Jeffrey Cohen Charged In Superseding Indictment With Wire Fraud, Money Laundering And Making False Statements To Fraudulently Obtain Over $100 Million In Insurance Premiums
Allegedly Created and Transmitted False Documents and Made False Statements
Baltimore, Maryland - A federal grand jury has returned a superseding indictment charging Jeffrey Brian Cohen, age 39, of Reisterstown, Maryland, with wire fraud and money laundering in addition to the charges of making false statements to an insurance regulator that were included in the original indictment. The superseding indictment was returned on September 16, 2014.
The superseding indictment was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office; and Postal Inspector in Charge Gary R. Barksdale of the U.S. Postal Inspection Service - Washington Division.
According to the superseding indictment, Cohen acted as the president and chairman of the board of a Delaware corporation Indemnity Insurance Corporation RRG (Indemnity). Cohen previously controlled a District of Columbia corporation called Indemnity Insurance Corporation of DC, Risk Retention Group (Indemnity-DC), which was a predecessor entity to Indemnity. Both companies were located in Sparks, Maryland, and provided general liability insurance, liquor liability insurance, and excess liability insurance coverage to their customers, which were individuals and companies involved in the entertainment industry, such as nightclubs, concert tours, and special events. Both companies operated in several states, including Maryland. In 2012, Indemnity insured more than 3,000 policyholders, and collected over $25 million in premiums.
The Delaware Insurance Commissioner and the DC Insurance Commissioner were charged by law with the responsibility of protecting insurance policyholders and the general public by regulating insurance companies and risk retention groups and their products to ensure among other things, that insurance companies and risk retention groups have the ability to pay claims.
According to the 12-count superseding indictment, Cohen obtained and attempted to obtain money from insurance policyholders and potential insurance policyholders of Indemnity-DC and Indemnity based on financial ratings, financial audits, and insurance regulatory approvals that Cohen fraudulently obtained. The indictment alleges that beginning in January 2008, and continuing until the fall of 2013, Cohen defrauded insurance policyholders and prospective insurance policyholders in order to obtain more than $100 million in insurance premiums, by falsely representing the financial status of Indemnity-DC, Indemnity, and other Cohen controlled entities to insurance policyholders, prospective insurance policyholders, the rating agency A.M. Best, to independent auditors, the DC Insurance Commissioner, and the Delaware Insurance Commissioner.
Specifically, the superseding indictment alleges that Cohen created false financial documents, including bank statements, letters of credit, and confirmations of bank account balances. These documents allegedly included a bank confirmation from a fictitious entity called RBCI, purportedly showing that Indemnity-DC had a bank account with a balance of $10 million as of December 31, 2009, and a bank confirmation dated March 1, 2013, purportedly from RBC Government Demands, showing that Indemnity’s bank account ending in 6652 had a balance of $5,097,276. According to the indictment, Cohen transmitted these false documents to A.M. Best in order to obtain financial ratings for Indemnity-DC and Indemnity that were not based on the companies’ true financial condition. Cohen then allegedly touted the A.M. Best ratings to potential policyholders, policyholders, and regulatory agencies. Cohen also allegedly transmitted false and fraudulent emails, management representation letters, financial statements, and other documents to the auditing firms Marcum and BDO so the auditors would provide an unqualified audit opinion on Indemnity-DC and Indemnity financial statements that Cohen knew were false.
According to the superseding indictment, Cohen caused Indemnity-DC and Indemnity to issue insurance policies exceeding the coverage limits authorized by the DC Insurance Commissioner and the Delaware Insurance Commissioner. To conceal the true financial condition of the companies, Cohen allegedly transmitted fraudulent audited and unaudited financial statements for Indemnity-DC and Indemnity to the DC Insurance Commissioner and the Delaware Insurance Commissioner. Cohen also allegedly made false statements to representatives of the Delaware Insurance Commissioner in June 2012.
According to the indictment, Cohen also conducted financial transactions with the proceeds of the scheme. Specifically the indictment alleges that Cohen transferred $666,667.67 from a corporate account he controlled to an account in the name of a law firm, and Cohen transferred $200,000 from a corporate account he controlled to one of his personal accounts.
The indictment seeks forfeiture of $100,866,667.67, believed to be the proceeds of the scheme.
Cohen faces a maximum sentence of 20 years in prison for each of five counts of wire fraud, 10 years in prison for each of two counts of money laundering, and 15 years in prison for each of five counts of making false statements to an insurance regulator. No court appearance has been scheduled and Cohen remains detained.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
United States Attorney Rod J. Rosenstein praised the FBI, HSI Baltimore, IRS – Criminal Investigation and U.S. Postal Inspection Service - Washington Division for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorneys Harry M. Gruber and Joyce K. McDonald, who are prosecuting the case.