The United States Attorney for the Southern District of New York announced on Wednesday that a jury convicted financial advisor Darryl Cohen of defrauding multiple NBA players. As part of the fraud scheme, Cohen stole their money and used it fund personal luxuries, including building a state-of-the-art gym in his own backyard.
According to the charging documents, statements made in public filings, and public court proceedings, including evidence presented at trial, three different professional basketball players, Chandler Parsons, Courtney Lee, and Jrue Holiday, were defrauded by Darryl Cohen, a licensed financial adviser, between at least 2017 and 2020.
Cohen swindled the three current and former NBA players out of a total of over $5 million combined.
How the fraud scheme worked: reselling insurance polices
The U.S. Department of Justice reports that, first, he deceived Parsons, Lee, and Holiday into buying viatical life insurance policies at enormous markups. Cohen failed to reveal that his accomplice had used a legal firm under his control to buy the policies and then resell them to the players at markups of 222%, 310%, and 244%, respectively. That law firm made approximately $4.5 million in profit from the sale of the policies to the players. Cohen and his co-conspirator then used the proceeds to pay their own personal expenses.
Specifically, Cohen paid off his personal credit card bill with about $67,500 of the money, renovated his house and worked on his pool with about $178,462 of the money, and transferred about $200,000 to a person with whom he was in a romantic relationship.
How the fraud scheme worked: fake charitable donations
Second, Cohen ordered someone to move $500,000 from Parsons and Lee’s accounts as alleged donations to Beast Basketball, a nonprofit. Cohen then constructed a cutting-edge sports gym in his backyard using about $238,000 of the money allegedly given to the nonprofit.
In fact, Parsons and Lee never gave him permission to send any money to Beast Basketball. When Parsons challenged Cohen about the donations, Cohen texted Parsons, stating that Parsons’s funds had “[h]elped a lot of future prospects and a lot of underprivileged kids.”
How the fraud scheme worked: paying off personal debt
Third, Cohen channeled around $328,125 of Parsons’s money through a sports agency and another law firm to reimburse Nyjer Morgan, a former Major League Baseball player and disgruntled client. Cohen made loans and investments on Morgan’s behalf, which Morgan complained about and demanded repayment.
While paying Morgan Parsons’s money on or around February 19, 2020, Cohen texted his accomplice, saying, “We gotta send [Morgan] more to get rid of him.” Parsons did not give Cohen permission to use money from his account to settle his debt to Morgan.
The financial advisor now faces decades in prison
After a five-week trial, a jury convicted Darryl Cohen, of Chatsworth, California, of one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of investment adviser fraud, which carries a maximum sentence of five years in prison. A judge will determine his sentence at a later date.
“Financial Advisor Darryl Cohen built trust with successful pro athletes—then betrayed it, stealing their money to fund personal luxuries, including a state-of-the-art gym in his own backyard,” said U.S. Attorney Jay Clayton. “New Yorkers deserve honest financial advice – not advisors who scheme to steal clients’ funds, rather than protect their financial interests – and this Office is committed to removing bad actors from our markets.”