Courtney Lee #5 and Chandler Parsons #25 of the Houston Rockets come together during their game at Staples Center on April 6, 2012 in Los Angeles, California.
Andrew D. Bernstein | National Basketball Association | Getty Images
Former Morgan Stanley advisor Darryl Cohen was arrested on 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 wire fraud and one count of wire fraud, in response to federal prosecutors. Each count carries as much as a 20-year prison sentence. He can be facing investment advisor fraud charges, which carry a maximum five-year prison sentence. Three others, including former NBA players agent Charles Briscoe, were also charged.
Within the indictment, which was unsealed on Thursday, the Justice Department alleged that Cohen and the others engaged in fraud schemes to transfer roughly $13 million from NBA clients for private uses. The DOJ noted that $7 million of that was allegedly misappropriated only by Briscoe and Calvin Darden Jr., who has previously pleaded guilty to separate wire fraud charges.
The players weren’t named within the DOJ’s announcement. Their identities were confirmed by an individual accustomed to the matter, who declined to be identified given the sensitive nature of the case.
The DOJ claimed that Cohen and his alleged co-conspirators induced the three clients to buy overpriced life insurance policies that Cohen later used to do renovations on his home and pool, in addition to repay his bank card bills and provides money to a romantic partner.
Prosecutors also alleged that Cohen directed the basketball players to provide donations to a nonprofit, which he ultimately used to construct athletic facilities in his backyard.
“These defendants believed that defrauding their skilled athlete clients of hundreds of thousands of dollars can be a layup. That was an enormous mistake, and so they now face serious criminal charges for his or her alleged crimes,” said Damian Williams, the U.S. Attorney for the Southern District of Latest York, in a Thursday announcement.
Cohen was an advisor for Morgan Stanley from 2015 to 2021, in response to his Financial Industry Regulatory Authority profile. The DOJ said in its indictment document that the alleged fraud schemes took place from roughly 2017 to 2020. Morgan Stanley fired Cohen in 2021 for “transactions not disclosed to or approved by Morgan Stanley and use of an unapproved platform to interact in inappropriate communications with clients,” in response to FINRA filings.
“We fully cooperated with the investigation and have resolved clients’ claims related to Mr. Cohen,” Morgan Stanley said in an announcement. “Mr. Cohen was terminated from the Firm in March 2021 and has since been barred from the securities industry by FINRA.”
The Securities and Exchange Commission also charged Cohen on Thursday for allegedly defrauding Holiday, Parsons and Lee out of over $1 million.
Cohen’s lawyer, Brandon Reif, didn’t immediately reply to a request for comment.
The three basketball players had previously filed claims against Morgan Stanley with FINRA. Those cases were later settled. Phil Aidikoff, who represented Holiday, Parsons and Lee, declined to comment as a consequence of the confidentiality agreements within the FINRA settlements.
Correction: This story was updated to reflect that there have been multiple alleged schemes leading to a complete $13 million of fraud.
