SAN FRANCISCO – American- Israeli hi-tech executive Samuel “Mouli” Cohen received one of the harshest sentences ever meted out in a white-collar crime case on Monday, for having defrauded victims of approximately $31 million.

Found guilty on 29 of 35 counts of wire fraud, money laundering and tax evasion in November 2011, Cohen was sentenced in the United States District Court for the Northern District of California to 22 years in prison.

The fraud he perpetrated led to the collapse of the Vanguard Public Foundation, a privately funded non-profit civil rights and social justice organization with ties to actor Danny Glover and singer Harry Belafonte. Cohen was convicted of soliciting investments between 2002 and 2008 from 50 individuals, most of them associated with Vanguard, and falsely claiming that Microsoft was poised to acquire Ecast, the electronic jukebox company of which he was co-founder and CEO.

Cohen lied to investors, telling them that once Ecast was acquired, its shares would be exchanged on a 1-for-1 basis with Microsoft shares.

According to a press statement from Melinda Haag, US attorney for the Northern District of California, “Cohen falsely represented that this investment would provide an opportunity for the investors to contribute a substantial amount of the profits to the Vanguard Public Foundation non-profit organization.”

He also falsely told investors that both a US governmental regulatory agency and the EU required payment of costs associated with their review and approval of the acquisition.

He extracted payment for this from his investors, warning them that they would lose their shares if they did not cover the costs. He falsely assured them that larger investors, including Silicon Valley venture capital firms, were also invested and paying their pro-rata share of these bonds and fees.

Prosecutors had asked the court to sentence Cohen to 30 years in prison. “The nature and circumstances of defendant’s offenses of conviction – multiple counts each of wire fraud, money laundering and tax evasion – warrant an extremely severe sentence,” they wrote in their sentencing memo to the court. “Defendant set the stage for his fraud schemes by manufacturing an elaborate charade to depict himself as a successful businessman so his victims would be more likely to part with money. He pretended to have the means and the genuine interest to help those less fortunate than he, and then he used a scheme he had practiced on other victims to attack a non-profit organization and its donors. Instead of going to help those in need, these victims’ tens of millions went to [the] defendant, who proceeded to spend the millions on a lifestyle remarkable for its opulence.”

The now-54-year-old Cohen is the son of Russian immigrants to Israel who raised him in poor circumstances in Jerusalem. He reportedly became a US citizen after arriving here in 1987. Prosecutors alleged that Cohen used $6m.

of the total out of which he had bilked Vanguard and other investors to jet around the country in a private plane, giving rides to celebrities like singer Elton John and actresssinger Jennifer Lopez.

He made it seem that he was a successful and wealthy businessman by renting a mansion in the exclusive town of Belvedere, just north of San Francisco in Marin County, for $15,000 per month. However, he told people that he owned the house, which he decorated with copies of famous art works by Picasso, Miro and Matisse – telling guests that they were originals.

Cohen also took lavish vacations to Europe and bought hundreds of thousands of dollars’ worth of jewelry, a Rolls Royce, an Aston Martin and a Jaguar. In addition, he used some of the investors’ money to help his wife publish a cookbook titled The Kosher Billionaire’s Secret Recipe. Despite all this, he reported very little income on his tax returns and paid no taxes.

His defense attorneys had asked for a sentence of no more than nine years.
“A 30-year sentence is excessive for a 53-year-old first-time offender, who has a long history of selfless acts and entrepreneurial innovation,” they asserted in a court document.

They described his character as upstanding, mentioning large sums he had donated to charity and recounting how back in Israel, even “at a young age, Mr. Cohen took after-school jobs in order to support his parents. In those jobs, Mr. Cohen was ‘always hard working, caring and very generous.’ Through these jobs, Mr. Cohen was instilled with an appreciation for the value of hard work and a sense of responsibility for helping others.”

Attorney Marcus Topel of Kasowitz, Benson, Torres & Friedman LLP, told The Jerusalem Post by phone that they were planning to file an appeal later this week.

“We are going to ask for a retrial,” he said. “It’s our view that the fundamental and exculpatory evidence was not presented to the jury.”

In the meantime, the sentencing decisions are not yet complete. Judge Charles R. Breyer has set a hearing for May 3 to consider fines against Cohen, which could reach a total of $60m.

Legal documents provided courtesy of www.justia.com

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