Courtney Lee #5 and Chandler Parsons #25 of the Houston Rockets arrive together during their game at the Staples Center April 6, 2012 in Los Angeles, California.
Andrew D Bernstein | National Basketball Association | Getty Images
Former MorganStanley Advisor Darryl Cohen was arrested Thursday morning for allegedly cheating on 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, according to federal prosecutors. Each charge carries a prison sentence of up to 20 years. He also faces an investment advisor fraud charge, which carries a maximum five-year prison sentence. Three others, including former NBA player agent Charles Briscoe, have also been charged.
In the indictment, which was unsealed Thursday, the Justice Department alleged that Cohen and the others were involved in fraud schemes to wire around $13 million from NBA customers for personal use. The DOJ found that $7 million of that was allegedly misappropriated only by Briscoe and Calvin Darden Jr., who previously pleaded guilty to separate wire fraud charges.
The players were not named in the DOJ’s announcement. Her identity was confirmed by a person familiar with the matter, who declined to be identified given the sensitive nature of the case.
The DOJ alleged that Cohen and his alleged co-conspirators tricked the three clients into purchasing overpriced life insurance policies, which Cohen later used to renovate his home and pool, pay his credit card bills, and give money to a romantic partner.
Prosecutors also alleged that Cohen directed the basketball players to give donations to a nonprofit organization, which he ultimately used to build athletic facilities in his backyard.
“These defendants believed that defrauding their professional athlete clients of millions of dollars would be a reprieve. That was a huge mistake and they now face serious criminal charges for their alleged crimes,” Damian Williams, the US Attorney for the Southern District of New York, said in a Thursday announcement.
Cohen was an advisor to Morgan Stanley from 2015 to 2021, according to his Financial Industry Regulatory Authority profile. The DOJ said in its indictment document that the alleged fraud schemes took place from approximately 2017 to 2020. Morgan Stanley fired Cohen in 2021 for “transactions not disclosed by Morgan Stanley or authorized by Morgan Stanley and using an unauthorized platform to engage in inappropriate communications with clients,” according to the FINRA filings.
“We have fully cooperated with the investigation and resolved clients’ claims regarding Mr. Cohen,” Morgan Stanley said in a statement. “Mr. Cohen was fired from the firm in March 2021 and has since been banned from the securities industry by FINRA.”
The Securities and Exchange Commission also charged Cohen Thursday with defrauding Holiday, Parsons and Lee of over $1 million.
Cohen’s attorney, Brandon Reif, did not immediately respond to a request for comment.
The three basketball players had previously filed claims against Morgan Stanley with FINRA. These cases were later settled. Phil Aidikoff, representing Holiday, Parsons and Lee, declined to comment due to confidentiality agreements in the FINRA settlements.
Correction: This story has been updated to reflect that there were multiple alleged schemes that resulted in a total of $13 million in scams.