A&O Shearman FCPA Digest | United States v. Michael Leslie Cohen (E.D.N.Y. 2017)

Source Documents

Nature of Business
Michael Cohen is a United States citizen who formerly served as an Executive Managing Director for the hedge fund, Och-Ziff Capital Management Group LLC, and was responsible for overseeing Och-Ziff’s investments in Europe, the Middle East, and Africa. Och-Ziff is a publicly traded company based in the United States, and its shares were traded on the New York Stock Exchange. Cohen also served as a director of a joint venture, Africa Management Limited (“AML”), which invested in mining, oil, and mineral concessions in Africa.

Influence to be Obtained
According to the DOJ, Cohen made material misrepresentations and omissions to the unnamed charitable foundation he and Och-Ziff advised on investment decisions and obstructed justice in trying to cover up his actions once they were under federal investigation. The misrepresentations and omissions allegedly stemmed from a conflict of interest between Cohen, as the investment adviser to the Charitable Foundation, and Strata Limited, the company in which Cohen had advised the Charitable Foundation to invest. The owner of the Strata Limited shares owed Cohen $18 million and planned to use $4 million generated from the sale of his Strata shares to the Charitable Foundation to partially pay Cohen back. Cohen failed to disclose this conflict of interest and took steps to obfuscate the owner of the shares and possible connections between them.

Further, the DOJ alleged that Cohen instructed the owner of the Strata shares to fabricate and back date a letter in which the Strata owner promised to not use the proceeds from the sale of his shares to the Charitable Foundation to pay back Cohen.

Enforcement
On January 3, 2018, the charges against Cohen were unsealed. Cohen was charged with ten counts: one count of conspiracy to commit Investment Adviser Fraud; one count of Investment Adviser Fraud; 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 material false statements. Cohen pleaded guilty to one count of material false statements and was sentenced on December 18, 2019 to three months in prison and fined $250,000.

Cohen was also charged by the SEC with respect to violations of the FCPA, but the charges against him were dismissed. Och-Ziff, several subsidiaries, and executives and other affiliates have also been subject to charges by the SEC and the DOJ related to FCPA violations.

Other Statutory Provision
Conspiracy to commit Investment Adviser Fraud; Investment Adviser Fraud; conspiracy to commit wire fraud; wire fraud; conspiracy to obstruct justice; obstruction of justice; material false statements.