A federal appeals court in San Francisco today upheld the conviction and 22-year sentence of a former Belvedere businessman who defrauded investors of $29.7 million.
Some of the victims of Samuel “Mouli” Cohen were patrons of the now-defunct Vanguard Public Foundation, including actors Danny Glover and Harry Belafonte.
The San Francisco-based foundation, which supported progressive causes such as civil rights and anti-poverty programs, closed in 2009 as a result of financial mismanagement and Cohen’s fraud.
Federal prosecutors alleged in a sentencing brief last year Cohen caused the collapse of Vanguard because its donors could no longer afford to support it after they lost millions of dollars they invested with Cohen in a phony deal concerning an electronic jukebox company.
Cohen, 55, was given the prison term by U.S. District Judge Charles Breyer in San Francisco last year after a jury convicted him in 2011 of 29 counts of wire fraud, money laundering and tax evasion.
Breyer ordered him to pay $29.7 million in restitution to more than 60 victims, including $410,000 to Belafonte and $2,758,221 to Glover.
The conviction and sentence were unanimously upheld by a three-judge panel of the 9th U.S. Circuit Court of Appeals.
According to the court, Cohen invited foundation donors to buy shares in an digital jukebox company he co-founded, Ecast Inc., and told them the share value was about to skyrocket because the company was soon to be acquired by Microsoft Inc.
The investors were told they could gain profits both for themselves and for donations to the foundation.
In fact, Cohen had been terminated from his position in Ecast and there was no deal in the works with Microsoft or any other buyer, according to the court. Prosecutors said he spent millions of dollars in investors’ money on lavish personal expenditures such as private jets, luxury cars, and European and Caribbean vacations.
Cohen told investors the purported deal was highly confidential and no one should do research on it, according to a 2010 indictment.
Among other appeal claims, Cohen argued to the circuit court that he shouldn’t have been given an increased prison term recommended under federal sentencing guidelines for cases involving “a misrepresentation that defendant was acting on behalf of a charitable…organization.”
Cohen argued the investors knew he wasn’t an agent or representative of Vanguard.
But the appeals court, in an opinion written by Judge Morgan Christen, said Cohen’s actions “fall easily within the ambit” of the sentencing enhancement.
“By approaching Vanguard Foundation donors, Cohen specifically extended his offer to individuals he knew to be inclined toward charitable giving, and he enticed them with promises that investing in the purchase of his Ecast shares would enable them to make even larger charitable gifts,” Christen wrote.
“Cohen pretended to be interested in diverting potential profit to charity and represented that the donors’ investment would inure to the benefit of a charity,” the court said.
Cohen took in the investors’ money between 2002 and 2008, according to the indictment.
In a separate fraud-within-a-fraud case, former foundation executive director Hari Dillon pleaded guilty before Breyer in 2010 to two counts of wire fraud and two counts of money laundering and admitted to embezzling at least $2.5 million between 2004 and 2007 from foundation patrons who had previously invested money with Cohen.
Dillon admitted in his plea agreement that the embezzled money came from additional funds he solicited from the donors by telling them Cohen needed loans to pay the costs of completing the supposed deal.
But Dillon admitted that he siphoned off $2.5 million of the intended loan money for himself. Prosecutors said he spent the funds on expensive hotels, restaurants, limousines, credit card bills and his children’s tuition.
As part of his plea agreement, Dillon aided prosecutors in investigating Cohen and testified against Cohen in his 2011 trial.
In January, Breyer sentenced Dillon to three years and four months in prison.
Breyer said Dillon’s actions were “simply inexcusable” and said he had “ruined the foundation,” but said he was sentencing Dillon for his own actions and not those of Cohen or the former foundation’s board, which Breyer said had been negligent in watching over Vanguard.
Julia Cheever, Bay City News