Don't Mess With Taxes

OK, I had no idea who Wade Cook is. Apparently, I am in the minority and, in this instance, darn glad of it.

Earlier this month, Cook was sentenced to 88 months (that's around 7 and 1/3 years if you don't have calculator handy) for federal tax evasion, obstruction of justice and filing a false return.

He also was ordered to pay $3.75 million in back taxes on the approximately $9.5 million he earned on sales of books like Wall Street Money Machine (you can pick up a used copy of Vol. 1 at Amazon for a penny), and the tapes and seminars he promoted.

I bring up this bit of belated news now because it's a nice counterpart to our post earlier today on the Pope's impending position paper on tax evasion. Not only does the Cook case involve tax evasion, but according to court documents, Cook's scheme involved a trust ostensibly established to benefit another religious group, the Mormon Church.

Federal prosecutors were successful in February in proving that Cook and his wife, Laura (who got a year-and-a-half jail term for helping him falsify documents), deceptively used a series of interrelated trusts and limited partnerships to hide their sales proceeds. The two claimed they had merely borrowed money from a trust they said they set up to benefit the Mormon church, but instead funneled money to themselves.

They ended up buying Arabian show horses, his-and-hers Cadillac Escalades and a 40-acre estate. They said they were unable to repay the trust loan after losing money in the stock market.

Cook's market drubbing was not his first brush with financial failure. His company, Wade Cook Financial Corp., went bankrupt in 2003. That didn't come as a total surprise. Back in 1999, The Motley Fool had already reported on the money mess Cook was facing. Wikipedia tracks all Cook's financial and legal troubles.

Given his checkered fiscal history, I find it interesting that Cook is variously referred to in media reports as a "financial guru" and best-selling author. I suspect, however, that he didn't preach any better than he practiced.