Extra-Long Sentence for Cheating the Charitable
(CN) - A fraudster who posed as a wealthy philanthropist to rip off charitable donors was properly given a sentencing enhancement that put him away for 22 years, the 9th Circuit ruled.
Samuel or Mouli Cohen is serving 22 years after a jury found him guilty of wire fraud and money laundering, and the district court applied a sentencing enhancement for criminals who misrepresent that they are acting on behalf of a charity.
Prosecutors showed the Cohen had orchestrated the scheme by claiming in 2002 that Microsoft planned to acquire Ecast, a company he co-founded, ensuring that its shares would skyrocket from their then-current price of $3.50 per share to $30 per share.
Pretending that he was interested in donating $60 million to charity, Cohen approached a charitable organization called the Vanguard Public Foundation and offered to sell the foundation's donors some of his founder's shares in Ecast.
Cohen conditioned his offer on the promise that the donors give half their profits to charity.
In reality, however, Ecast had fired Cohen, never transferred his shares to the donors, and the company was not in talks with Microsoft or any other buyer.
Cohen and Vanguard's then president meanwhile cited regulatory delays and unexpected fees to milk $31 million from individuals associated with Vanguard through 2007.
The co-conspirator Hari Dillon pleaded to the fraud, testified against Cohen and was sentenced to 40 months.
On Thursday, a three-judge panel of the 9th Circuit refused to disturb the two-level sentencing enhancement applied to Cohen.
"Cohen's offense fits easily within the ambit of the charitable enhancement even though his scheme involved the sham sale of shares in a for-profit company: by approaching Vanguard Foundation donors, Cohen specifically extended his offer to individuals he knew to be inclined toward charitable giving, and he enticed them with promises that investing in the purchase of his Ecast shares would enable them to make even larger charitable gifts," Judge Morgan Christen wrote for the panel. "The applicability of this sentencing enhancement does not change because Cohen purported to act in the interest of the Vanguard Foundation but not as its agent or representative. Nor is it significant that Cohen's investors may have been motivated, in part, by a desire to profit personally."
Although the investors knew that Cohen was not a representative of the Vanguard Foundation, "Cohen pretended to be interested in diverting potential profit to charity and represented that the donors' investment would inure to the benefit of a charity. Cohen's conduct qualifies for the enhancement because, by presenting the investment opportunity as his means of donating to the Vanguard Foundation, Cohen misrepresented that he was acting 'to obtain a benefit on behalf of' the Vanguard Foundation," the seven-page opinion concluded.