A former Morgan Stanley investment adviser and three others were charged with defrauding (NBA fraud) professional basketball players of $13 million, in an alleged scheme targeting pro athletes.
Federal prosecutors in New York on Thursday charged the former adviser, Darryl Cohen, along with a financial planner, an NBA agent and a former stockbroker in two schemes to cheat professional basketball players.
The US claims Cohen and the financial planner, Brian Gilder, fraudulently convinced three of the unidentified players to buy life insurance policies at markups as high as 310%. He used some of the money to pay off his credit card bill, to work on his home and pool and to pay $200,000 to a person with whom he was romantically involved, according to the US government.
Cohen had also allegedly transferred $500,000 from two of the players, claiming it was for charity, then used $238,000 to build athletic training facilities in his own backyard, the US claims. Cohen is a defendant in a lawsuit by the US Securities and Exchange Commission as well.
Is this the only case of fraud on professional athletes in recent years?
The case comes amid a rising trend of frauds on the pros, marked by their fame, financial inexperience and high net worth, according to a 2021 report by Ernst & Young LLP.
Professional athletes have reported almost $600 million in fraud-related losses from 2004 to 2019, according to the report, which is based on publicly available criminal, civil and bankruptcy pleadings. Morgan Stanley said it had fired Cohen and has worked with the authorities.
“We fully cooperated with the investigation and have resolved clients’ claims related to Mr. Cohen,” a spokeswoman for the firm said in a statement. “Mr. Cohen was terminated from the firm in March 2021 and has since been barred from the securities industry by Finra.”
Lawyers for the other three defendants couldn’t immediately be identified. Three of the alleged victims in the case are professional basketball players in Jrue Holiday, Chandler Parsons and Courtney Lee, their lawyer, Phil Aidikoff, confirmed.
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