The U.S. Attorney’s Office for the Southern District of New York on Thursday declared criminal rates in opposition to previous Morgan Stanley broker Darryl M. Cohen for his alleged involvement in two techniques to defraud four professional basketball gamers of more than $13 million.
Cohen, 49, who was fired from Morgan Stanley in 2021 and later barred from the industry, was arrested Thursday morning in Chatsworth, California, and billed with perpetrating the techniques together with a financial planner, sports activities agent and a “previously convicted fraudster,” in accordance to the Division of Justice announcement.
From approximately 2017 to 2020, Cohen “orchestrated a scheme” to defraud three of the athlete purchasers, unnamed in the indictment, of a complete of more than $5 million “by having gain of his advisory and fiduciary associations with individuals consumers,” the DOJ stated.
Cohen allegedly conspired with Brian Gilder, referred to in the indictment as an “independent money planner,” whom Cohen encouraged the three athletes to work with and who assisted in tax preparations, in accordance to the DOJ. Gilder does not have a registration history with a broker-dealer or registered investment decision advisor agency, according to regulatory data.
The athlete purchasers were allegedly fraudulently induced by Cohen and Gilder to buy viatical daily life insurance policies at “massive markups” of as significant as 310%, through a law company the customers had been unaware was controlled by Gilder. Gilder’s company as a outcome built about $4.5 million in financial gain from the gross sales, and Cohen and Gilder made use of “a substantial portion” of those illicit proceeds to pay back their own personalized fees, the DOJ mentioned.
Cohen, for occasion, used about $178,462 of the money to renovate his property and to execute work on his pool, an additional $67,500 to pay back off his personal credit card bill, and also transferred $200,000 of the money to “an personal with whom he was in a passionate partnership,” the DOJ claimed.
Cohen also misallocated $500,000 from two of the clients’ accounts and used a portion of these cash to create “athletic education facilities” in his backyard, the DOJ explained. He experienced allegedly directed the transfers as purported donations to a nonprofit business, but neither of the two customers experienced accepted any these transfers.
Cohen and Gilder, by means of a athletics agency and one more law company, also wired a different $328,125 from a single client’s account to repay yet another “disgruntled” athlete customer immediately after he complained to Cohen about losses and lacking funds, the DOJ said.
In a parallel civil motion, the Securities and Exchange Commission on Thursday billed Cohen independently with misappropriating a lot more than $1 million from 3 recent and previous skilled basketball gamers over two and a 50 % a long time.
Lawyers for Cohen in other proceedings did not straight away react to requests for remark on Thursday. A lawyer was not still mentioned for Cohen in the SEC situation.
“We fully cooperated with the investigation and have resolved clients’ statements linked to Mr. Cohen,” a Morgan Stanley spokesperson mentioned in an emailed assertion Thursday.
Cohen, who had logged 24 yrs in the industry, was discharged from Morgan Stanley in March 2021 above allegations relevant to his “outside client small business and transactions not disclosed to or permitted by Morgan Stanley and use of an unapproved system to have interaction in inappropriate communications with clients,” in accordance to BrokerCheck. In February 2022, he was barred for failing to cooperate with the Economic Business Regulatory Authority’s investigation of allegations of conversion and poor use of client resources.
Four athletes by the close of 2021 had filed arbitration promises with Finra alleging that Morgan Stanley unsuccessful to cease Cohen from fleecing them out of a total of $9.3 million. Neither the DOJ nor SEC actions named the athletes associated, but the wirehouse has confronted statements brought in opposition to Cohen by previous NBA players Chandler Parsons, Courtney Lee and Jrue Vacation, as effectively as Holiday’s wife, Lauren Vacation, who was on the U.S. soccer staff when it won the 2015 Women’s Environment Cup, according to preceding information experiences.
4 statements related to Cohen’s investment tips have settled for a overall of much more than $5.8 million since the commencing of 2021, in accordance to his BrokerCheck report.
Separately, a “John Doe” plaintiff whose career knowledge matches Cohen’s before this thirty day period sued Morgan Stanley in Los Angeles County Outstanding Courtroom alleging disability discrimination and scapegoating to test to recoup about $4 million in deferred compensation.
The lion’s share of the fraudulent plan outlined by the DOJ was allegedly perpetrated by a athletics agent, Charles Briscoe, and a convicted fraudster, Calvin Darden Jr. The pair stole approximately $7 million from a fourth athlete consumer on misrepresentations that they would facilitate the athlete’s oblique obtain of a specialist women’s basketball crew, the DOJ claimed. None of the funds went toward getting the team, and Briscoe and Darden as an alternative applied the money to purchase cryptocurrency, luxurious vehicles, a piano and a koi pond, among other personal expenditures, in accordance to the DOJ.
Briscoe and Darden stole another $1 million from just one of the initial three athlete consumers as part of a phony sporting activities company they have been purportedly setting up, with Cohen acting in a “consulting” role, in accordance to the DOJ. The money, fairly than going toward the sports activities agency’s purported enterprise, allegedly went toward Briscoe and Darden’s own expenditures.
Cohen and the other folks were being each and every charged with one count of conspiracy to dedicate wire fraud and a single count of wire fraud, with each count carrying a highest sentence of 20 a long time in prison. Cohen was also charged with just one count of financial investment advisor fraud, carrying a greatest sentence of five decades in prison, and Briscoe was also billed with a person count of aggravated identification theft, carrying a obligatory prison expression of two years.
“As alleged in the indictment, these defendants considered that defrauding their experienced athlete purchasers of thousands and thousands of bucks would be a layup,” U.S. Attorney Damian Williams mentioned in the DOJ’s announcement. “That was a enormous blunder, and they now facial area serious prison charges for their alleged crimes.”