Courtney Lee No. 5 and Chandler Parsons No. 25 of the Houston Rockets meet during a game on the Staples Center on April 6, 2012 in Los Angeles, California.
Andrew D. Bernstein | National Basketball Association | Getty Images
Ex Morgan Stanley adviser Darryl Cohen was arrested Thursday morning for allegedly defrauding current and former NBA players, including Jrue Holiday, Chandler Parsons and Courtney Lee.
Cohen is charged with one count of conspiracy to commit electronic fraud and one count of electronic fraud, in line with federal prosecutors. Each number is punishable by as much as 20 years in prison. He can also be facing charges of fraud as an investment adviser, for which he faces a maximum of 5 years in prison. Three others were also charged, including former NBA player agent Charles Briscoe.
Within the indictment, which was unsealed Thursday, the Department of Justice claimed that Cohen and others engaged in fraud to transfer roughly $13 million from NBA clients for private use. The Department of Justice noted that the $7 million was allegedly embezzled only by Briscoe and Calvin Darden Jr., who had previously pleaded guilty to separate counts of electronic fraud.
The players weren’t named within the Department of Justice communiqué. Their identities were confirmed by an individual familiar with the case, who declined to be identified as a consequence of the sensitive nature of the case.
The Department of Justice alleged that Cohen and his alleged co-conspirators tricked three clients into purchasing overpriced life insurance policies, which Cohen later used to renovate his home and swimming pool, in addition to repay bank card bills and transfer money to a romantic partner.
Prosecutors also alleged that Cohen directed the basketball players to donate to a non-profit organization, which he eventually used to construct sports facilities in his backyard.
“The defendants believed that defrauding their skilled athlete clients out of hundreds of thousands of dollars can be a bribe. It was an enormous mistake and now they face serious criminal charges for his or her alleged crimes,” Damian Williams, U.S. Attorney for the Southern District of Latest York, said in a Thursday announcement.
Cohen served as an advisor to Morgan Stanley from 2015 to 2021 Profile of the Financial Industry Regulatory Authority. The Department of Justice said in its indictment that the alleged fraud took place from roughly 2017 to 2020. Morgan Stanley fired Cohen in 2021 for “transactions undisclosed or approved by Morgan Stanley and using an unapproved platform to have interaction in inappropriate customer communications”, in line with FINRA documents.
“We cooperated fully with the investigation and resolved customer claims related to Mr Cohen,” Morgan Stanley said in an announcement. “Mr. Cohen was fired from the firm in March 2021 and has since been barred from the securities industry by FINRA.”
Securities and Exchange Commission also charged Cohen on Thursday for allegedly defrauding Holiday, Parsons and Lee of greater than $1 million.
Cohen’s lawyer, Brandon Reif, didn’t immediately reply to a request for comment.
The three basketball players previously filed lawsuits against Morgan Stanley with FINRA. These cases were later settled. Phil Aidikoff, who represented Holiday, Parsons and Lee, declined to comment as a consequence of the non-disclosure agreements within the FINRA settlements.
Correction: This story has been updated to reflect that there have been multiple alleged schemes that resulted in a complete of $13 million in fraud.