Some of Minnesota’s mightiest have hit rock bottom. Here are the state’s top 8 disgraced powers, plus a few fallen sports figures for good measure.
Perhaps Trevor Cook should have stuck with his part-time gig as a sports bookie. He might not currently be serving more than two decades in prison.
Cook was Minnesota’s own mini Bernie Madoff, the mastermind of a Ponzi scheme that purported to make money for investors (the phony statements they received said so, after all) while mostly enriching himself and several confederates.
For four years beginning in 2005, he and his colleagues sweet talked $194 million out of the bank accounts of some 1,000 investors who believed he operated Plymouth-based currency trading firm Universal Brokerage Services.
But the FBI, the SEC and other law-enforcement entities claim only about $109 million of that money was ever sent to currency-trading firms. About $52 million was repaid to investors in what the government called “lulling payments.” And another $30 million was pocketed by Cook and his coconspirators to fund their lavish lifestyles.
A graduate of Christian prep school Minnehaha Academy and a former caddy at the Minikahda Club, Cook quickly became known as a major partier during his time at the University of Minnesota, spending freely on booze and strippers (one of whom he hired as his administrative and sexual assistant). He graduated with a bachelor’s degree in applied economics, got a job as an investment banker and by 2007 opened his own money-management firm after buying the 117-year-old Van Dusen Mansion for $2.6 million in cash.
In 2009, the SEC and the Commodity Futures Trading Commission filed lawsuits accusing Cook of running a Ponzi scheme, using the money of later investors to pay off earlier ones. Prosecutors seized $13 million spent on land in Panama, and Cook turned over Fabergé eggs, bejeweled purses, a watch collection and $363,700 in $100 bills. On top of that, he admitted to cheating the Internal Revenue Service out of $2 million in taxes. In 2010, Cook pleaded guilty to one count of mail fraud and one count of tax evasion. He was sentenced to 25 years in federal prison.
Once upon a time, Denny Hecker was a successful car dealer in the Twin Cities. In the nineties, he collected expensive watches, jetted around the country on a private plane, and owned vacation homes in Colorado, Minnesota and Mexico.
But in 2008, things started to go south when authorities received complaints that his dealerships hadn’t been paying tax, title and licensing fees. An investigation soon unearthed larger scams. Beginning three years earlier, he and a couple associates had begun altering documents that defrauded commercial lenders out of tens of millions of dollars.
By the end of 2009, the hole Hecker had dug himself was $767 million deep. He filed for bankruptcy, figuring if he could get that “gorilla,” as he put it, off his back, he could still live comfortably on $1 million a year in consulting fees and the sale of some of his businesses.
But federal prosecutors had other ideas. In 2010, Hecker was charged with conspiracy to commit wire and bankruptcy fraud, earning the latter charge when he tried to conceal assets by transferring more than $110,000 to a friend who had instructions to hold it for him. Hecker eventually reached a plea deal, and in February 2011, he was ordered to pay $31 million in restitution and to serve 10 years in prison.
At his sentencing, U.S. District Court Judge Joan Ericksen said, “The actions you’ve taken are not consistent with someone who can be trusted, and you have not been as truthful as you could have been in the court system. Therefore, you do not get a break. You’re going to get the full 10 years, which is appropriate and necessary. Behaving like a scoundrel is not tolerated in the court system.”
For his part, Hecker maintained his innocence, blaming his problems on deals gone bad, an ill-advised bankruptcy and the poor advice of the people on whom he relied. His release date is slated for 2018, when he’ll be 66.
Amy Koch may have set a record in the state Senate, but being the shortest tenured majority leader in the history of Minnesota is a dubious honor.
In January 2006, Republican Koch won the seat for the 19th District, embracing portions of Hennepin and Wright counties. Almost seven years to the day and a year after she rose to majority leader, she resigned that post because, as the press quoted her the day she made her announcement, “Sometimes, I think, it’s just time.”
But it was only a matter of time before the whole story came out: The married senator was engaged in an affair with her communications chief, Michael Brodkorb, who was also married. After word had gotten around the Senate, the duo was confronted in September 2011 by Minnesota Senate Republican Caucus Chief of Staff Cullen Sheehan. Koch confirmed they were romantically involved, explaining that her husband knew of the affair and that she wanted to handle the situation quietly.
The clandestine couple thought their secret was safe, but Sheehan told Deputy Majority Leader Geoff Michel. Concerned, he later that year orchestrated a political intervention, bringing Koch to a secret, three-hour meeting at the Minneapolis Club with some of her political allies. As Koch later revealed, Republican Senator David Hann told her, “You are going to resign tonight.” He explained that Brodkorb would be fired the next day.
Koch resigned her leadership position and did not seek reelection. Brodkorb filed a wrongful termination lawsuit, asking for $500,000 in damages. He ultimately settled for $30,000.
