A Sherman Oaks man pleaded guilty today in federal court to conning about 1,000 victims nationwide out of $39 million by offering phony investments in a sham companies.
Richard Alan Cohen, 61, pleaded guilty in U.S. District Court in downtown Los Angeles to 26 counts of fraud, money laundering and tax offenses.
His son, Daniel Cohen, 34, of Calabasas, pleaded guilty April 22 to 20 felony counts related to the scheme that utilized a number of sham companies, including one called Euromints, according to U.S. Attorney's Office spokesman Thom Mrozek.
Both Cohens face hundreds of years in federal prison when they are sentenced this fall by U.S. District Judge George H. Wu, Mrozek said.
In the mid-1990s, the Cohens formed several companies — including Eurobrand, LLC, doing business as Euromints; Samuel & Cohen Media, LLC; Mintech International Inc.; and Rig Leasing Inc.— that they used to solicit money from investors with claims that the businesses were successful and generated large profits, Mrozek said.
Potential investors were solicited in several ways, including by a team of salespeople who worked in a "boiler room'' in Calabasas, according to the U.S. Attorney's Office.
In addition to making claims that the businesses were viable and successful, salespeople often told potential investors that the companies were on the verge of "going public'' or were going to be taken over by larger companies, Mrozek said.
Salespeople commonly told potential investors that they could buy company stock from a widowed investor who was willing to sell her investment at a discounted price, according to court papers.
In reality, the Cohen companies were not successful, the stock certificates issued by the companies were worthless, and a substantial portion of the money received from investors was skimmed by the Cohens to fund their lavish lifestyles, which included luxury cars and the son's "palatial'' Calabasas home, according to the government.
As part of the scheme, father and son were involved in related fraudulent activity, which included the elder Cohen's efforts to avoid paying restitution to victims who lost money when his commodities investment company, Madison Financial, was shut down by the Commodities Futures Trading commission, Mrozek said.
Richard Cohen withheld information from the CFTC via a number of ways, including having his son pay rent on his $8,500-a-month Bel Air residence and using an American Express Black card in his son's name to conceal hundreds of thousands of dollars in income that had been misappropriated from investors, according to the U.S. Attorney's Office.
Richard and Daniel Cohen both pleaded guilty to conspiracy, 11 counts of mail fraud, two counts of causing victims to travel in relation to a fraud, and conspiracy to evade tax laws, Mrozek said.
Richard Cohen additionally pleaded guilty to two counts of money laundering, three counts of making false statements to the CFTC, two counts of filing false tax returns and three counts of tax evasion, Mrozek said.
His son additionally pleaded guilty to five counts of money laundering.
Richard Cohen, who is scheduled to be sentenced on Oct. 7, faces a statutory maximum of 306 years in federal prison, but will surrender to begin serving his sentence on May 28, Mrozek said.
The younger Cohen, who is scheduled to be sentenced on Sept. 23, faces a maximum sentence of 290 years in prison, according to Mrozek. The defendant has been in custody since July 2009.
A third defendant involved in the Cohens' scheme -- Joshua Hoffman, 40, of Malibu -- was sentenced in March to 5 1/2 years in prison. He pleaded guilty in this case, as well as another fraud case that victimized various companies and organizations that thought they were purchasing advertising in magazines, Mrozek said.