Wednesday, July 21, 2010

Affinity Scam, Part 6: No Honor Among Thieves, The Defandants Begin to Turn on Each Other

He who is his own lawyer has a fool for a client.

A jury consists of twelve persons chosen to decide who has the better lawyer.
Robert Frost

The feeding frenzy has begun among the participants in the Affinity Scam Ponzi scheme that my colleague Pen and I have been chronicling here on Penigma.  It was inevitable that the alleged crooked participants in this massive swindle, this rapacious fraud, would sooner or later begin to turn on each other as the pressure was applied by the victims and their lawyers, by the receiver charged with recovering as much of the money as possible, by the SEC and CFTC, and by the US Attorney's office.  It is what the pressure is intended to do.

In confidential information from the victims, I have been hearing for months that additional indictments are going to be handed down soon.  From that information I have been expecting them over the last three months or more.  Defendants Beckman, Durand and Pettengill have been surprisingly quiet, as has Patrick Kiley.  The court activities have swirled almost exclusively around Trevor Cook, while continuing to reference that he committed his crimes with the deliberate assistance of unnamed others.

This has left an aura of waiting for the other shoe to drop......and waiting and waiting and waiting.

In the interim, Trevor Cook has gone to jail for contempt, and subsequently made an incredibly sweet plea bargain deal that has allowed him to plead guilty to only a couple of charges for which he is guaranteed he will serve no more than 25 years.  I am told that this is 25 years without time off for good behavior, or any other time off; it will be the full 25 years behind bars, followed by several years of supervision out of jail.

In this interim, since he made the plea bargain, it appears that Cook acted in bad faith, which those skeptics among us had thought from the beginning.  He has not as agreed provided any significant or substantial information as to the whereabouts of large amounts of missing money.  He was to be sentenced in the plea bargain in the next week or so.

During these court proceedings the lead attorney, one of the best in the DoJ for this kind of crime, Frank Magill, has left the U.S. Attorney's office to become a judge.  The other top lawyers with the expertise to take over had been finishing up other high profile Ponzi scheme trials, like the Tom Petters case.  When there are as many swindles going on in a jurisdiction as we have -- and make no mistake, Minnesota has more than many, more than most, to our shame and embarrassment -- there are only so many experienced trial personnel to go around.  We've stretched them pretty thin here, even with the organization by the Obama administration of a special Fraud task force, which seems to be scoring successes against the bad guys.

Today however, there was a development so bizarre, so outrageous, so just plain funny, that I could not delay another segment in the series on this scam.  Pat Kiley, one of the most prominent, most often cited high-profile actors in this little drama is suing the other defendants, Beckman, Durand and Pettengill, along with Dan Browning, the Minneapolis Star Tribune, the Pioneer Press and assorted other reporters for millions of dollars -----for having destroyed his reputation in the radio listening community!  It gets better. Kiley is representing himself, or acting 'pro se' to use the legal term for it.

The link to the suit is above, already available on  It is comparatively brief, and has some unintentionally comic moments.  The descriptions of drunken orgies with hookers alone are entertaining, for what it tells us about these individuals.  Presumably for Beckman, Durand and Pettengill to provide this information about Kiley's participation, they were at the very least admitting to being present, certainly it demonstrates they knew what kind of operation they were a part of.  From other accounts, I would be inclined to believe that all of them were participants, and none were simply observing.

The other interesting part is that Kiley claims that Beckman, Durand and Pettengill tried to shift their illegal actions onto him; he in turn indignantly claims the other three were the thieves and swindlers in the scam.  Among the other shots Kiley levels at his former bosom buddies is that their radio show was inferior to his.  This isn't surprising really; bad as Kiley's own radio show was -- and it was god-awful, Cook has complained that the press has not recognized what a shrewd business man he was and is angry at them for depicting him as having lost millions in bad deals - a fraction apparently compared to what he stole and gambled away.  If anyone wants to check out Kiley's old radio show, Youtube has quite a few examples of it.