William McGuire’s career was fast-tracked when the health company where he served as chief operating officer and president was acquired by Minnesota-based UnitedHealth Group in 1988. A year later, he was named president, and within a couple of years, he was anointed CEO and chairman of the board. With McGuire at the helm, the company grew rapidly, and in 2006, UnitedHealth enjoyed $70 billion in annual revenue.
That success made McGuire’s fall from grace that year all the greater when the Securities and Exchange Commission made him the poster boy for a crackdown on corporate chieftains who for years had received backdated stock options from their companies. The maneuver involved carefully timing the awarding of stock options to executives when the share price was near a low so that the value would be greater when they sold the stock later at, presumably, a higher price.
The Wall Street Journal wrote extensively about McGuire, perhaps as much for his backstory as the size of his backdated options. A pulmonologist by training, he was also a philanthropist, a student of butterflies, and an avid collector of wine, art and furniture.
The SEC discovered that numerous other CEOs, including Apple’s Steve Jobs, had received backdated options, and at least five execs were given jail time. In 2007, McGuire agreed to a settlement that required he pay out $468 million in fines and restitution. And he was barred from serving as an officer or director of a public company for 10 years.
But his philanthropy continued — in 2009, he and his wife donated a butterfly collection valued at $41 million to the University of Florida — and he maintained his civic presence. In 2012, he bought the Minnesota Stars soccer team and steered through a political thicket to land the right to build a dramatic, privately financed stadium for the team (now called the Minnesota United FC) on the site of a former bus barn at the intersection of I-94 and Snelling Avenue in St. Paul.
“It pains me deeply that my good name and reputation have been put into question by allegations that are entirely false and based wholly on rumor, hearsay or innuendo,” said former Archbishop John Nienstedt a month after he resigned as head of the Archdiocese of Saint Paul and Minneapolis last June.
It was an ignoble end to his eight-year tenure as archbishop, with rumors swirling about scores of reports of priest abuse as well as bankruptcy and civil and criminal charges. An internal probe by the archdiocese — authorized by Nienstedt in 2014 — wound up naming him as part of the problem, though he has never been charged with a crime. Investigators collected affidavits from priests and former seminarians who implicated Nienstedt in a variety of situations, including his presence in a gay nightclub in Detroit, an attempt to buy “poppers” used as a sexual stimulant, and inappropriate touching and sexual suggestions involving at least two seminarians and one teenage boy. He denies the accusations and insists his accusers were prompted by his objections to same-sex marriage and “difficult decisions I made as their superior.”
Further dooming Nienstedt career’s was a raft of allegations that he turned a blind eye to reports of other sexual misbehavior involving priests under his jurisdiction. At last check, he was living in Northern California, where he consults with the Napa Institute, helping write and edit religious documents. He remains a priest.
Perhaps one of the fastest and most unusual falls from grace — and subsequent rehabilitations — involved Eden Prairie dentist Walter Palmer, who went on a reported $54,000 hunting trip to Zimbabwe in the summer of 2015.
Under the tutelage of a local guide, he unwittingly shot and killed a beloved lion named Cecil who lived in Zimbabwe’s Hwange National Park. The news went viral, and Palmer was labeled a pariah and worse. Angry protestors outside his Bloomington clinic kept him away from his practice for weeks.
Palmer’s profile attached to a trophy-hunting organization called Safari Club International credits him with 43 kills, including deer, caribou, moose, buffalo, a polar bear and a mountain lion. His only hunting-related brush with the law was a 2008 conviction of poaching a black bear in Wisconsin that was killed 40 miles outside a legal hunting zone. He was fined nearly $3,000 and placed on a year’s probation.
But nothing could have prepared Palmer for the worldwide condemnation he received following the shooting of Cecil. Social-media posts around the world blasted him. The door of his vacation home on Marco Island, Florida, was spray painted “LION KILLER!” Pickled pigs’ feet were left on his driveway.
Palmer eventually returned to his practice. The Zimbabwe government said his papers were in order and no charges would be brought against him. His guide, on the other hand, did face trial, but the charges were dropped.
Even a year after the incident, London’s Daily Mail published photos of Palmer and his Porsche Cayenne Turbo as he headed into the W hotel in downtown Minneapolis. The headline read: “EXCLUSIVE: Not a care in the world for the millionaire dentist who slaughtered Cecil the Lion with his bow and arrow exactly a year ago as he drives his new $120,000 Porsche to a cocktail bar.”
Until 2008, Twin Cities mogul Tom Petters enjoyed the fruits of operating the third largest fraudulent hedge fund in the country’s history. Court documents put his 2007 worth at $1 billion. He owned luxury cars, yachts and three mansions in three states (including one in Wayzata worth $5.3 million).
