Cook Islands Trust Case Law: What the Cases Actually Decided

Cook Islands trust case law is among the most frequently misrepresented bodies of law in the asset protection space. Competitors and commentators routinely cite a handful of cases as proof that Cook Islands trusts “don’t work.” Proponents sometimes overstate the same cases as proof that the trusts are impenetrable. Both characterizations are wrong.

The cases, read carefully, show a consistent pattern. Trusts that produced bad outcomes for debtors did so because of retained control, post-litigation funding, debtor misconduct, or concealment—not because Cook Islands law was inadequate. In every major case, the structural decisions made during planning determined the result. And in no reported case has a creditor successfully obtained a judgment in a Cook Islands court ordering the trustee to turn over assets from a properly administered trust.

This article reviews the major cases, explains what each court actually decided, identifies how each case is commonly misrepresented, and draws the structural lessons that matter for planning purposes.

FTC v. Affordable Media (The Anderson Case)

This is the most cited Cook Islands trust case and the most misunderstood. The Andersons operated a fraudulent telemarketing scheme through Affordable Media, LLC, and funded a Cook Islands trust with the proceeds. They named themselves co-trustees alongside the Cook Islands trustee company and retained the role of trust protector. When the FTC obtained a repatriation order, the duress clause removed the Andersons as co-trustees, but the court found they retained control through their protector powers. The Ninth Circuit affirmed a civil contempt finding.

How it is commonly cited: As proof that Cook Islands trusts do not protect assets from U.S. courts.

What the case actually decided: The court found that the Andersons retained practical control over the trust. The contempt finding rested on the specific structural defect of naming themselves co-trustees and protectors—a design no competent practitioner would use today. The Ninth Circuit did not hold that Cook Islands trusts are inherently ineffective. It held that a settlor cannot claim impossibility while retaining the power to cause compliance.

What happened to the assets: This is the part most commentators omit. The Cook Islands trustee refused to comply with the U.S. order. When the Andersons, under duress from the U.S. court, signed documents attempting to replace the trustee with an FTC-controlled entity, the Cook Islands trustee sought a ruling from the Cook Islands High Court. The Cook Islands court invalidated the replacement, finding the documents were executed under duress and that the attempted amendment would benefit an excluded person in violation of the trust deed.

The FTC—a federal government agency with substantial resources—chose to settle with the Cook Islands trustee rather than pursue further litigation in the Cook Islands. The settlement terms are not public, but the FTC released the trustee and the trust from further liability. The Cook Islands court awarded costs against the FTC entity.

The Anderson case therefore demonstrates two things simultaneously: that a poorly structured trust exposes the debtor to contempt in U.S. courts, and that even a poorly structured trust can protect the assets themselves when the Cook Islands trustee fulfills its obligations under local law.

In re Lawrence

Stephen Lawrence transferred assets to a Cook Islands trust shortly before an adverse arbitration award. The bankruptcy court ordered turnover of the trust assets. Lawrence invoked the duress clause and claimed impossibility. The Eleventh Circuit affirmed the contempt finding. Lawrence was incarcerated for nearly six years before being released.

How it is commonly cited: As the worst-case scenario for Cook Islands trust settlors.

What the case actually decided: The court found that Lawrence retained the ability to appoint new trustees, giving him indirect control over the trust. The impossibility defense failed because the court concluded that Lawrence had both created the impossibility and retained mechanisms to circumvent it. The case turned on retained control and the timing of the transfer—made in anticipation of an adverse award—not on a deficiency in Cook Islands law.

The structural lesson: Lawrence retained trustee appointment powers that undermined his impossibility defense. A trust that eliminates or restricts these powers when duress is triggered presents a materially different enforcement profile. The duration of Lawrence’s incarceration also illustrates the outer limits of civil contempt—eventually the coercive purpose is exhausted, and continued incarceration becomes punitive rather than coercive.

