A former hedge fund highflier charged last year with civil FCPA violations is now indicted for defrauding a big charitable foundation by hiding his conflicts of interest in a multi-million dollar investment deal.
Michael Cohen, 46, was the executive managing director of hedge fund giant Och-Ziff Capital Management Group LLC.
In a criminal indictment unsealed Wednesday, he was charged with one count of conspiracy to commit investment adviser fraud and one count of investment adviser fraud.
He’s also facing one count of conspiracy to commit wire fraud, four counts of wire fraud, one count of conspiracy to obstruct justice, one count of obstruction of justice, and one count of making false statements.
The indictment was returned under seal by a federal grand jury in Brooklyn, New York on October 5, 2017.
Cohen lives in London and isn’t now in U.S. custody, according to sources who spoke to Bloomberg.
A year ago, the SEC charged Cohen and another Och-Ziff executive with orchestrating bribes across Africa that violated the Foreign Corrupt Practices Act.
The SEC said Cohen, who headed Och-Ziff’s European office in London, and Vanja Baros, caused “tens of millions of dollars in bribes to be paid to high-level government officials in Africa.”
In September 2016, Och-Ziff paid $412 million in criminal and civil penalties to resolve one of the biggest FCPA enforcement actions ever.
Two other Och-Ziff executives, including founder and CEO Daniel Och, settled SEC charges that they violated the FCPA. Daniel Och agreed to pay nearly $2.2 million to resolve the SEC action.
In June 2017, a former consultant to a mining company owned by an Och-Ziff joint venture was sentenced to two years in prison for conspiring to violate the Foreign Corrupt Practices Act.
Samuel Mebiame, 43, the son of a former Prime Minister of Gabon, admitted bribing officials in Niger, Chad, Guinea, and other countries.
According to the indictment unsealed Wednesday, in 2008 Cohen and others recommended an investment in an African mining company to a large charitable trust that was an Och-Ziff client.
The charitable foundation is the Wellcome Trust, Bloomberg reported. It supports research in science and health, among other things.
The indictment alleges that Cohen never disclosed that a seller of the African mining company shares owed Cohen millions of dollars. The debt was part of a delinquent $18 million personal loan Cohen had made to finance the purchase of a luxury yacht, the DOJ said.
When the borrower sold his shares in the African mining company to the charitable foundation, $4 million of the proceeds allegedly went to Cohen.
“Cohen violated his fiduciary duties to the charitable foundation by making material misrepresentations and concealing conflicts of interest,” the DOJ said.
The indictment also accuses Cohen of conspiring to cover up facts about the transaction after the SEC began investigating Och-Ziff in 2011.
The DOJ said Cohen obstructed investigations by concocting a false, backdated letter and making false statements to federal agents and the SEC.
Cohen’s lawyer, Ron White, told Bloomberg: “Mr. Cohen has done nothing wrong and is confident that when all the evidence is presented, it will be shown that the government’s charges are baseless.”
Richard L. Cassin is the publisher and editor of the FCPA Blog.