experience to derive his “meter-drop” theory of investing in which he claimed it was better to make a lot of small profits through quick in-and-out trades than to buy and hold. The theory was the subject of best-selling books, tapes and especially his pricey investment seminars run by his publicly traded company, Tukwila-based Wade Cook Financial, which was forced into bankruptcy in December 2002.
The U.S. government initially filed criminal charges against the Cooks on Dec. 1, 2005.
David Bowermaster: 206-464-2724 or firstname.lastname@example.org