His esteemed Petters Group Worldwide had thousands of employees and owned 100-plus businesses, including Fingerhut, Polaroid and Sun Country Airlines. Petters was hailed a business genius, a symbol to all that a middle child of seven growing up in St. Cloud could reach the brass ring. He even propounded a long list of inspirational quotes, including “If a window of opportunity occurs, don’t pull down the shade.”
But the shade came down abruptly following the defection of insider Deanna Coleman, Petter’s vice president of operations (and, briefly, his lover). A couple other execs agreed to cooperate with an investigation that involved Coleman wearing a wire while Petters talked of felonious activities. It soon came to light that, in true Ponzi fashion, as more lenders gave him money, he’d pay off earlier loans or roll them into new ones while carving out millions for himself and his coconspirators, including Coleman.
Indicted in December 2008, Petters was ultimately found guilty of orchestrating a $3.65-billion Ponzi scheme. The charges included mail and wire fraud as well as conspiracy to commit money laundering. In April 2010, he was sentenced to 50 years in prison, the longest term ever ordered in a financial-fraud case in Minnesota history. Petters maintains his innocence to this day and continues to file petitions — thus far unsuccessfully — for a new trial and new judge. One of his inspirational quotes has the ring of irony: “There is no such thing,” he once wrote, “as a minor lapse of integrity.”
Until the summer of 2016, things seemed to be going swimmingly for Pierz native John Stumpf. The son of a farmer and one of 11 children, he in 2007 became the well-respected CEO of one of America’s four mega banks, Wells Fargo.
Stumpf steered the financial institution through the nation’s financial crisis while earning tens of millions of dollars in salary and stock grants. He masterminded a major deal in 2008, when Wells Fargo acquired Wachovia for $12.2 billion in stock, a move that gave the bank a national footprint.
But that shiny career came to a crashing end last September when the Consumer Financial Protection Bureau announced it would fine Wells Fargo $100 million for creating two million “ghost” accounts without the consent of the customers whose names were put on those checking and credit-card accounts. The Office of the Comptroller of the Currency piled on a $50-million penalty, and the city and the county of Los Angeles tacked on another $35-million fine.
Members of the finance committees in both the House and the Senate erupted with anger and demanded Stumpf’s head during testy hearings (Senator Sherrod Brown accused the bank of “stonewalling”) after learning the scam had gone on for five years. Some 2,300 employees lost their jobs, and Stumpf resigned in October 2016. Both he and Wells Fargo’s head of retail banking forfeited $60 million in stock. Stumpf’s wallet could grow even lighter as an internal investigation may result in more clawbacks of bonuses given to executives.
Fallen Sports Figures
In 1986, former NBA player Clem Haskins was hired by the University of Minnesota to rebuild a men’s basketball team tarnished by scandal. But within 13 years, he had created his own. The day before the 1999 NCAA tournament, the Pioneer Press reported allegations that a tutor at the school’s academic-counseling office had secretly written more than 400 pieces of coursework for several players. It was later revealed she’d received $3,000 from Haskins himself. The team was put on probation and stripped of wins, including its 1997 Big Ten conference title. Haskins was forced to resign and was banned from coaching until 2007. Now retired, he lives on a 750-acre ranch in Kentucky.
University of Minnesota wrestling coach J Robinson was fired last September after 30 years with the school following an investigation that revealed he failed to take corrective actions when he became aware that wrestlers were selling and abusing Xanax. He provided his supervisors with a list of student athletes he believed were involved, but athletic director Mark Coyle said he was not helpful or forthcoming with additional knowledge. He was fired “for cause,” which made him ineligible for a $500,000 severance check. In a letter to Coyle, Robinson disagreed with the findings, attacking the university’s lack of support for coaches addressing student-athlete drug issues. He has since moved his popular wrestling camp to the University of Wisconsin–River Falls.
Minnesota Vikings first-year safety Fred Smoot was a key member and alleged organizer of 2005’s infamous “Love Boat” scandal that took place on Lake Minnetonka. After crew members witnessed inappropriate sexual activities on the boat, the three-and-a-half-hour cruise was cut short. Formal charges were filed, and Smoot was ordered to pay a fine and perform community service. Years later, he asserted the incident was like going to any other club in the city and stated, “You know, cities like New York, D.C., Miami, Atlanta — this type of stuff happens every day.”
University of Minnesota athletic director Norwood Teague resigned in August 2015 after it was revealed he had sexually harassed two employees during a night of drinking at a university-sponsored event. He inappropriately touched both women and sent text messages to one. As his alcohol consumption increased, his behavior grew worse; he eventually pinched one of the women’s buttocks and asked if he could perform oral sex on her. The behavior was reported the next day, and University President Eric Kaler requested Teague seek an alcohol-abuse assessment. He took full responsibility for his actions, noting he was taking steps to address his alcohol issues. Teague received no severance package and was barred from campus.