SEC v. Solow

Jamie Solow was subject to a securities fraud disgorgement order. After the judgment was entered, he and his wife transferred assets to offshore accounts, encumbered the marital residence with a $5.2 million mortgage, and used the proceeds to fund a Cook Islands trust in his wife’s name. He claimed he had no assets and could not comply with the disgorgement order. The Eleventh Circuit found that the inability to pay was self-created through post-judgment transfers and upheld the contempt finding.

How it is commonly cited: As evidence that offshore trusts cannot shield assets from government enforcement.

What the case actually decided: Every transfer was made after a final judgment had already been entered. Solow continued to use trust assets for personal expenses, including paying taxes, which destroyed any claim of independent administration. The court’s finding was based on post-judgment conduct and bad faith, not on the structure of Cook Islands trusts as a legal concept.

The structural lesson: Post-judgment transfers into an offshore trust provide minimal protection and maximum judicial hostility. Solow represents the worst possible timing scenario. The case reinforces that timing is the most important variable in asset protection planning.

In re Allen

Daniel Allen funded a Cook Islands trust with a duress clause and standard protective provisions. When creditors pursued collection, the bankruptcy court ordered repatriation. Allen claimed impossibility. The court held him in contempt twice, finding the impossibility was self-created. The Third Circuit affirmed.

How it is commonly cited: As proof that standard Cook Islands trust provisions, including duress clauses, do not prevent contempt findings.

What the case actually decided: The court applied the self-created impossibility doctrine. The transfers were made during pending litigation, providing a clear factual basis for the fraudulent transfer finding. The court emphasized that substance controls over form—if the debtor effectively maintains control, the protections of the foreign trust structure will be disregarded for enforcement purposes.

BB&T v. Bellinger

This case is less frequently discussed but more instructive than many of the commonly cited cases. Bellinger transferred assets to a Cook Islands trust after a bank demanded repayment of a multimillion-dollar loan. The bank argued fraudulent transfer and sought contempt. The court ordered Bellinger to contact the Cook Islands trustee and request repatriation.

What happened: Bellinger complied with the court’s order—he contacted the trustee and requested repatriation. The Cook Islands trustee refused, consistent with its obligations under Cook Islands law and the trust deed. The court examined Bellinger’s intent and found that his primary motive for establishing the trust was to preserve assets for retirement, not to defraud the bank.

Why this case matters: The Cook Islands trustee’s refusal to repatriate assets—even when the debtor cooperated with the U.S. court order—demonstrates how the jurisdictional gap operates in practice. The U.S. court can order the debtor to ask. The trustee can say no. And the trust’s protective framework holds even when the factual circumstances are less than ideal.

Bank of America v. Weese

Brian and Elizabeth Weese transferred over $20 million to a Cook Islands trust shortly after Bank of America demanded repayment of a multimillion-dollar loan. The court found they retained effective control over the trust and continued to use trust assets for personal benefit, including living in a trust-owned property rent free.

How it is commonly cited: As a case where the trust was “pierced.”

What the case actually decided: The Weeses settled for over $12 million to avoid incarceration. The trust was not pierced through Cook Islands proceedings. No Cook Islands court ordered the trustee to return assets. Resolution came through negotiated settlement driven by the contempt pressure on the debtors, not through judicial recovery of trust assets.

The structural lesson: Even in this unfavorable fact pattern—late funding, retained control, personal use of trust assets—the creditor did not recover through Cook Islands litigation. The settlement was substantial, but it reflected a negotiated outcome, not a judicial order unwinding the trust.

FTC v. Trudeau

Kevin Trudeau was subject to a $37.5 million FTC judgment for deceptive marketing practices. He moved assets into a Cook Islands trust and refused to testify about his offshore accounts. He was convicted of criminal contempt and imprisoned.

How it is commonly cited: As the most extreme example of offshore trust consequences.

What the case actually decided: Trudeau’s contempt was criminal, not civil. He was punished for past conduct—refusing to testify and obstructing proceedings—not coerced to produce future compliance. His case involved outright defiance of court orders and concealment, not a good-faith impossibility defense. The Cook Islands trustee did not transfer the assets despite Trudeau’s imprisonment. The FTC reportedly collected nothing from the Cook Islands trust.

