You might remember Wade Cook from his stock-trading financial seminars attended by throngs of hopeful investors. You can still find Wall Street Money Machine and Wealth 101, books that touted his secrets, at Barnes & Noble (NYSE:BKS), Borders (NYSE:BGP), and (NASDAQ:AMZN). Now federal prosecutors have charged him with eight counts of tax fraud.

Cook's investing advice was seemingly simple, though incredibly risky and ultimately fundamentally flawed. Continuously investing in the waves of "rolling stocks" -- stocks that "roll" up and down within a certain price range -- and in stock options bought on maximum margin could earn investors tremendous profits. Cook claimed that by following his advice, investors could earn upwards of 20% to 40% monthly. The fly in the ointment, his fundamental flaw, was that it's impossible to consistently reap such incredible returns.

Berkshire Hathaway's (NYSE:BRKa) (NYSE:BRKb) Warren Buffett, considered by most to be the greatest investor who ever lived, has managed to achieve only a 25% annual return. As The Motley Fool pointed out in this article warning investors to be cautious when taking investment advice, a single dollar compounded monthly at 20% interest for 15 years was equal to $179 trillion, or seven times the world's gross domestic product.

Offering bogus financial and investment information wasn't what led to Cook being indicted; instead, it was his concealment of nearly $9 million in seminar fees and book royalties. Investors engaged in a willing suspension of disbelief and forked over thousands of dollars to attend a seminar that was an infomercial for penny stock trading, options trading, and using your credit card to pay for it all.

Of course, if it was really possible to make such millions trading, why was he bothering to hold these seminars? In fact, he apparently did very little trading on his own, instead making his money from selling books, seminars, and running the Wade Cook Financial Corporation, which at its height employed more than 500 people and had annual revenues of $118 million.

Prosecutors charge that Cook and his wife set up a fraudulent charitable trust and limited partnership, ostensibly to benefit the Mormon church, that instead funneled money to them. They ended up buying Arabian show horses, his-and-hers Cadillac Escalades, and a 40-acre estate. According to the charges, the Cooks were able to declare taxable royalties of just $980 in 1998, when in reality they received almost $5 million. From 1998 to 2000, the Cooks reported adjusted gross incomes of $350,000 annually, but allegedly concealed the millions they actually earned. The company was forced into bankruptcy in 2003 and its assets were auctioned off. The website still exists, and though it announces that Wade Cook Financial is bankrupt, it still hawks an investment seminar for an apparently different company.

With the charges, Wade Cook could face prison terms of three to 15 years each and fines of $100,000 to $1 million. If he needs to pay off that potential liability, perhaps this former taxicab driver-turned-financial guru could simply invest in some rolling stocks for a few days.

Roll back the clock with these early Foolish exposes of Wade Cook:

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Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. The Motley Fool has a disclosure policy.