Cooley sentenced to federal prison

Ex-congressman who represented Central Oregon guilty of tax evasion

By Scott Hammers / The Bulletin

Published Dec 12, 2012 at 04:00AM

A former congressman who once represented Central Oregon was sentenced Monday in Los Angeles to a year in prison for filing a falsified tax return.

Wester Shadric “Wes” Cooley, 80, entered a guilty plea to the tax evasion charges earlier this year in order to avoid trial on charges of money laundering. According to federal prosecutors, Cooley and his business partners defrauded investors in three companies they controlled — a search engine website, an auctions website and a vitamin and mineral supplement distributor — to the tune of more than $10 million.

In federal court documents, Cooley admitted to receiving approximately $500,000 in unreported income in 2002, money that he acquired by transferring investor funds to his personal bank account.

The documents describe how Cooley and his business partners recruited investors through telemarketing cold calls.

Prospective investors were often told that the search engine and the supplement distributor would soon be going public with an initial public offering, and that the search engine and auction site were on the verge of being acquired by eBay.

In fact, eBay had no plans to acquire Cooley's company — called “Bidbay” — and had sued Bidbay for trademark infringement.

One of Cooley's business partners was paid a 50 percent commission on funds received from investors, the documents state, though the commission was not disclosed to the investors. All together, approximately $1.1 million was transferred from investor accounts to the personal accounts of Cooley and his partners in early 2002.

Under the terms of his plea deal, Cooley has been ordered to pay $3.5 million in restitution to investors and $138,000 to the Internal Revenue Service.

A Powell Butte resident, Cooley in 1994 was less than two years into his first term as a state senator when longtime U.S. Rep. Bob Smith announced his retirement. Cooley won a crowded Republican primary and was elected to Congress in November, but ran into controversy during his re-election campaign in 1996. Cooley's troubles began with his statement in the voter pamphlet two years earlier, in which he claimed to have served with an Army Special Forces unit in the Korean War. Cooley was unable to provide documentation to support his claim.

The resulting examination of other aspects of Cooley's past called his credibility further into question. Despite his claims, Cooley had not been a member of the academic honor society Phi Beta Kappa while in college, and had never earned a law degree or a master's degree. His residence in and thus eligibility for the district he'd represented in the Oregon Senate was also questioned, and it was alleged that his wife had kept her marriage to Cooley secret so she could continue to get veterans benefits she received as a result of her prior husband's death.

Under pressure from members of his party, Cooley dropped his re-election campaign; Smith was chosen to run for one more term in his place. Cooley attempted to win his seat back in 1998, but finished a distant third in the Republican primary won by U.S. Rep. Greg Walden, of Hood River.

Cooley is scheduled to begin serving his prison sentence March 11.