U.S. v. Grant

Raymond Grant created two Cook Islands trusts years before incurring substantial tax liabilities. After his death, the IRS obtained a $36 million judgment against his wife Arline. The court initially declined to hold Arline in contempt but reversed course when evidence showed she continued to receive trust distributions through her children’s accounts and directed how those funds were used.

What this case shows: The contempt finding was based on Arline’s continued access to and direction of trust distributions after the judgment—not on the original trust creation. The court found she “clearly violated the Repatriation Order” and that trust assets were being dissipated after judicial intervention. The case did not hold that the trust structure itself was defective. It held that post-judgment conduct—receiving distributions and directing their use—constituted noncompliance with court orders.

Chadwick v. Green

H. Beatty Chadwick was incarcerated for 14 years for refusing to comply with a court order to turn over approximately $2.5 million believed to be held offshore. He was eventually released when the court concluded that further incarceration had lost its coercive effect and had become punitive.

Why this case matters: Chadwick represents the theoretical maximum duration of civil contempt incarceration. His release established that civil contempt—which must be coercive, not punitive—has practical limits. A court cannot indefinitely incarcerate someone if continued incarceration will not produce compliance. This principle is relevant to the contempt risk analysis for any Cook Islands trust settlor.

The Pattern

Read together, these cases reveal a consistent pattern rather than a condemnation of Cook Islands trusts as a legal tool.

Every case where the debtor was held in contempt involved at least one of the following factors: the debtor retained practical control over the trust through trustee appointment powers, co-trustee status, or protector powers that allowed them to influence the trustee; the trust was funded after litigation had begun, a judgment had been entered, or a claim was clearly imminent; the debtor continued to access trust assets for personal expenses after the trust was purportedly irrevocable; or the debtor concealed the trust, lied during discovery, or actively obstructed court proceedings.

In no case did a Cook Islands court order a trustee to return assets to a U.S. creditor. In the Anderson case, the Cook Islands court affirmatively protected the trust against the FTC. In the Bellinger case, the trustee refused repatriation and the refusal stood. In the Trudeau case, the trust assets reportedly remained in the Cook Islands despite years of criminal contempt proceedings.

The absence of successful Cook Islands court challenges is not an accident. It reflects the statutory framework described in the limitation periods and burden of proof article—short filing deadlines, a criminal-law evidentiary standard, mandatory litigation bonds, and no contingency fees. These barriers have proven sufficient to deter even well-resourced government agencies from pursuing trust assets through Cook Islands proceedings.

What a Properly Structured Trust Looks Like

The cases define, by negative implication, the structural features of a trust that has not been defeated in any reported case.

That trust has an independent licensed Cook Islands trustee company with no personal relationship to the settlor. The settlor does not serve as co-trustee or retain the power to appoint or remove trustees during duress events. The duress clause is properly drafted to activate automatically upon a court order, suspending the settlor’s remaining powers and eliminating any mechanism through which the settlor could cause repatriation.

The trust was funded during a period of financial stability, before any creditor claims existed or were reasonably anticipated. The settlor retained sufficient assets outside the trust to remain solvent after the transfer. The settlor complied with all U.S. tax reporting obligations and fully disclosed the trust during post-judgment proceedings. The settlor did not access trust assets for personal expenses after funding. And the settlor cooperated with court orders to the extent possible while maintaining that compliance with repatriation was genuinely impossible due to the trust’s structure and governing law.

No reported case has defeated a Cook Islands trust with these characteristics. The cases that are cited as failures are cases where one or more of these features was absent. The distinction is not between trusts that work and trusts that don’t. It is between trusts that were properly planned and trusts that were not.

For an overview of the enforcement mechanisms discussed in these cases, see the litigation overview. For comprehensive information about Cook Islands trust planning, return to the Cook Islands trust overview.