Source: United States Department of Justice News
Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a six-count Indictment charging DARRYL COHEN, BRIAN GILDER, CHARLES BRISCOE, and CALVIN DARDEN, JR. in connection with two schemes to defraud professional basketball players. COHEN and GILDER were arrested this morning in, respectively, Chatsworth, California, and North Ridge, California, and will be presented later today in the United States District Court for the Central District of California. BRISCOE was arrested this morning in Katy, Texas, and will be presented later today in the United States District Court for the Southern District of Texas. DARDEN, JR. was arrested this morning in Atlanta, Georgia, and will be presented later today in the United States District Court for the Northern District of Georgia.
U.S. Attorney Damian Williams said: “As alleged in the indictment, these defendants believed that defrauding their professional athlete clients of millions of dollars would be a layup. That was a huge mistake, and they now face serious criminal charges for their alleged crimes.”
FBI Assistant Director Michael J. Driscoll said: “As alleged, the defendants engaged in schemes to defraud four professional basketball players of more than $13 million. Today’s actions should serve as an example to others who engage in criminal activity to serve their own greedy financial desires at the expense of others – the FBI is committed to bringing you to justice.”
As alleged in the Indictment:[1]
COHEN and GILDER
From at least in or about 2017 through in or about 2020, COHEN, a registered investment adviser, orchestrated a scheme to defraud three different professional basketball player clients (“Athlete-1,” “Athlete-2,” and “Athlete-3,” respectively) of a total of over $5 million by taking advantage of his advisory and fiduciary relationships with those clients. COHEN conspired with BRIAN GILDER, an independent financial planner whom COHEN encouraged his clients to work with and who assisted in tax preparation for Athletes-1, -2, and -3.
First, COHEN and GILDER fraudulently induced Athletes-1, -2, and -3 to purchase viatical life insurance policies at massive markups. COHEN and GILDER did not disclose that GILDER had arranged for a purported law firm (“Law Firm-1”) that he controlled to purchase the polices and then to sell them to the athletes at markups of 222%, 310%, and 244%, respectively. Indeed, Law Firm-1 made approximately $4.5 million in profit from the sale of the policies to COHEN and GILDER’s athlete clients. COHEN and GILDER used a substantial portion of these illicit proceeds to pay their own personal expenses. In particular: (i) GILDER used approximately $257,479 of the funds to pay off a mortgage he owed; (ii) COHEN used approximately $178,462 of the funds to renovate his home and to perform work on his pool; (iii) COHEN used approximately $67,500 of the funds to pay off his personal credit card bill; and (iv) COHEN transferred approximately $200,000 of the funds to an individual with whom he was in a romantic relationship.
Second, COHEN directed that $500,000 be transferred from the accounts of Athletes-2 and -3 as purported donations to a non-profit organization. COHEN then used approximately $238,000 of the funds purportedly donated to the non-profit to build athletic training facilities in the backyard of his home. Athletes-2 and -3 never, in fact, authorized any transfers of their funds to the non-profit organization. When Athlete-2 confronted COHEN about the donations, COHEN told Athlete-2 in a text message, in substance and in part, that Athlete-2’s money had “[h]elped a lot of future prospects and a lot of underprivileged kids.” COHEN did not disclose to Athlete-2 that a substantial portion of Athlete-2’s donations had, in fact, been used to build an athletic training facility in COHEN’s backyard.
Third, COHEN and GILDER used a sports agency and another law firm to channel approximately $328,125 of Athlete-2’s money to repay a former professional baseball player (“Athlete-4”), who was a disgruntled client of COHEN’s. Athlete-4 had expressed concern to COHEN about investments and loans that COHEN made on Athlete‑4’s behalf and demanded to be repaid. On or about February 19, 2020, in the midst of making the payments of Athlete-2’s money to Athlete-4, COHEN messaged GILDER, “We gotta send [Athlete-4] more to get rid of him.” Athlete-2 did not authorize the use of funds from his account to repay debts owed by COHEN to Athlete-4.
BRISCOE and DARDEN, JR.
BRISCOE and DARDEN, JR. also defrauded professional basketball players. BRISCOE was an NBA agent, and DARDEN, JR. had previously pled guilty to wire fraud in the Southern District of New York.
