Michael Cohen, a former head of the European operations of Och-Ziff Capital Management Group, was charged with fraud related to the hedge fund firm’s investments in Africa, according to an indictment made public Wednesday in Brooklyn.
Cohen, 46, of London, is charged with 10 counts including conspiracy to commit investment adviser fraud, conspiracy to commit wire fraud and conspiracy to obstruct justice and making false statements.
It’s the latest turn in U.S. investigations that have spanned at least five years. The inquiries into misconduct in the Democratic Republic of Congo, Libya and other African countries bedeviled the world’s largest hedge fund for years, causing investors to pull assets and prompting defections of personnel.
Och-Ziff resolved the matter with the Justice Department and the Securities and Exchange Commission in 2016, paying more than $400 million. A unit of the firm pleaded guilty to conspiring to bribe officials in Congo to win business. Since then, Och-Ziff has remade itself into something of a fixed-income shop and now has half of its $32 billion in assets tied to credit.
Continuing Probe
After settling with the firm, authorities continued their investigation of individuals in the Africa matter. The criminal charges against Cohen relate to a transaction he brokered with an individual who owed him money.
The SEC sued Cohen in early 2017, alleging that he spearheaded a sprawling bribery scheme that involved paying tens of millions of dollars across Africa to win business. Cohen’s attorney, Ron White, didn’t immediately respond to a request for comment on the Justice Department’s charges.
As part of the 2016 settlement with Och-Ziff, the fund’s founder and chief executive officer, Dan Och, personally agreed to pay nearly $2.2 million. The SEC said that Och didn’t know about the bribes.
Prosecutors say that beginning in 2008, Cohen and his co-conspirators carried out a scheme to defraud an Och-Ziff client, identified in the indictment only as a large charitable foundation.
Africa Investment
Cohen allegedly violated his fiduciary duties to the charitable foundation by making material misrepresentations and concealing conflicts of interest in connection with a proposed investment in an African mining company, according to the indictment.
Prosecutors said Cohen failed to tell the foundation that one of the sellers of the mining company’s shares in the African mining company owed Cohen $18 million, used to buy a luxury yacht, according to the indictment.
The seller allegedly paid approximately $4 million of the share proceeds to Cohen to partially repay the personal loan. Cohen failed to disclose to the charitable foundation any of the details of what prosecutors call a conflict of interest, the U.S. said.
Cohen is accused of covering up information about the transaction after learning in 2012 that the SEC was investigating Och-Ziff, according to the indictment. Cohen and others, who aren’t named, are accused of obstructing justice for allegedly backdating a letter and making false statements to federal agents and the SEC.
This article was provided by Bloomberg News.
