Och-Ziff's Former Executive Pleads Not Guilty in Fraud Case
(Bloomberg) -- Michael L. Cohen, the former head of Och-Ziff Capital Management’s European operations, pleaded not guilty to U.S. charges that he defrauded one of the hedge fund’s clients by lying about an investment in an African mining company.
Cohen, 46, a U.S. citizen who lives in the U.K., agreed to waive extradition and was arraigned Tuesday in federal court in Brooklyn, New York. Charges against him include wire fraud, conspiracy and making false statements.
Federal prosecutors accused him enriching himself at the expense of a large charity, which they didn’t identify, but which two people familiar with the matter said was Wellcome Trust, an organization that supports research in science, health and other areas. Cohen brokered a sale of shares in an African mining company that were owned by a business associate of his to the charity, according to prosecutors.
Cohen had lent the associate $18 million to buy a luxury yacht and and got $4 million of the proceeds from the sale of the shares, prosecutors said. He also didn’t tell the charity he had a personal interest in the mining company and owned some of the shares involved in the sale, according to the indictment.
After the U.S. Securities and Exchange Commission began investigating Och-Ziff in 2011, Cohen tried to obstruct the investigation, including allegedly concocting a false letter and making false statements to regulators.
$10 Million Bond
U.S. District Judge Nicholas Garaufis, in Brooklyn, New York, agreed Tuesday to release Cohen on a $10 million bond secured by $500,000 in cash as well as the Maine home of his parents and a $8.7 million home his wife owns in the U.S. Virgin Islands.
After pleading not guilty, Cohen also signed a waiver of extradition agreeing to return to the U.S. for trial.
Cohen and his lawyers declined to comment after the hearing.
The judge said Cohen can go to the U.K., where he’s lived since 1999, but ordered him to surrender his U.S. and U.K. passports and limit his travels to England and parts of the eastern U.S. Cohen told the judge he’d fly home on Saturday.
Cohen’s lawyers cited the case of former HSBC Holdings Plc trader Mark Johnson in arguing for his bail. Johnson, a U.K. banker who was charged and convicted of front-running ahead of a $3.5 billion client order, was released from a federal prison Tuesday and allowed to return to the U.K. on a $1 million bond while he awaits the outcome of his appeal.
Prosecutor David Pitluck said his office was turning over to Cohen’s lawyers more than 200,000 documents of the millions the government has collected during its probe.
Pitluck also told Garaufis the U.S. might have classified evidence that can’t be discussed or viewed by people who don’t have proper security clearance under the Classified Information Procedures Act. If the U.S. does use the evidence, Pitluck said defense lawyers would have to get clearance in order to see it.
Garaufis ordered lawyers and Cohen to return to court Sept. 13 for a pretrial conference.
The case is U.S. v. Cohen, 17-cr-544, U.S. District Court for the Eastern District of New York (Brooklyn).
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