Erez Law is currently investigating former Morgan Stanley broker Darryl Cohen (CRD# 2786613) regarding non-broker dealer product investment losses and selling away. The broker was part of the Global Sports Entertainment Group at Morgan Stanley, focusing on athletes and entertainers likely to have short-lived income streams. The FINRA investigation found that most customer complaints involved former and current professional athletes.
According to public records, four former NBA players, including Chandler Parsons and his former roommate Courtney Lee, are alleging $13 million in total damages.
Reports indicate that between 2017 and 2020, he “orchestrated” a scheme along with an independent financial planner to steal from pro-athletes by selling life settlements policies at inflated prices. According to prosecutors, the planner’s firm made a $4.5 million profit, while the broker took in $246,000 in undisclosed kickbacks.
According to the claim, “payments were made without prior approval” from their accounts. The claim also alleges that the NBA players were encouraged to “take out a liquidity access line of credit for real estate and life insurance policies, which they now claim they hold no interest.”
In December 2021, FINRA barred Darryl Cohen after he failed to fully and completely respond to multiple requests by FINRA for information and documents in connection with an investigation into improper use of customer funds and possible conversion. FINRA sought to obtain the following documents:
- communications regarding his customers and business, including electronic communications such as emails, texts, and social media posting
- bank account statements
- telephone logs and records
According to the FINRA filing, the staff had “concerns about unusual or suspicious money movement.”
In February 2023, he sued Morgan Stanley for discrimination in an attempt to recoup $4 million in deferred compensation.
In March 2023, he was arrested for his involvement in the scheme that defrauded three professional basketball players of $5 million. The Department of Justice and the Federal Bureau of Investigation (FBI) announced a six-count indictment that charged Darryl Cohen, Brian Gilder (an independent financial planner), Charles Briscoe (who served as the sports agent of a professional basketball player), and Calvin Darden, Jr. in connection with two schemes to defraud professional basketball players. In connection with the charges, the four individuals were arrested.
Darryl Cohen, Brian Gilder, Charles Briscoe, and Calvin Darden, Jr. were each charged with one count of conspiracy to commit wire fraud and one count of wire fraud. Darryl Cohen was also charged with one count of investment advisor fraud, and Charles Briscoe was charged with one count of aggravated identity theft.
The Department of Justice reported that Darryl Cohen conspired with Brian Gilder and encouraged his client to work with and assist in tax preparations for the athletes. It is alleged that the duo induced the athletes to purchase viatical life insurance policies at massive markups of 222 to 310%. Additionally, the duo arranged for a law firm to control the purchase of the policies, causing the law firm to make approximately $4.5 million in profit from the sale of the policies.
The Department of Justice reported that the duo used the proceeds to pay for personal expenses, such as mortgage payments, home renovations, personal credit card bill payments, and other personal charges. Additionally, the Department of Justice reported that he donated money to a non-profit organization and to build an athletic training facility in his backyard. The Department of Justice also reported that the duo channeled money to repay a former professional baseball player who was disgruntled about investment losses and loans.
According to the Department of Justice, Charles Briscoe and Calvin Darden, Jr. defrauded professional basketball players. It is reported that between November 2020 and December 2021, the duo transferred money into personal accounts and relatives, as well as personal luxury purchases and home improvements. It is reported that the duo alleged to be building a new sports agency and had signed a “highly touted athlete preparing for a professional basketball draft.” In fact, the athlete had not signed with them and instead, Charles Briscoe forged the signature of the athlete on a player-agent contract and sent that forged contract to another athlete who was investing in the new agency.
He was registered with Morgan Stanley in Westlake Village, California, from 2015 until January 2021, when he was terminated regarding, “Allegations relating to the representative’s facilitation of outside client business and transactions not disclosed to or approved by Morgan Stanley and use of an unapproved platform to engage in inappropriate communications with clients.”
Darryl Cohen Customer Complaints
He has been the subject of nine customer complaints between 2001 and 2021, one of which was denied and one was closed without action, according to his CRD report. Recent complaints are regarding:
October 2021. “Claimants allege, inter alia, that payments were made without prior approval from their accounts and in that they were encouraged to use a Liquidity Access Line for real estate and life insurance policies for which they now claim they hold no interest. 2017-2019.” The customer sought $2 million in damages, and the case was settled for $1,575,000.
April 2021. “Claimant alleges, inter alia, misrepresentation with respect to recommendation for outside business investment utilizing a line of credit from the firm- June 2019.” The customer sought $100,000 in damages, and the case was settled for $32,000.
April 2021. “Claimants allege, inter alia, unsuitability with respect to investments and Credit line – 2015 through 2020.” The customer sought $2.3 million in damages, and the case was settled for $1.7 million.
January 2021. “Claimants allege, inter alia, that payments were made without prior approval from their accounts and that they were encouraged to use a Liquidity Access Line for real estate and life insurance policies for which they now claim they hold no interest. 2017-2019.” The customer sought $5,000,000 in damages and the case was settled for $2.5 million. The complaint is regarding non-broker dealer activity with two NBA players.
June 2020. “Claimant alleges unsuitability with respect to the use of Liquidity Access Line to loan funds to outside business entities.” The case was settled for $125,000.
According to FINRA Rules, member firms are responsible for supervising a broker’s activities when the broker is registered with the firm. Therefore, Morgan Stanley may be liable for investment or other losses Darryl Cohen’s customers suffered.
Have you experienced investment losses due to broker fraud?
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If you have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations, and institutions in claims against brokerage firms, banks, and insurance companies on a contingency fee basis.
"*" indicates required fields