A Manhattan federal jury on Tuesday found former Morgan Stanley financial adviser Darryl Cohen guilty of cheating three professional basketball players out of more than $5 million. After a five-week trial, jurors convicted him of wire fraud and investment-adviser fraud, with sentencing still to come. The players, Jrue Holiday, Chandler Parsons and Courtney Lee, testified that the adviser they trusted pushed them into pricey life-insurance deals and authorized transfers they never signed off on.
The verdict capped a monthlong proceeding in U.S. District Court in Manhattan before U.S. District Judge Vernon S. Broderick, where jurors combed through witness testimony and stacks of bank records, according to Bloomberg Law. Cohen was convicted on one count of wire fraud and one count of investment-adviser fraud, while jurors were unable to reach a decision on a third conspiracy charge. Prosecutors told the court the wire-fraud count alone carries a statutory maximum sentence of 20 years, although the final punishment is up to the judge.
"Financial Advisor Darryl Cohen built trust with successful pro athletes, then betrayed it, stealing their money to fund personal luxuries," U.S. Attorney Jay Clayton said in a statement in a press release via the U.S. Attorney's Office for the Southern District of New York. The office also shared the announcement on X earlier Wednesday, directing followers to the full release and an evidence summary. The statement lays out the government’s timeline and the money flows shown to jurors.
How prosecutors say the scheme worked
Prosecutors argued that from about 2017 through 2020, Cohen and accountant Brian Gilder steered the players into viatical life-insurance policies that had originally been bought at far lower prices, then resold to the athletes at markups reaching 310 percent, according to reporting from the Houston Chronicle. A law firm connected to the setup took in roughly $4.5 million in profit from those deals, the government says. Several players testified that Cohen orchestrated the purchases and failed to disclose the conflicts of interest behind the recommendations.
Where the money went
Jurors were told that Cohen did not stop at high-markup insurance products. Prosecutors said he diverted client funds to pay for his own lifestyle, including home renovations, credit card bills, transfers to a romantic partner and a high-end training gym constructed in his backyard. Roughly $500,000 from two clients was routed into a nonprofit entity called Beast Basketball, and about $238,000 of that total later funded the backyard gym project, as summarized by InvestmentNews. The government also alleges that Cohen dipped into client accounts to reimburse a dissatisfied former client, Nyjer Morgan.
Regulatory fallout
The criminal case comes on the heels of a 2023 civil enforcement action by the Securities and Exchange Commission, which accused Cohen of misappropriating more than $1 million from NBA clients and sought disgorgement and financial penalties, according to the SEC. The 2023 indictment and coverage at the time by outlets including CNBC described parallel criminal and civil investigations that ultimately converged in this trial.
Next steps in court
Cohen, 52, of Chatsworth, California, is set to be sentenced on a date that has not yet been scheduled. The prosecution was handled by the Southern District’s Complex Frauds and Cybercrime Unit, according to the U.S. Attorney’s release. The office credited the FBI and several other U.S. Attorney’s Offices with assisting in the investigation and said it intends to keep pursuing financial professionals who abuse their fiduciary roles.
The verdict lands amid a broader crackdown on advisers and promoters accused of targeting professional athletes, with at least one co-conspirator already having pleaded guilty to related charges, Law360 reports. For athletes and their families, the case underscores both the need to thoroughly vet financial advisers and the practical limits of privacy in arbitration and civil settlements when criminal charges enter the picture.