Kiley's dignity slips more than a bit throughout, not unlike his tacky toupee.  There will be more information forthcoming: about the SEC case hearing earlier this week, about Cook's polygraph test administered by the FBI, about the efforts by the victims and others to overturn the plea agreement for non-compliance with recovering money and delay the sentencing.  With any luck, our patience will be rewarded in the promised indictments being made public, the claw-back suits to recover money have begun, Durand being among those pursued for money.  But in the meantime, it is at least a one-ring circus in the Kiley v Browning case courtroom.

CNN has done a series of segments on this Ponzi scheme; I can only wonder if they will continue their coverage of this latest development.

For those who want more information on Kiley's inability to read with comprehension in the filing of this suit, this is an excellent explanation for what is wrong with this stupid suit.

I have to admit the inclusion of Fox News guest host and right wing radio talk show host Laura Ingraham was a bit of a surprise, although the renting of right wing politicians and pundits is certainly not new for these kinds of bogus financial plan promotions.  But in the words of those right wing radio hosts -- stay tuned!


  1. In reading the complaint, Kiley (who authored it), seems to have some grasp of the basic structure of a civil complaint. This suggests it is something this "classy" fellow is not unfamiliar with.

    Regardless, his understanding of journalism seems shallow. His understanding of lying seems deep. I suspect he showed up at the Van Dusen Mansion to crash the party and steal (back?) some of what he thought were his clients.

    Past the substance of that encounter, there seems little other substance, past the evidence that he (apparently) didn't travel overseas (as the SEC alleges), there seems little evidence.. except of the fact that he and his associates claim to be christian and ethical, and yet in his complaint he appears to be venal, petty, and callow - his complaints are personal.. while his reputation may have been harmed - it was harmed by being associated with a Ponzi scheme - doing business with the unscrupulous, a role he seems to have been all too willing to participate in. It is not that unfair things were said ABOUT him, it is that unfair (and unethical things) were done BY him - including this ludicrous complaint - and done by those whom he knew.

  2. Mr. Kiley has the correct format for a civil suit, and the language used suggests some legal training behind it. For instance, he makes the allegation that he is not a public figure. New York Times v. Sullivan 376 US 254 (1964) (Being a public figure would raise the standard of proof much higher than the ordinary standard of proof required for a civil libel suit.) However, by his prominence in the entire mess in Minnesota, including his participation in the radio programs, etc, I think he qualifies as a public figure. Gertz v Robert Welch, Inc. 418 US 323 (1974)

    Once this burden or proof is required his lawsuit will fail many of its allegations. The only allegation that I see in the complaint which might not fail would be the allegation that Mr. Browning and others knew or should have known that he did not travel overseas, due to the fact that he had shown his passport to them. I don't think that's very convincing proof of not traveling overseas, but its the only allegation that holds any merit.

    Even if the allegation is proven, I think that the damages issue remains: I think he's brought on the damages by himself, and that its going to be difficult for a Minnesota jury to award him anything based on his conduct in this matter.

  3. dog gone said...
    Despite representing himself, Kiley either hired a lawyer to draft the paperwork, or perhaps a paralegal - he doesn't have even the minimal education to do this himself.

    He is distinctly ill-educated.

    His claim to damages is that he has been discredited and embarrassed in the radio listening community. Not embarrassed in front of a few personal friends. Embarrassed in front of a lot of strangers.

    If THAT doesn't meet the criteria of Kiley himself claiming he is a public figure - I don't know what does. He is blatantly contradicting himself in his own suit.

    His whinging on and on and on about his damn passport - pardon my language - is so stupid it is pathetic. If you read the link at the bottom of the post to the MinnPo story, as well as the original SEC documents themselves, NO ONE EVER WROTE THAT KILEY WENT OVER SEAS ANYWHERE.

