By Kenneth Corbin
A former Morgan Stanley advisor has been found guilty of defrauding three professional basketball players through a life insurance scheme from 2017 through 2020. Prosecutors say that Darryl Cohen bilked NBA players Chandler Parsons, Courtney Lee, and Jrue Holiday out of more than $5 million through the insurance grift and other fraudulent activity.
After a five-week trial, a New York jury found Cohen guilty of one count of wire fraud and one count of investment adviser fraud. Those charges carry maximum prison sentences of 20 years and five years, respectively
Lawyers for Cohen didn't immediately respond to requests for comment on the verdict or what they hope for at sentencing. Judge Vernon Broderick of U.S. District Court in New York's Southern District hasn't set a sentencing date yet.
The primary scheme involved viatical settlements, a financial transaction when life insurance policies with a cash value are sold to a third party for a lump-sum payment. The buyer takes over the premium payments and collects the entire benefit upon the policyholder's death.
Cohen worked with an accountant to induce the three NBA players to purchase viatical settlements at substantial markups. The players paid between 222% and 310% of the value of the policies, according to prosecutors.
A law firm that Cohen and the accountant, who previously pleaded guilty in the criminal case, used to handle the insurance-policy sales made about $4.5 million from the transactions, money that the defendants used for personal expenses. Cohen spent hundreds of thousands of dollars on home renovations, credit card bills, and a transfer of funds to an individual with whom he was romantically involved, prosecutors say.
In addition to the life-insurance scheme, Cohen also arranged to transfer $500,000 from Parsons and Lee's accounts to support a nonprofit basketball organization but then siphoned off $238,000 of that money to build an athletic gym at his home.
"Cohen built trust with successful pro athletes -- then betrayed it, stealing their money to fund personal luxuries, including a state-of-the-art gym in his own backyard," says Jay Clayton, U.S. attorney for New York's Southern District. "New Yorkers deserve honest financial advice -- not advisors who scheme to steal clients' funds rather than protect their financial interests."
Cohen also worked with a sports agency and another law firm to move more than $328,000 of Parsons' money to repay a former professional baseball player described by the Justice Department as a "disgruntled client of Cohen's."
Cohen entered the wealth management industry in 1997 with Merrill Lynch, moved to Wells Fargo in 2003, and landed at Morgan Stanley in 2015. In March 2021, after looking into allegations that Cohen was engaged in unapproved communication and business with clients, Morgan Stanley fired him.
"Mr. Cohen was terminated from Morgan Stanley almost six years ago for outside transactions not disclosed to or approved by Morgan Stanley, and use of an unapproved platform to engage in inappropriate communications with clients," a Morgan Stanley spokeswoman says. "We have cooperated fully and have resolved all client claims related to the transactions at issue in this matter."
In December 2021, Finra, the brokerage sector's self-regulatory authority, barred Cohen from the industry after he failed to cooperate with an investigation. A civil complaint brought by the Securities and Exchange Commission is pending.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 06, 2026 13:03 ET (18:03 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments