Thursday, January 4, 2018

DOJ Systematically Takes Down Clinton Foundation Donors

Och-Ziff Capital Management was a major donor to the Clinton Foundation.

Most of the major donors of the Clinton Foundation are part of the social impact bond scheme of privatization, which always begins with child welfare because no one cares.

Now, DOJ cares.

Former Executive Managing Director of Och-Ziff Capital Management Indicted for Defrauding Charitable Foundation and Obstructing Justice

Michael Leslie Cohen
A 10-count indictment was unsealed today, in federal court in Brooklyn, charging Michael Leslie Cohen, a former executive managing director of New York-based hedge fund Och-Ziff Capital Management Group LLC (“Och-Ziff”), for his alleged participation in a scheme to defraud one of the hedge fund’s clients, a large charitable foundation, when recommending financial investments relating to the African mining sector.  Cohen is charged with one count of conspiracy to commit investment adviser fraud, one count of investment adviser fraud, one count of conspiracy to commit wire fraud, and four counts of wire fraud.  Cohen is also charged with conspiring to obstruct federal grand jury and U.S. Securities and Exchange Commission (SEC) investigations and making false statements to federal agents.  The indictment was returned under seal by a federal grand jury sitting in Brooklyn, New York on October 5, 2017, and relates to Cohen’s alleged conduct between 2008 and 2013.   
Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and James D. Robnett, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS-CI), announced the charges.  

“As alleged, Michael Cohen violated his fiduciary duties as an investment advisor, deceiving a charitable foundation, in order to enrich himself and his associates,” stated Acting United States Attorney Rohde.  “The deceit continued when he learned that the U.S. government was investigating his activities, was confronted with evidence of the alleged crimes and responded with a cover-up.  The charges announced today reflect this Office’s commitment, together with our law enforcement partners, to hold accountable those in the finance industry who defraud investors.”  Ms. Rohde thanked the SEC, Boston Regional Office, for its significant cooperation and assistance during the investigation. 

“As alleged, Cohen turned his back on his fiduciary duties, profiting from the investments of his clients, essentially double dipping at their expense. His further actions of obstructing justice and lying to federal agents speak to his blatant disregard for integrity and the rule of law,” stated FBI Assistant Director-in-Charge Sweeney. “Today's indictment maintains our resolve to hold accountable those who engage in this type of corrupt and illegal activity.”
 “Today’s indictment of Mr. Cohen, a former Managing Director of one of the largest hedge funds, alleges the misuse of his position of trust to deceive a charitable foundation,” stated IRS-CI Special Agent-in-Charge Robnett.  “IRS-CI will continue to investigate executives who mislead investors and violate the public trust.”
The indictment alleges that, beginning in or about 2008, Cohen and his co-conspirators carried out a scheme to defraud a large charitable foundation and investor (the “Charitable Foundation”).  Cohen violated his fiduciary duties to the Charitable Foundation by making material misrepresentations and omissions in connection with a proposed investment in shares of an African mining company.  Through an Och-Ziff investment fund and joint venture overseen by the defendant, Cohen fraudulently induced the Charitable Foundation to consent to the purchase of shares in the African mining company without disclosing numerous conflicts of interest that existed in the transaction.  Among other things, Cohen failed to disclose that one of the proposed sellers of the shares personally owed Cohen $18 million – for a loan used to finance a luxury yacht – and would use the proceeds from the sale of shares to partially repay his debt to Cohen.  Cohen also failed to disclose that he personally controlled another portion of the shares in the African mining company that would be sold as part of the transaction.

The indictment further alleges that in order to conceal his fraudulent scheme and self-dealing, Cohen conspired with others to cover up facts about the transaction after the SEC began an investigation of Och-Ziff in 2011.  Cohen and others engaged in a number of acts to obstruct both the federal grand jury and SEC investigations, including concocting a false, backdated letter and making false statements to federal agents and the SEC. 
The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The case is being handled by the Office’s Business and Securities Fraud Section and the Criminal Division’s Fraud Section.  Assistant United States Attorneys David C. Pitluck, James P. McDonald and Jonathan P. Lax, and Trial Attorney Gerald M. Moody, Jr., are in charge of the prosecution.  The Criminal Division’s Office of International Affairs provided significant assistance in this matter.

The Defendant:

Age: 46
Residence: London, England

E.D.N.Y. Docket No. 17-CR-544 (NGG)

Here is a bit of a backgrounder.

Accounts reveal huge dividends paid to hedge fund tycoon Michael Cohen

Mr Cohen is reported to have earned hundreds of millions of pounds in his time running the operation’s investments in Europe, Africa and the Middle East.

The London hedge fund tycoon whose division is being investigated by the US authorities over alleged corruption in Africa was paid more than £5.5m in the year before he retired at 41, 

Michael Cohen set up and ran the hugely successful London arm of Och-Ziff, the giant New York hedge fund.

He is reported to have earned hundreds of millions of pounds in his time running the operation’s investments in Europe, Africa and the Middle East, and lives in a 930-acre Hampshire estate once home to the Duke of Wellington.

But it is his investments in Africa for which his London operations are now becoming best known. The US Department of Justice and the Securities and Exchange Commission announced in the spring that they were investigating the firm’s operations in Africa.

Reports last week claimed the investigators were focusing on payments allegedly made by Och-Ziff to a middleman called Mohamad Ali Ajami to secure an investment of $300m (£190m) from the Libyan sovereign wealth fund during the Gaddafi era. It is not known if Mr Cohen is personally under investigation.

Recently filed figures from Och-Ziff Management Europe show that Mr Cohen was paid £5.5m in 2012 and what was described as “a portion” of a £3.6m payment to directors last year – for his final few months in office.

Sources close to Mr Cohen said the payment was made in the form of dividends from shares he has built up in the US parent company. They denied the sums had amounted to a payoff.

 The accounts show that Och-Ziff’s “code staff” – meaning employees taking important investment decisions under UK regulatory definitions – were paid £36m last year. The company said it employed 36 “investment professionals” at that time.

Och-Ziff’s London office has been involved in numerous controversial deals in Africa, including an investment in Camec, a London Stock Exchange-listed company which gave $100m to the government of Robert Mugabe as a loan in return for a stake in platinum assets in Zimbabwe. Camec says the funds went to a series of international creditors, primarily for seeds, grain, fertiliser and fuel.

Critics say the loan allowed Mr Mugabe to fund, and win, his violent 2008 election contest with Morgan Tsvangirai.

Documents seen by The Independent from a 2007 tax presentation for Och-Ziff by PricewaterhouseCoopers highlight the circle of African fixers and investors with whom Mr Cohen mixed.

The presentation outlines the tax structure of a private equity fund being planned to invest in African mining and minerals, called the Africa Fund. It says Och-Ziff was to invest $300m, with decisions made by an “investment committee” including Mr Cohen, the then-JPMorgan mining banker Lloyd Pengilly and Walter Hennig – a controversial South African diamond trader. Other powerful African business leaders on the committee included Tokyo Sexwale, Mark Wilcox and Mikki Xayiya.

Mr Hennig’s Palladino investment vehicle was later mired in controversy over a $25m loan to the government of Guinea which was reportedly made in return for a potential 30 per cent slice of the mineral-rich country’s national mine company. Guinea eventually cancelled the deal and repaid the loan after negative publicity about it in the British press.

It seems they have exited the real estate foreclosure business.

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