    The statement was, clearly, that money was spent overseas, in a "spending spree". NOT that Kiley ever personally left the country to do that spending.

    My understanding is that Kiley's signature is all over faxed documents setting up overseas accounts to which money was transferred, and then disappeared. Ditto overseas purchases.

    THAT is part of what makes these documents so very funny, and in part, why I expect this specious, spurious suit will be dismissed.

    The rest of his claims in the suit are just as deficient in merit.

    Kiley appears to have knowingly lied, to have knowingly defrauded people by representing himself to have financail credentials he did not have. He appears to have knowingly and deliberately created an entirely fictitious background for himself and to have promoted it on the radio.

    His claims about not having defrauded people seem to rest on his not having fully understood every aspect of the fraud. But he knew HE was a fraud, he knew or should have known his radio program made claims which he clearly stated were verified that were NOT. He knew people were handing over money, in part, based on his false statements about himself and his credentials. LOTS AND LOTS of money.

    To claim he is not guilty because Cook said he was duped is no defense. Cook has said other things under oath, about money, particularly in the context of the issues which landed him in jail for contempt, which were also untrue.

    It is equivalent to someone using 'the dog ate my homework' excuse from someone who doesn't own a dog.

    ToE thanks for the heads up; readers, the link to the MinnPo article is fixed and now works, for those who would like to read it. It is excellent; I couldn't do any better myself. I encourage readers to read it.

    In the context of the recently passed Wall Street Reform and Consumer Protection Act, this is all more timely and topical than ever.

  4. In general, the truth of the matter told is an absolute defense to the tort of libel. Truth will be, in many cases here I suspect, used as part of the basis of any defense. The second basis will be that it seems clear to me that Mr. Kiley is a public figure, by the very nature of his appearances and sponsorship of radio programs. Therefore, the standard of proof that he has to show is much higher. He must show actual malice, and that the defendants published items which were untrue and that they knew that they were untrue (or were so reckless that they should have known they were untrue). That's an extremely high burden to overcome, but the problem is, with the exception of the Star Tribune, none of the defendants have especially deep pockets, and therefore, defending the lawsuit will be expensive. The lawsuit does not, in my opinion, rise to the point of being frivolous, but I agree with DG, I think most if not all of the counts of it will be dismissed when there is the inevitable Motion to Dismiss.

  5. ToE wrote, "That's an extremely high burden to overcome, but the problem is, with the exception of the Star Tribune, none of the defendants have especially deep pockets, and therefore, defending the lawsuit will be expensive. "

    Dan Browning, and his intern, presumably will be defended by the STrib lawyers, who have already been very effective in other litigation relating to this Affinity Scam. The Pioneer Press is an equally deep pocket, and presumably will be defending their reporter as well as the paper itself.

    Beckman is being sued by his lawyers for unpaid bills in conjunction with the scam. It remains to be seen if he will represent himself, like Kiley, or if he can find someone to represent him, given his current legal situation.

    Durand and Pettengill? Who knows? They would seem, potentially, to be more at risk from the claw-back lawsuits that are following the trail of the victims money. If, as I have long suspected, Durand and Pettengill used money from the Affinity scam to spin off into their own scam using the David Strom show on WWTC......then not only Durand and Pettengill, but also Strom and WWTC might be the target of those claw-back efforts.

    That would seem a more pressing concern than the Kiley action, which is a joke.

    I don't know what position the big papers will take - to dismiss, or not dismiss. When I emailed Dan Browning, he certainly didn't seem too concerned about the whole thing.

  6. I meant to add that I found it entertaining that Kiley claims Durand and Pettengill and Beckman 'stole' some of the investors money from he and convicted swindler Cook. And he asserts how they did it, in this suit.

    Cook claims in one of the documents in his contempt case hearing that put him behind bars, that they 'stole' investors money from him - Cook - as well, elaborating that since they had swindled the money in the first place, he couldn't go to the police.