There is a popular perception that courts simply give white collar fraudsters a slap on the wrist – a quick court appearance in the afternoon and then home in time for dinner. While we believe that the government hasn’t prosecuted enough criminal fraud cases against the big banks and Wall Street, federal judges do hand out stiff sentences in investment fraud cases. This week a federal appeals court upheld the 22 year prison sentence imposed on Samuel “Mouli” Cohen.
Cohen was convicted in April of 2012 on 29 counts of wire fraud, money laundering and tax evasion. Prosecutors say he developed an elaborate scheme in which he claimed to have built a successful business selling digital entertainment to bars and nightclubs. To add legitimacy to his claims, he told potential investors that Microsoft was in the process of acquiring his company and would issuing stock on a 1 for 1 basis. That means an investor could purchase a share of Cohen’s business for $2.50 and later receive a much more valuable share of Mircrosoft’s stock.
If the deal seemed to good to be true, it was. A jury believed the entire scheme was nothing more than an elaborate investment fraud. After being convicted of 29 counts, a federal judge sentenced Cohen to 22 years in prison.
At sentencing, Cohen’s defense team and federal prosecutors painted a very different picture of Mouli Cohen. Defense lawyers claimed that the record was “replete with evidence of Mr. Cohen’s entrepreneurial vision and resolute work ethic.” They claim he was a man who showed “genuine caring for those around him who are less fortunate.”
Indeed, Cohen apparently gave significant sums of money to charitable causes. Unfortunately, the source of that money casts a cloud on all of his charitable activities.
Prosecutors painted a very different picture of Cohen. They say he victimized a charity and his friends and anyone he could find that had money. In their words, Cohen’s investment fraud involved selling more shares in his company than he owned, for far more money than they worth and doing so by falsely claiming the company was about to be acquired by Microsoft. They say he only pretended to have the means and interest to help the less fortunate.
So where did the tens of millions of dollars raised from investors go? Prosecutors say he used the money in part to live “a lifestyle remarkable for its opulence.”
Where did the money come from? Prosecutors say it came from wealthy donors including noted actor Danny Glover. Much of the money also came from the Vanguard Public Foundation, a non-profit that went under as a result of Cohen’s investment fraud.
Evidently, the government’s version of events was more believable. Last year Judge Charles Breyer sentenced Cohen to a lengthy prison sentence. Cohen appealed the sentence but that appeal was denied this week by the U.S. 9th Circuit of Appeals. A 3 judge panel ruled that Judge Breyer properly allowed evidence of Cohen’s lavish lifestyle in sentencing him.
The moral of the story? If you are going to steal from people, don’t expect any leniency if you defraud a charity. Expect even less sympathy if you use the money for your own personal jet. When I was a prosecutor, we would sometimes see cases where homeless people would shoplift food. A crime? Yes, of course. But stealing to survive is much different from investment frauds in which millions are stolen. Inevitably the money is used to support a narcissistic lifestyle of outrageous parties, private jets, boats, trips, etc.
If you lost $100,000 or more in some type of investment fraud, stock scam or Ponzi scheme, give us a call. The fraud lawyers at Mahany & Ertl have helped many victims get back their hard earned money. We also take cases involving other frauds including legal and accounting malpractice cases.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and San Francisco, California. Fraud recovery available in many jurisdictions.
Need more information? Our Due Diligence blog has a search engine located in the upper right hand corner. We have hundreds of informative articles on our site.
Post by Brian Mahany, Esq.
* photograph from Wikiepedia