SEC: Van Dusen Mansion hosted massive Ponzi scheme


The landmark Van Dusen Mansion on LaSalle Avenue South was purchased with some of the profits of a massive Ponzi scheme, and then used by its owner as a place to meet with potential victims, according to court documents on file with the Securities and Exchange Commission.

The SEC has frozen the assets of the two Minnesota men it accuses of running the scheme,  Burnsville investor Trevor G. Cook, and syndicated radio show host Patrick J. Kiley of Minneapolis. It alleges that the two, and their corporate entities, raised more than $190 million over a three year period and victimized more than 1,000 investors between 2006 and 2009.

In addition, the pair allegedly made $51 million in Ponzi-like payments to earlier investors, and placed $108 million of investors' funds into banking and trading accounts in the names of their various shell companies.

The mansion was built in 1892 by George Van Dusen, who made his fortune in the grain elevator business. It's listed by the city's Heritage Preservation Commission as "

The Coen brothers used the mansion as a backdrop in 2008 while filming their new movie, "A Serious Man." (See image at right.) It's listed on the National Register of Historic Places, and by the Minneapolis Heritage and Preservation Commission.

Click on image to enlarge

Click on image to enlarge

Court documents show that Cook bought the mansion for $2.8 million in 2007. He's recently been in a legal battle with former associate Bo Beckman over its ownership.

The SEC has frozen the assets of Cook and Kiley as it investigates their dealings. 

Those named as victims include:

  • James Cochran, a 61-year-old dry wall contractor from California, who invested $200,000 after an initial meeting with Cook at the Van Dusen Mansion, and followed that with an $800,000 deposit.
  • Fifty-year-old Thomas Hoel, of Woodbury, Minn., who owns and runs a physical and occupational therapy center for children with special needs. He followed an initial $83,834 investment with another $12,000.
  • Lonsdale, Minn., farmer and self-employed grain broker Edward Smisek, 61, put $111,669 into the foreign currency program.
"Cook and Kiley told investors that their money would be invested safely and profitably," said Merri Jo Gillette, Director of the SEC's Chicago Regional Office. "Instead, they went on a $40 million-plus spending spree with investors' money and lost another $40 million in risky foreign currency trading."

Among the expenditures:
  • $18 million to buy ownership interests in two trading firms.
  • $12.8 million purportedly used to finance the construction of a Panama casino.
  • $2.8 million to acquire the Van Dusen Mansion.
  • $4.8 million that Cook lost through gambling.