Barred Advisor Convicted for $5M Fraud Against NBA Players
Darryl Cohen, a former Morgan Stanley advisor who was barred from the industry in 2022, was convicted in a scheme to defraud three NBA players, including Chandler Parsons, Courtney Lee and Jrue Holiday, out of a total $5 million, according to the Department of Justice.
The conviction comes after a five-week jury trial before U.S. District Judge Vernon S. Broderick. The 52-year-old Cohen was convicted of one count of wire fraud, carrying a maximum sentence of 20 years in prison, and one count of investment advisor fraud, with a maximum sentence of 5 years in prison. He’ll be sentenced 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,” U.S. Attorney Jay Clayton said in a statement. “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.”
This stems from dual charges against Cohen from the DOJ and the Securities and Exchange Commission in 2023.
Los Angeles-based Cohen was a broker and investment advisor with Morgan Stanley from June 2015 through April 2021; he had prior stints with Merrill Lynch and spent 12 years at Wells Fargo, according to his BrokerCheck profile.
Cohen told the athletes he was a “one-stop shop” for their financial needs, and the three failed to adequately understand the “large volumes of documentation” he provided; the advisor had full discretionary authority and access to their advisory accounts, according to the complaint.
At one point, Cohen approached two of the players to gauge their interest in investing in Beast Basketball, a nonprofit league founded by an associate of Cohen’s (both Cohen’s son and the associate’s son played on the team). The NBA stars decided against investing, but Cohen nevertheless funneled at least $500,000 from their accounts into Beast’s coffers.
The amount totaled nearly all of the $523,000 deposited into the nonprofit’s accounts during the time period in question, and $238,000 went to the construction of a basketball court at Cohen’s home.
In addition, Cohen conspired with accountant Brian Gilder to induce the players to buy viatical life insurance policies at massive markups. Gilder had arranged for a law firm he controlled to purchase the policies, a detail Cohen failed to disclose, and then sell them at markups ranging from 222% to 310%.
Gilder’s law firm made about $4.5 million when selling the policies to the ballplayers, while Cohen used more than $178,000 to work on his home and renovate his pool, $67,500 for credit card bills, and $200,000 went to an unnamed romantic partner.
Additionally, Cohen was convicted of improperly loaning funds out of Parsons’ Morgan Stanley brokerage accounts, using about $328,000 to repay Nyjer Morgan, a former Major League Baseball player and disgruntled client of Cohen’s. Morgan was concerned about the investments and loans Cohen made on his behalf and demanded repayment, but Parsons never authorized the use of his funds.
An attorney for Cohen could not be reached for comment prior to publication.