Portland Trail Blazers guard Jrue Holiday was defrauded by former Morgan Stanley investment advisor Darryl Cohen, a Manhattan jury concluded in convicting Cohen of wire fraud and investment advisor fraud on Tuesday.
Prosecutors from the Southern District of New York charged Cohen and others in 2023 for orchestrating a scheme to defraud Holiday, along with former Houston Rockets forward Chandler Parsons and former New York Knicks guard Courtney Lee, of over $5 million.
Cohen was accused of exploiting his advisory and fiduciary relationships with these players.
In one part of the scheme, Cohen duped the players into buying life insurance policies at “massive markups.” More specifically, Cohen and other conspirators arranged for the sale of life insurance policies that were worth a combined $1.7 million for a whopping $6.2 million. Cohen’s group kept the difference between the actual price and marked-up price, prosecutors asserted.
Cohen was also depicted as fraudulently diverting about $500,000 from the players’ financial accounts into a basketball-related nonprofit organization under the guise they were donations.
In a text, Cohen assured one of the players his donation “helped a lot of future prospects and a lot of underprivileged kids,” when, in reality, the donation was used to build “athletic training facilities in Cohen’s backyard.” In addition, Cohen allegedly used the players’ money to pay off other clients who were threatening to sue him over allegations he lost their money.
Cohen’s defense included that in some instances the players approved the transactions and thus were not defrauded. The defense also contended that venue was improper in the Southern District of New York. Cohen’s attorneys maintained that none of the facts in the case, including dollars sent and received via bank accounts, took place in SDNY and “not a single defense witness to the charges resides in the District.” Those and other arguments didn’t persuade U.S. District Judge Vernon S. Broderick to dismiss the case.
Cohen was not convicted of a third charge, conspiracy, because jurors could not reach a verdict on that count. Cohen faces a sentence of up to 20 years in prison. He can appeal his conviction to the U.S. Court of Appeals for the Second Circuit.
Cohen was charged with Calvin Darden Jr., who last year Broderick sentenced to 12 years and seven months in prison for defrauding former NBA All-Star Dwight Howard and Parsons out of about $8 million. Darden deceived Howard into believing he was buying the WNBA’s Atlanta Dream when his $7 million was instead being rerouted to enable Darden to buy expensive cars and real estate. Darden is pursuing an appeal at the Second Circuit.