Jeffrey Cohen Sentenced to 37 Years in Prison in Massive Insurance Fraud Scheme
Defendant Fraudulently Obtained More Than $100 Million in Premiums from Thousands of Insureds for His Personal Benefit; Then He Planned to Kill Attorneys, Judge and Government Official
Baltimore, Maryland – U.S. District Judge William D. Quarles, Jr. sentenced Jeffrey Brian Cohen, age 40, of Reisterstown, Maryland, today to 37 years in prison followed by three years of supervised release for wire fraud, aggravated identity theft, making false statements to an insurance regulator and obstruction of justice. Judge Quarles also entered an order requiring Cohen to pay restitution of $137 million, and will order forfeiture.
The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation; Special Agent in Charge Andre Watson 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 Postal Inspector in Charge David G. Bowers of the U.S. Postal Inspection Service - Washington Division.
U.S. Attorney Rod Rosenstein stated, “The evidence demonstrated that Jeffrey Cohen was a chronic con artist who was planning to commit murder to prevent his fraud schemes from coming to light.”
“Cohen’s substantial criminal conduct may have benefited him short-term, but now Cohen is being held accountable for his criminal actions,” said Thomas Jankowski, Special Agent in Charge, IRS Criminal Investigation, Washington D.C. Field Office. “Today's sentencing stands as an example that IRS-CI, along with the U.S. Attorney’s Office and our law enforcement partners, will continue to investigate and prosecute crimes involving financial fraud.”
“Postal Inspectors are proud to have worked with our federal law enforcement partners to end a widespread insurance fraud affecting businesses all over the U.S.,” stated Inspector In Charge David Bowers of the U.S. Postal Inspection Service. “But we are just as proud that the investigation may have prevented more dangerous activities from occurring.”
After four days of trial, Cohen pleaded guilty to the offenses on June 5, 2015. 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.
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 from January 2008 to the fall of 2013, Cohen obtained insurance premiums by falsely representing the financial status of Indemnity and other Cohen controlled entities to some policyholders, a rating agency, independent financial 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 and Indemnity-DC 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 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.
According to court documents, as of 2013, Cohen paid himself more than $96,000 a month. He lived in a multi-million dollar house in Florida, and maintained homes at different points in Phoenix, Reisterstown and Baltimore Maryland. He purchased luxury cars including a Bentley and Aston Martin.
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.
According to court documents, more than 5,000 policyholders paid more than $100 million in premiums for coverage that was illusory because Cohen’s companies never had sufficient capacity to cover its loss exposure. Many of these policyholders suffered additional harm when the fraud scheme collapsed in 2013. These policyholders had to purchase new policies to protect themselves, or were left without new policies, risking self-insurance or potential bankruptcy. The government also presented evidence to the Court regarding individuals who suffered substantial injuries and/or death due to the actions of Indemnity’s insured. Multiple victims, and/or their estates’ representatives, failed to receive appropriate compensation because Indemnity could not perform under its insurance policies. The Court made a factual finding that the actual losses caused by the fraud scheme exceeded $100 million.
The Delaware Insurance Commissioner began civil proceedings against the Cohen companies in June 2013. In October 2013, two attorneys referred Cohen’s criminal offenses to federal authorities. On February 20, 2014, after a hearing in the Delaware insurance litigation and in an effort to prevent one of the attorneys from communicating with federal law enforcement, Cohen turned to the attorney and stated: “Now I’m coming after you. You’re next.” According to court documents, during a deposition in connection with the Delaware insurance litigation, Cohen made a motion to a witness as if he was pointing a gun and shooting it.
According to the Court’s findings, it was probable that Cohen meant to harm a judge in the Delaware insurance litigation, two attorneys who brought Cohen’s criminal conduct to the attention of the U.S. Department of Justice, and a Delaware government official. From May to June 2014, Cohen searched online terms involving the victims’ home addresses, ammonium nitrate bombs, other bombings and explosions, and how to assemble bombs. In June 2014, he purchased 50 pounds of ammonium nitrate. He also purchased a sophisticated $25,000 rifle with 200 rounds of ammunition from a specialty firearms manufacturer, and $550 worth of fuses and incendiary ammunition. He practiced with his newly purchased rifle at a firing range. Cohen bought night vision binoculars for more than $3,500.
The government presented evidence that on June 17, 2014 he activated a prepaid bank card in the name of “Bill Ward.” On June 19th, he sought to obtain the cash value of a life insurance policy that was less than a year old (he later received a check in the mail for $250,000). In mid-June, he purchased personal information about the individuals he was targeting, including their personal residences, family members and phone numbers. On June 20, Cohen created, printed, and used directions to travel from Baltimore to the homes of a Delaware government official and the Delaware judge. While at one of the public official’s home, Cohen took notes, including “get real estate listing for scouting,” “not much cover must be night,” and “do it late – after dusk.” During this trip, he made audio recordings in which he stated that he “was driving to Delaware to scout out how [he could] attack” these two individuals; he had “methodically planned” his “recon” trip; there are individuals who “kill because of the necessity” and “look at the killing as for the greater good.” He noted that killing should not be viewed as wrong because “killing culls the weak.”
The government also presented evidence that on June 23, Cohen created a last will and testament and transferred all his personal property. Shortly before his arrest, Cohen searched the internet for additional information about bombs, the public officials’ homes, estate sales and depression.
When agents executed arrest and search warrants on June 25, 2014 on Cohen and his residence, they found the $25,000 rifle in his garage and, in addition to the other items described above, a backpack containing wigs, masks, a false moustache, gas masks, several knives, wire garrotes, strike spikes and camouflage pants. They also found a military style vest, rifle scopes and accessories, ammunition for guns, bolt cutters and a GPS device. A notebook contained the following writings: “Always carry a loaded 45 for the end. Have to carry at all times.”
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 prosecuted the case.