A former Morgan Stanley financial advisor is fighting charges in federal court in Manhattan that he defrauded NBA players out of millions of dollars when he sold them viatical settlements, a complex investment product that allows individuals with a limited life expectancy to sell their life insurance to another person or group.
The advisor, Darryl Cohen, along with three other people, was charged in March 2023 with six counts for schemes to defraud professional basketball players, according to a statement from the U.S. Attorney’s Office, the southern district of New York.
As part of his scheme Cohen allegedly transferred $500,000 from the accounts of two professional basketball players as purported donations to a non-profit organization, according to federal charges. He then used approximately $238,000 of those funds to build athletic training facilities in the backyard of his home.
Cohen was registered with Morgan Stanley in the Los Angeles suburbs from 2016 to 2021, according to his BrokerCheck profile, when the firm “discharged,” or fired him. The same year FINRA barred him from the securities industry.
Cohen’s trial began at the end of last month and federal prosecutors last Thursday rested their case, according to an article by Law360. The NBA players who were the targets of Cohen’s alleged scheme included Jrue Holiday, Chandler Parsons and Courtney Lee, according to the article.
From 2017 through 2020 Cohen managed a scheme to defraud three different professional basketball player clients of over $5 million by taking advantage of his advisory and fiduciary relationships with those clients, according to the federal charges.
Cohen conspired with Brian Gilder, an independent financial planner whom Cohen “encouraged his clients to work with and who assisted in tax preparation,” according to the federal allegations.
Cohen and Gilder allegedly fraudulently induced three athletes to purchase viatical life insurance policies at massive markups of 222%, 310%, and 244%, respectively, without disclosing Gilder controlled the transaction, according to the indictment.
Cohen and Gilder also allegedly used a sports agency and another law firm to channel approximately $328,125 of one of his client’s money to repay a former professional baseball player, a disgruntled client.
In February 2020, in the midst of making those payments, Cohen sent a message to Gilder saying: “We gotta send [the baseball player] more to get rid of him,” according to the indictment.
Gilder previously pled guilty to wire fraud conspiracy, according to Law360.
MyComplianceOffice's AI-assisted surveillance links employee chats on Slack and Telegram with prediction market trades as Wall Street tightens rules
Elsewhere, Raymond James absorbs a family-run practice from Commonwealth into its independent channel, while RBC welcomes a father-son tandem formerly from UBS.
Fuel-driven inflation drove the supersized adjustment, but advocates say retirees are still losing ground as trust fund insolvency nears.
State mandates and plan complexity are opening doors for financial advisors in the 401 market.
New LIMRA data reveal a stubborn advice gap that financial professionals are well-positioned to close.
Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
