Five Defendants Arrested for Engaging in Sophisticated ATM Skimming Schemes Involving Theft of Account Information and PIN Numbers from Unsuspecting Bank Customers
A 10-count indictment was unsealed today, in federal court in Brooklyn, charging Michael Leslie Cohen, a former executive managing director of New York-based hedge fund Och-Ziff Capital Management Group LLC (“Och-Ziff”), for his alleged participation in a scheme to defraud one of the hedge fund’s clients, a large charitable foundation, when recommending financial investments relating to the African mining sector. Cohen is charged with one count of conspiracy to commit investment adviser fraud, one count of investment adviser fraud, one count of conspiracy to commit wire fraud, and four counts of wire fraud. Cohen is also charged with conspiring to obstruct federal grand jury and U.S. Securities and Exchange Commission (SEC) investigations and making false statements to federal agents. The indictment was returned under seal by a federal grand jury sitting in Brooklyn, New York on October 5, 2017, and relates to Cohen’s alleged conduct between 2008 and 2013.
Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and James D. Robnett, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS-CI), announced the charges.
“As alleged, Michael Cohen violated his fiduciary duties as an investment advisor, deceiving a charitable foundation, in order to enrich himself and his associates,” stated Acting United States Attorney Rohde. “The deceit continued when he learned that the U.S. government was investigating his activities, was confronted with evidence of the alleged crimes and responded with a cover-up. The charges announced today reflect this Office’s commitment, together with our law enforcement partners, to hold accountable those in the finance industry who defraud investors.” Ms. Rohde thanked the SEC, Boston Regional Office, for its significant cooperation and assistance during the investigation.
“As alleged, Cohen turned his back on his fiduciary duties, profiting from the investments of his clients, essentially double dipping at their expense. His further actions of obstructing justice and lying to federal agents speak to his blatant disregard for integrity and the rule of law,” stated FBI Assistant Director-in-Charge Sweeney. “Today's indictment maintains our resolve to hold accountable those who engage in this type of corrupt and illegal activity.”
“Today’s indictment of Mr. Cohen, a former Managing Director of one of the largest hedge funds, alleges the misuse of his position of trust to deceive a charitable foundation,” stated IRS-CI Special Agent-in-Charge Robnett. “IRS-CI will continue to investigate executives who mislead investors and violate the public trust.”
The indictment alleges that, beginning in or about 2008, Cohen and his co-conspirators carried out a scheme to defraud a large charitable foundation and investor (the “Charitable Foundation”). Cohen violated his fiduciary duties to the Charitable Foundation by making material misrepresentations and omissions in connection with a proposed investment in shares of an African mining company. Through an Och-Ziff investment fund and joint venture overseen by the defendant, Cohen fraudulently induced the Charitable Foundation to consent to the purchase of shares in the African mining company without disclosing numerous conflicts of interest that existed in the transaction. Among other things, Cohen failed to disclose that one of the proposed sellers of the shares personally owed Cohen $18 million – for a loan used to finance a luxury yacht – and would use the proceeds from the sale of shares to partially repay his debt to Cohen. Cohen also failed to disclose that he personally controlled another portion of the shares in the African mining company that would be sold as part of the transaction.
The indictment further alleges that in order to conceal his fraudulent scheme and self-dealing, Cohen conspired with others to cover up facts about the transaction after the SEC began an investigation of Och-Ziff in 2011. Cohen and others engaged in a number of acts to obstruct both the federal grand jury and SEC investigations, including concocting a false, backdated letter and making false statements to federal agents and the SEC.
The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The case is being handled by the Office’s Business and Securities Fraud Section and the Criminal Division’s Fraud Section. Assistant United States Attorneys David C. Pitluck, James P. McDonald and Jonathan P. Lax, and Trial Attorney Gerald M. Moody, Jr., are in charge of the prosecution. The Criminal Division’s Office of International Affairs provided significant assistance in this matter.
MICHAEL LESLIE COHEN
Residence: London, England
E.D.N.Y. Docket No. 17-CR-544 (NGG)
United States Attorney’s Office