New York Times
Around the time that Lauren Holiday helped the United States soccer team win the 2015 Women’s World Cup, she and her husband, Jrue Holiday, the N.B.A. player, visited the Southern California office of a securities broker who had come highly recommended for making prudent long-term investments.
Experienced? The broker had two decades with blue-chip firms like Morgan Stanley, Wells Fargo and Merrill Lynch. Connected? He said he specialized in assisting athletes in all sports, with a client list of 70 current and former pros.
But instead of pursuing a “conservative to moderate investment strategy,” the Holidays now allege, the broker, Darryl M. Cohen, steered $2.3 million of their money to “dubious individuals and entities” — and now most of the money is gone.
Other athletes said they had a similar experience. Chandler Parsons and Courtney Lee, who also played in the N.B.A., said that Cohen and Morgan Stanley improperly diverted $5 million and $2 million of their investments and that most of that money has similarly disappeared. So Parsons, Lee and the Holidays have filed claims against Morgan Stanley with the Financial Industry Regulatory Authority, a self-regulatory organization known as FINRA which oversees brokerage firms.
“I feel violated and taken advantage of,” Parsons said in a statement provided to The New York Times via Phil Aidikoff, a longtime securities lawyer in Beverly Hills, Calif., who represents the athletes as well as another claimant, in separate cases filed last year.
The athletes’ cases are still months away from being resolved through a settlement or an arbitration hearing. Yet FINRA, the industry regulators, in a separate but dramatic step last week, barred Cohen from the securities industry. By refusing to cooperate with FINRA’s own inquiry into the “improper use of customer funds,” FINRA said, Cohen had “stymied an investigation into very serious potential misconduct.”
Officials at Morgan Stanley declined to comment. But in a regulatory filing, the firm said it had terminated Cohen in March 2021 because of allegations involving “transactions not disclosed to or approved by Morgan Stanley.”
When reached on his cellphone, Cohen said, “I’ll get back with you.” He did not respond to a follow-up message, and his lawyer, Brandon S. Reif, said, “No comment.”
FINRA cases are typically confidential, and documents are not publicly available. Aidikoff, citing pending litigation, declined to make his clients available for interviews to elaborate on their cases. Still, the fact that the athletes wanted to go public underscores their determination to “ensure it doesn’t happen to someone else,” Parsons said, and to encourage other possible victims to come forward.
Lee said in a statement that he believed Morgan Stanley would put his interests first because it had been around for many years. “I was wrong,” he said.
The Holidays, who have been active philanthropists, said: “We are all susceptible to being exploited by people like Darryl Cohen. We are disappointed that a company as well known as Morgan Stanley would enable someone like Mr. Cohen to be in a position that allowed him to move money out of our accounts the way that he did.”
There is no shortage of stories about prominent athletes being duped or getting entangled in risky financial schemes. An Ernst & Young report last year found that professional athletes reported almost $600 million in fraud-related losses from 2004 to 2019. The “incidence of fraud in sports is trending in the wrong direction,” the report said.
But Parsons, Lee and the Holidays are different, Aidikoff said, because they simply did what many ordinary investors often do: They relied on a big-name brokerage to make low-risk, long-term decisions.
Jrue Holiday, 31, won an N.B.A. title with the Milwaukee Bucks and an Olympic gold medal with the U.S. basketball team in Tokyo last year. He signed a four-year extension in April 2021 for $134 million. He met his wife, then Lauren Cheney, while they were at U.C.L.A., and her soccer career led to endorsement deals with Under Armour and Chobani.
Parsons, 33, a sharpshooter whose best seasons came with the Houston Rockets and Dallas Mavericks, retired in January, two years after he was seriously injured in a car accident caused by a drunken driver. His last contract, signed in 2016, was a four-year deal worth $94 million, and he has been active in Los Angeles real estate.
Lee, 36, last played for the Mavericks, his eighth team, in 2020, after signing a four-year, $48 million contract in 2016 with the Knicks. He had a serious calf injury in 2020, but played golf last summer in Thousand Oaks, Calif., with Parsons, Green Bay Packers quarterback Aaron Rodgers and others.
The athletes apparently heard about Cohen through basketball circles, including a former N.B.A. player who had also been an assistant coach, Aidikoff said.
Cohen worked alongside his father, Marc Cohen, in the same Morgan Stanley branch in Westlake Village, Calif. His father has not been accused of wrongdoing, and remains with the firm, records show.
The Holidays first met the younger Cohen in mid-2015. For Parsons, it was late 2015, and for Lee, it was sometime in 2017, according to their statements to FINRA.
In mid-2020, a business adviser to Parsons noticed oddities about the Morgan Stanley investments. After Parsons contacted Aidikoff’s firm, lawyers discovered that Cohen and Morgan Stanley had apparently sent checks and wire transfers from Parsons’s accounts to questionable entities, including a purported charity which built a basketball court in Cohen’s backyard.
All the athletes invested in life insurance policies based on deceptive information provided by Cohen, and used an accountant recommended by Cohen. But the accountant was actually an insurance salesman. And the person who signed the athletes’ tax documents — the insurance salesman’s father — was a lawyer who had never met or spoken with the athletes, Aidikoff said.
Cohen has been the subject of a handful of other complaints, according to regulatory records. In March 2021, Nyjer Morgan, an outfielder who played for four Major League Baseball teams, settled a claim for $125,000 over the improper use of a “liquidity access line to loan funds to outside business entities.”
One former client of Cohen’s, a retired professional athlete, told The Times that Cohen had won him over through word of mouth and then by a sales pitch over dinner that included laminated reports. But a year later, when the client noticed financial transactions that looked unfamiliar — and lost tens of thousands of dollars in the process — he was alarmed, and told his agent to immediately find another broker.
“It’s painful and it doesn’t leave you,” said the athlete, who spoke on condition of anonymity to avoid reliving a difficult private experience in the public eye.