BRISCOE served as the sports agent of a professional basketball player (“Athlete-5”). Athlete-5 began discussing the possibility of purchasing a professional women’s basketball team (“Team-1”), and BRISCOE introduced Athlete-5 to DARDEN, JR. Because Athlete-5 was not permitted to purchase Team-1 as an active professional basketball league player, BRISCOE, DARDEN, JR., and a relative of DARDEN, JR., who serves or has served on the boards of multiple public companies (“Relative-1”), discussed with Athlete-5 an arrangement in which Athlete-5 would indirectly purchase Team-1 through a company (“Company-1”) purportedly controlled by Relative-1. BRISCOE provided Athlete-5 with a slide deck outlining a “vision plan” for the purchase of Team-1 by Company-1. The “vision plan” claimed, among other things, that Company-1 was led by Relative-1 and was advised by a board including several prominent individuals in sports, entertainment, and corporate America. In truth and in fact, and as BRISCOE and DARDEN, JR. well knew, at least two of those individuals never served as advisors to Company-1.
Between in or about November 2020 and in or about December 2020, Athlete‑5 caused $7 million to be transferred to a bank account controlled by DARDEN, JR. Athlete-5 understood that these payments were in order for Athlete-5 to purchase and become full owner of Team-1. In truth and in fact, none of the money Athlete-5 sent went toward the purchase of Team-1, and Athete-5 did not become an owner of Team-1. Instead, from approximately November 2020 until approximately December 2021, DARDEN, JR. transferred more than $1 million of the funds to BRISCOE. In addition, DARDEN, JR. retained a substantial portion of the funds for himself and his relatives, sending more than $500,000 to a relative and more than $400,000 to a cryptocurrency exchange for his benefit. DARDEN, JR. also used some of the funds to pay for luxury goods for himself, including approximately $880,000 to luxury car companies, more than $300,000 to art galleries, and more than $100,000 to purchase a piano, among other things. DARDEN, JR. also spent in excess of approximately $1 million in connection with purchasing and making improvements to a residence, including, among other things, the addition of a koi pond.
BRISCOE and DARDEN, JR. also worked together to defraud Athlete-2. BRISCOE, in consultation with COHEN and GILDER, was purportedly building a new sports agency (“Agency-1”) funded by Athlete-2. BRISCOE convinced Athlete-2 that BRISCOE had signed, through Agency-1, a highly touted athlete preparing for a professional basketball draft (“Athlete-6”). In fact, Athlete-6 had not signed with BRISCOE or Agency-1. Rather, BRISCOE forged the signature of Athlete-6 and Athlete-6’s mother on a player-agent contract and sent that forged contract to Athlete-2. BRISCOE then directed Athlete-2 to transfer $1 million to BRISCOE as a “loan” to Athlete-6 while Athlete-6 prepared for the draft. In fact, Athlete-6 never had any conversations with BRISCOE or DARDEN, JR. about signing with BRISCOE or about receiving a $1 million loan, and Athlete-6 never received any part of the $1 million loan. Instead, BRISCOE used approximately $306,642 of the funds transferred by Athlete-2 to pay off a debt that BRISCOE had personally incurred and also transferred approximately $544,000 to a bank account controlled by DARDEN, JR.
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COHEN, 49, of Chatsworth, California, and Las Vegas, Nevada, GILDER, 49, of North Ridge, California, BRISCOE, 35, of Katy, Texas, and DARDEN, JR. 49, of Atlanta, Georgia, are each charged with one count of conspiracy to commit wire fraud and one count of wire fraud. Each count carries a maximum sentence of 20 years in prison. COHEN is also charged with one count of investment advisor fraud, which carries a maximum sentence of five years in prison, and BRISCOE is also charged with one count of aggravated identity theft, which carries a mandatory prison term of two years.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.
Mr. Williams praised the outstanding work of the FBI. Mr. Williams also thanked the United States Attorney’s Offices for the Central District of California, the Northern District of Georgia, and the Southern District of Texas for their assistance in the investigation. Mr. Williams further thanked the U.S. Securities and Exchange Commission, which today filed a parallel civil action against COHEN, for its assistance and cooperation in this investigation.
The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Katherine Reilly and Kevin Mead are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described therein should be treated as an allegation.