Jeffrey Cohen Pleads Guilty to Wire Fraud, Aggravated Identity Theft, False Statements to Insurance Regulators and Obstruction of Justice in Insurance Fraud Scheme
Created and Transmitted False Documents, Made False Statements, and Obstructed Justice
Baltimore, Maryland – After four days of trial, Jeffrey Brian Cohen, age 39, of Reisterstown, Maryland, pleaded guilty late today, to wire fraud, aggravated identity theft, making false statements to an insurance regulator, and obstruction of justice.
The guilty plea 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; Acting Special Agent in Charge Ivan Arvelo of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Special Agent in Charge Thomas Jankowski of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office; and Acting Postal Inspector in Charge David M. McGinnis of the U.S. Postal Inspection Service - Washington Division.
U.S. Attorney Rod Rosenstein stated, “Jeffrey Cohen carried out a massive fraud scheme for which he finally will be held accountable.”
According to his plea agreement, 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. From 2008 through 2012, Indemnity insured more than 3,000 policyholders, and collected over $100 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 had the ability to pay claims.
Cohen admitted that he 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. 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, Cohen created false financial documents, including bank statements, letters of credit, and confirmations of bank account balances. Cohen transmitted some of 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 touted the A.M. Best ratings to potential policyholders, policyholders, and regulatory agencies. Cohen also 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. Cohen used the name and identity of a bank official to create a false bank confirmation.
To conceal the true financial condition of the companies, Cohen transmitted fraudulent audited and unaudited financial statements for Indemnity-DC and Indemnity to the DC Insurance Commissioner and the Delaware Insurance Commissioner. Cohen also made false statements to representatives of the Delaware Insurance Commissioner in June 2012.
The Delaware Insurance Commissioner instituted civil proceedings against the Cohen companies in June 2013. In October 2013, two attorneys referred Cohen’s criminal offenses, including the false statements to an insurance regulator offense to which he’s pleading guilty, to federal authorities. On February 20, 2014, Cohen threated one of the attorneys who had referred his case in an effort to prevent the attorney from communicating with federal law enforcement concerning the crimes Cohen committed in the operation of his insurance companies.
Cohen faces a maximum sentence of 20 years in prison for each of the wire fraud and obstruction of justice counts, 15 years in prison for making false statements to an insurance regulator, and a mandatory two years, consecutive to any other sentence, for aggravated identity theft. U.S. District Judge William D. Quarles, Jr. has scheduled sentencing for August 6, 2015, at 10:00 a.m. Cohen remains detained.
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.