Wade Cook Financial sells off assets
Yesterday, the long-ailing stock-market-seminar company in Tukwila auctioned off most of the contents of its spacious offices. The doors are closed. The building is for sale. For a company that repeatedly has said it would never fall, whose fierce loyalists maintained their belief in stock-market guru Wade Cook, it was a rough day.
"It's just very sad," said Bonnie Granger, who worked for the company for nearly seven years. "This means it's not like a home anymore. It's just an empty building."
Not that the day wasn't long in the coming. Wade Cook Financial, along with its subsidiary, the Stock Market Institute of Learning, had taken nearly every hit a company could in the past year.
In August, the chairwoman of the company's audit committee resigned with some harsh words for Wade Cook. Janice Leysath said she was "morally offended by the lack of fiscal responsibility" and "cannot be a party to the continued mismanagement of thousands of dollars."
Then in December, a group of former speakers, ex-employees and a former board member sought to force the company into Chapter 7 bankruptcy, which would liquidate its assets and close it down. The group claimed mismanagement and questionable business practices.
A federal judge converted the bankruptcy filing to a Chapter 11 reorganization in January, giving the company time to regroup as it figures out how to repay creditors. At the time, Cook called the plan a "bring-out-the-champagne-and-celebrate" event and said the company had ample assets to pay its creditors.
But the company has struggled under enormous debt. Although Cook continued to hold seminars teaching people investment strategies, he often didn't pay trade vendors, speakers or employees. The debt rose steadily.
"It was like dominoes," Granger said. "Somebody triggered that first one, and away it went."
In February, bankruptcy trustee Diana Carey canceled all seminars and closed the company, laying off 22 employees and leaving a skeleton staff to tie up loose ends.
"It was very apparent that there was no hope of reorganizing the company," Carey said.
But what marked the company as much as those chain of events was the denial that pulsed through its ranks at every setback. Even as lawsuits piled up and employees went unpaid, many said the company would never go under.
Much of that was due to Cook himself, described as an unfettered optimist. He could not be reached for comment yesterday.
"I don't think he appreciated how deep the debt was and how mired the company was," Carey said.
The plan is to liquidate the company's assets in hopes creditors can be repaid, Carey said. She hasn't converted the bankruptcy back to Chapter 7 but said she probably will in the next few months.
Carey puts the debt at more than $17 million. Money from auction proceeds and the building sale is expected to total around $5.5 million, which will pay back a few secured creditors, Carey said.
Even with an anticipated $2.5 million tax refund, it's doubtful the company can repay everyone owed money, she said.
First on the list to be paid are Carey and others involved in guiding the company through bankruptcy. Next are employees such as Granger, who is owed about three months' back pay.
Those least likely to be paid are the 50,000 customers owed a refund by order of the Federal Trade Commission. Under a court settlement, Cook is supposed to pay if his company cannot. The refunds total millions of dollars, and it is unclear whether Cook will pay.
Next week, a federal judge will decide what happens to the company's intellectual property, including a database of about a million customers Cook says belongs to him. The list would be valuable as he undertakes his new venture, a health-oriented juice product.
Cook's plan to launch a new company worry those who believe they've been burned. Darlene Nelson, part of the group that forced the company into bankruptcy and a former speaker who says Cook owes her about $100,000, fears he will continue to mismanage money to the detriment of others.
"He doesn't know how to manage a company," Nelson said. "He would just spend all the money and try to produce more income to pay for the past. He's robbing Peter to pay Paul."
Lisa Heyamoto: 206-464-2149 or lheyamoto@seattletimes.com