A former Morgan Stanley investment adviser and others three people were charged with defrauding professional basketball players of $13 million, in the most recent alleged plan aimed at professional athletes.
Federal prosecutors in New York indicted former adviser Darryl Cohen on Thursdayalong with a financial planner, an NBA agent, and a former stockbroker in two schemes to cheat players.
The United States claims that Cohen and financial planner, Brian Gilder, fraudulently convinced three of the unidentified players to buy life insurance policies with margins of up to 310%.. She used some of the money to pay off his credit card bill, to work on his house and pool, and to pay $200,000 to a person he was romantically involved with, according to the government.
Cohen also allegedly transferred $500,000 from two of the players, claiming it was for charity.and then used $238,000 to build athletic training facilities in his own backyard, US claims. Cohen is also a defendant in a US Securities and Exchange Commission lawsuit.
In the second scheme, involving the planned sale of a women’s professional team, prosecutors charged Charles Briscoe, an NBA agent, and Calvin Darden Jr. Previously convicted of fraud, Darden spent nearly $900,000 of his latest haul on luxury cars, the government said.
Athletes as goals
The case comes amid a growing trend of frauds against professionals, marked by their fame, financial inexperience and high net worth., according to a 2021 report by Ernst & Young LLP. Professional athletes have reported nearly $600 million in fraud-related losses between 2004 and 2019, according to the report, which is based on publicly available criminal, civil and bankruptcy filings.
Morgan Stanley said it had fired Cohen and has worked with authorities.
“We are fully cooperating with the investigation and have resolved customer complaints related to Mr. Cohen.a spokeswoman for the firm said in a statement. “Mr. Cohen was fired from the firm in March 2021 and has since been barred from the securities industry by Finra.”
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Three of the alleged victims in the case are Jrue Holiday, Chandler Parsons and Courtney Lee, their attorney, Phil Aidikoff, confirmed.
“I think this was an appropriate action taken by the government to deal with a very, very significant course of conduct by a broker at a cable house.,” Aidikoff said of the charges.
From 2017 to 2020, prosecutors said, Cohen and Gilder induced the three players to buy policies with margins of 222%, 244% and 310%. An “alleged law firm” controlled by Gilder allegedly made $4.5 million from the sales.
As part of a plan to buy the team, USA says, a player wired $7 million to a bank account controlled by Darden. As an active professional, the player was not eligible to purchase the team. But prosecutors say Briscoe and Darden stole from the fund and that Darden sent $1 million to Briscoe.
expensive habits
Darden sent $500,000 of the player’s money to a relative and more than $400,000 to a cryptocurrency exchange, according to prosecutors. She spent $880,000 on cars, $300,000 on art, $100,000 to buy a piano, and $1 million on home improvements, including adding a koi pond.
Darden and Briscoe also allegedly defrauded one of Cohen’s victimized athletes out of $1 million, falsely claiming that it would be used by another player preparing for the professional draft.
According to the Ernst & Young report, “From 2004 to 2019, athlete victims identified in legal proceedings claimed to have suffered nearly $594 million in alleged losses. Losses, and efforts to recover them, are only gaining strength: legal proceedings initiated between 2016 and 2019 accounted for more than $197 million, or 33%, of all identified losses” in the period.
Darden, a former Wall Street stockbroker, is the son of Darden Media Group Chairman Calvin Darden. He pleaded guilty in 2015 to a scheme to impersonate his father. in a multi-million dollar fraud related to the purchase of Maxim magazine and was sentenced to one year in prison.
