Wade Cook Revisited
Wade Cook in Hot Water?
By David Forrest (TMF Bogey)
April 22, 1999
The Fool wrote extensively about Wade Cook back in the fall of 1997, shedding light on the dubious nature of both his company, Wade Cook Financial Corp. (OTC BB: WADE), and the "educational" material he was pumping out like bilge water to anyone with $4,000 and a desire to get rich quick. It was our sincere hope that the public would stop paying to attend his wealth-building seminars and buying his books. Much to our chagrin, ol' Wade is still out there hawking his wares and grabbing as many unknowing folks as he can to pay big bucks to attend his seminars. Perhaps though, Wade Cook's longevity is waning.
When we last left the cab driver turned financial guru, we told you about the 18 felony counts against Wade Cook that were thrown out of court because of the double jeopardy clause in the law. Since that time, several new lawsuits and investigations have come to light against Wade Cook Financial and its respective subsidiaries. Let's take a quick peek at how much fun the lawyers for Wade Cook are having. Most of these lawsuits and investigations make claims that the company engaged in deceptive practices regarding its investment track record and didn't tell people about their refund rights.
- In March of 1999, the Attorneys General of nine undisclosed states opened investigations to determine whether Wade Cook Financial or its subsidiaries have engaged in business and advertising practices that violate consumer protection laws. The company believes it has done nothing wrong.
- The state of Texas has filed a suit alleging that the company has engaged in deceptive trade and commerce practices as outlined in Texas law. Specifically, consumers must be told that they have the right to cancel their order within three days of making the order. According to the suit, Wade Cook Seminars (WCSI) isn't making this mandatory disclosure. The company denies any wrongdoing.
- The Texas Unauthorized Practice of Law committee also sent a request asking WCSI and two of its employees to cease and desist their activities that may constitute unauthorized practice of law in Texas. The company is allegedly helping people set up Nevada Corporations, Living Trusts, and other legal stuff that it isn't supposed to do in Texas. The company denied any wrongdoing, but later divested the group that was causing the ruckus. Hmmm.
- Nine Colorado residents have filed a lawsuit against Wade Cook and his company alleging misleading practices. The suit seeks various kinds of damages.
- In July of 1998, the Attorney General's Consumer Fraud Division of Illinois launched a formal investigation to find out if Cook's company has engaged in illegal and fraudulent activities. The company denies any wrongdoing.
- California's Attorney General has filed a civil suit alleging multiple violations of the state's civil code, including the dissemination of untrue or misleading statements; unlawful, unfair, or fraudulent practices; and deceptive, untrue, or misleading advertising. California seeks an injunction against the named companies as well as a penalty of $2,500 for each violation, "but in any event, not less than $4 million dollars in the aggregate" [emphasis ours]. The company says it will defend itself in the matter.
- The SEC has been investigating Wade Cook Financial since 1997. The company has complied with the investigation, and the SEC has taken no action so far. However, the SEC has not informed the company (according to the 10-K filing) that the matter is closed.
- Wade Cook and some of his companies have been under investigation by the state of Washington Securities Division since 1996. No action has been taken thus far by the state of Washington, but the investigation is ongoing.
- Two former employees of Wade Cook Seminars filed a complaint alleging sexual harassment and retaliatory discharge and defamation. The company believes it has not engaged in any unlawful practices.
- According to the company, it is delinquent on its 1997 taxes of $3.2 million dollars, not including penalties and interest. At the end of 1998, it was delinquent $5 million in taxes. To our knowledge, the IRS has not launched any proceedings against the company.
Our advice to anyone considering listening to Wade Cook's "get rich quick" message is to think twice about it, then think three more times about it, dress up in a bunny suit, hop around in a circle, drink some lemonade, think a few more times about it, and then... don't do it.
Next: A Look at Wade Cook Financial »