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Tuesday, May 28, 2024 | Back issues
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Feds Slam Hedge Fund Exec With Criminal Indictment

Federal prosecutors Wednesday unsealed an indictment accusing  Michael Cohen, a former executive managing director of the publicly traded hedge fund Och-Ziff Capital Management of 10 criminal counts, including fraud, conspiracy and obstructing justice in a scheme involving a charitable client and a “luxury yacht.”

BROOKLYN (CN) — Federal prosecutors unsealed an indictment Wednesday accusing a former hedge fund executive of fraud, conspiracy and obstructing justice in a scheme involving a charitable client and a “luxury yacht.”

Michael Cohen, 46, headed European operations at the publicly traded Och-Ziff Capital Management, according to the 10-count indictment filed under seal on Oct. 5 last year.

Federal prosecutors have been investigating the hedge fund for several years. Och-Ziff Capital Management agreed to pay $213 million in September 2016 to settle claims that it bribed officials in Libya and Congo to get an edge on mineral mining rights. The SEC sought an additional $199 million in that case.

A spokesman for Och Ziff said in an email Wednesday: “The allegations in the indictment against Michael Cohen do not raise any new issues for the firm, which has settled the matter.”

An attorney for Cohen was not immediately available for comment.

Cohen was in charge of setting up two ventures to invest in African mining and oil interests.

An unidentified charitable foundation in the United Kingdom agreed to invest $200 million in one of those funds.

Some shares of the mining company had been sold to an unnamed co-conspirator who owed Cohen $18 million for a luxury yacht. The co-conspirator was to use the proceeds from the sale of shares in Strata Ltd. to pay off Cohen, who failed to disclose that, according to the 21-page indictment.

Prosecutors said Cohen and the co-conspirator backdated a letter to conceal the transaction and Cohen lied about it to law enforcement during grand jury proceedings and the SEC case last year.

The SEC accused Cohen and Vanja Baros, another former Och Ziff official, of a widespread bribery scheme to win business in Africa.

A cease-and-desist order the SEC levied against the firm in September 2016 said Och-Ziff’s bribes drew investments from the Libyan Investment Authority sovereign wealth fund and secured mining rights in Libya, Chad, Niger, Guinea and the Congo.

CEO Daniel Och agreed to pay $2.2 million as part of that settlement, and the SEC said it would assess a penalty against CFO Joel Frank at a later date.

Both consented to the order without admitting or denying that they turned a blind eye to the red flags and risks associated with the transactions, failed to ensure proper bookkeeping of the deals, and failed to have safeguards in place to prevent such bribes from happening.

The 10-count indictment unsealed Wednesday charges Cohen with conspiracy to commit wire fraud and investment adviser fraud, wire fraud and investment adviser fraud, conspiracy to obstruct justice and obstructing justice, and material false statements. It also seeks criminal forfeitures.

Categories / Criminal, Securities

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