State Sues Investment Guru Wade Cook, Alleging Fraud

Wade Cook--the self-proclaimed investment guru who charges as much as $7,995 for his investment seminars--was accused by state prosecutors Tuesday of defrauding California residents out of as much as $18 million.

Wade Cook Financial Corp. of Seattle, which sells books and newsletters and conducts investment seminars nationwide, was named as a defendant in the civil suit filed in Fresno County Superior Court.

Prosecutors are seeking refunds of as much as $18 million in tuition the company received in California in 1995, 1996 and 1997. They also seek civil penalties of at least $4 million.

“Seminar scam artists and other purveyors of bogus get-rich-quick schemes ought to think twice before doing business in California,” said state Atty. Gen. Bill Lockyer.

Kiman Lucas, general counsel for Wade Cook Financial, said he could not comment on the action because the company had not yet been served. However, he added that the company is “proud of our policy of providing full refunds to any customer who requests one within seven days of registering for a seminar.”

The California action, filed jointly by Lockyer and Fresno County Dist. Atty. Edward Hunt, is the latest in a virtual avalanche of regulatory investigations and charges filed against the charismatic author of “Wall Street Money Machine.”

The company faces a similar suit filed in Texas last May. The Securities and Exchange Commission, Washington state and Illinois securities regulators are also investigating the company, according to SEC documents.

The company has said it does not believe that it violated any applicable laws.

The Fresno suit alleges Wade Cook Financial and Cook, the chief executive, misrepresented the company’s stock market success and its money-back guarantee policy for seminars. Further, it charges that the company failed to inform students of the state-mandated three-day refund period after they signed up for seminars.