S.D. Investment Adviser Charged With Theft of Funds

The San Diego district attorney’s office has charged San Diego investment adviser Donald D. Cook with 29 counts of grand theft in connection with Cook’s bankrupt San Diego Realty Exchange operation.

Cook’s firm acted as a “facilitator” for commercial real estate owners who wanted to avoid the tax consequences of selling their property. The law allows owners of non-residential, income-producing property to avoid paying tax on the profit from selling their property if the funds are handed over to a third party before reinvesting. The transaction then qualifies as a delayed exchange and is not taxed.

The district attorney’s office alleges that Cook, a certified public accountant, used up to $6 million of investor funds for his own purposes. Much of the money went into a separate Cook business called InstaTax, an electronic tax filing service, said San Diego Deputy Dist. Atty. Anthony Samson.

The case broke last spring when investors who had turned funds over to Cook were told the money was not available, said Samson, who is chief of the district attorney’s fraud division. He said Cook will be arraigned on the theft charges in San Diego County Superior Court next Monday.

Samson said his office expects Cook to argue in court that he had legal possession of the investors’ funds and therefore broke no laws in diverting them to his use.

The district attorney maintains that the funds were in fact in trust accounts and that outside use of them constituted theft. Cook was unavailable for comment Tuesday.