A former Morgan Stanley investment advisor was convicted of defrauding three professional basketball players out of millions of dollars.
Darryl Cohen was found guilty by a jury in Manhattan on two counts Tuesday following a monthlong trial. He faces a maximum sentence of 20 years in prison
Though the jury, which began deliberating Friday, convicted Cohen of wire fraud and investment adviser fraud, it couldn't reach a verdict on a third count of conspiracy. The judge declared a mistrial on that charge Tuesday.
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Cohen's former clients — Portland Trail Blazers guard Jrue Holiday and former players Chandler Parsons and Courtney Lee — all took the stand against him at trial. They testified that Cohen got them into viatical policies, in which investors purchase insurance on another person, betting the payout on that person's death will exceed the cost of the premiums.
According to the players, Cohen told them to buy the policies from a law firm controlled by him and an independent financial adviser, Brian Gilder. Prosecutors said the policies were bought from a broker and then sold to Cohen's clients at three or four times the purchase price. For instance, one policy bought for around $465,000 was marked up to $1.6 million. Another, purchased for $620,000, was sold for more than $2.5 million.
Cohen was also charged with transferring without authorization $500,000 from two of the players' accounts to a nonprofit amateur basketball organization started by an associate of his, nd $300,000 from Parsons' accounts to pay off a former professional baseball player who was a disgruntled client.
The defense argued that Cohen was being blamed for misconduct committed by Gilder, who pleaded guilty in 2023 and was sentenced to three years' probation, as well as Parsons. According to the defense, at least some of the transfers Cohen made were on behalf of Parsons, who they claim was trying to hide his involvement with a sports agency he set up in violation of NBA rules.
Parsons knew when he established the agency that the punishment could be "severe," Michael Bloch, an attorney for Cohen, told the jury during his closing argument. "Chandler did it anyway and by necessity had to lie to a lot of people."
Bloch didn't respond to a request for comment on the verdict.
Cohen joined Morgan Stanley in 2015.
"Mr. Cohen was terminated from Morgan Stanley almost six years ago for outside transactions not disclosed to or approved by Morgan Stanley, and use of an unapproved platform to engage in inappropriate communications with clients," the company said in a statement. "We have cooperated fully and have resolved all client claims related to the transactions at issue in this matter."
Before he joined Morgan Stanley, Cohen spent 12 years as an adviser at Wells Fargo, according to Financial Industry Regulatory Authority records. He also previously worked at Merrill Lynch.
