United States v. Cohen

Decision Date07 May 2015
Docket NumberCRIMINAL NO.: WDQ-14-0310
CourtU.S. District Court — District of Maryland

Jeffrey Brian Cohen is charged with wire fraud,1 aggravated identity theft,2 money laundering,3 making false statements to an insurance regulator,4 and obstructing justice.5 ECF No. 78 (third superseding indictment). Pending are pretrial motions.6 A hearing was held on May 4, 2015.7 For the following reasons, the motions will be resolved as discussed herein.

I. Background
A. Facts8

From 2008 to 2013, Cohen operated a group of related insurance companies. ECF No. 284 at 1.9 Until August 2013, Cohen was the President, Chairman of the Board, and majority owner of the companies. Id. at 1-2. In 2012, the Delaware Insurance Commissioner ("Commissioner") began investigating Indemnity's financial stability. Id. at 2. Delaware regulators were concerned about Indemnity's ability to collect $20 million owed by IDG and $5.1 million purportedly on deposit at Susquehanna Bank. Id.; Gov. Ex. 1 (January 2, 2014 Delaware Court of Chancery Opinion, attached to the search warrant affidavit)(hereinafter "Del. Ct. Chancery Op.") at 3. The $20 million receivable potentially overstated Indemnity's assets and "should have been written down or written off as uncollectable." ECF No. 284 at 2 n.l.

In May 2013, the Commissioner obtained a seizure order from the Delaware Court of Chancery authorizing the regulatory takeover of Indemnity. Del. Ct. Chancery Op. at 1-2. In July 2013, after examining Indemnity under the seizure order, the Commissioner filed a petition to liquidate Indemnity "in light of (i) acts of fraud by Cohen and (ii) Indemnity's unsound financial condition." Id. at 3. Thereafter, Delaware Department of Insurance representatives and Cohen used office space at 950 Ridgebrook Road, Sparks, Maryland ("950 Ridgebrook Road"). ECF No. 284 at 3.

On August 5, 2013, Cohen resigned as Indemnity's Chairman of the Board, and the Board removed him from officer positions. Del. Ct. Chancery Op. at 8. "[A]fter August 5, Cohen's only connection to Indemnity was as the owner of [RB], an entity that purports to own 99% of Indemnity's equity by virtue of having been issued a zero-dollar insurance policy by Indemnity." Id.10 On September 1, 2013, "Cohen was banished" from 950 Ridgebrook Road. ECF No. 76 at 5.

In September 2013, Indemnity sought to modify the seizure order because Cohen had interfered with the company "and the efforts of the Commissioner." Del. Ct. Chancery Op. at 9. Theamended seizure order "clarif[ied] that Cohen was prohibited from accessing Indemnity's IT systems and from communicating with Indemnity's employees and business associates." Id. at 10. Although the seizure order "had granted the Commissioner title and control over all of Indemnity's assets," the amended seizure order confirmed that those assets "included intangible assets like Indemnity's information systems and electronic records." Id. at 11.

On November 1, 2013, the U.S. Attorney's Office for the District of Maryland began a criminal investigation of Cohen. ECF No. 284 at 6.11

On April 30, 2014, FBI Special Agent Jennifer Perry obtained Jeffrey Miceli's consent to search 950 Ridgebrook Road. ECF No. 299-1 at 1-3. Miceli acted as the Commissioner's agent following Indemnity's and IDG's regulatory takeover. ECF No.299 at 1.12 During the search agents took video and still photographs of the premises and received a copy of the floor plan, a "server inventory[,] and printouts of [miscellaneous] network details." ECF No. 299-1 at 2, 4.

On May 5, 2014, Agent Perry obtained a warrant to search 950 Ridgebrook Road for evidence of mail and wire fraud and false statements to insurance regulators. Gov. Ex. 1 at 6. The affidavit supporting the search warrant incorporated the January 2, 2014 Delaware Court of Chancery Opinion by Vice Chancellor Laster sanctioning Cohen for violating previous orders about the seizure of Indemnity, and the April 9, 2014 Delaware Supreme Court Opinion affirming the Court of Chancery's Orders. See Gov. Ex. 1.

On May 8, 2014, federal agents conducted the search and seized about 50 boxes of documents. ECF No. 284 at 6-7; Gov. Ex. 2. The documents "were taken to the FBI document laboratory, scanned, and produced to [Cohen] in searchable electronic format." ECF No. 284 at 7. On site procedures were used "to ensure that consideration was shown to the possibilityof obtaining attorney-client privileged material." Id. The list of items seized shows certain documents marked as "TAINT DOCUMENTS." Gov. Ex. 2 at 3.13

On June 24, 2014, Postal Inspector Kalliopi Tserkis-Mullins14 of the United States Postal Inspection Service obtained a warrant to search Cohen's home at 2419 Long Ridge Road, Reisterstown, Maryland ("2419 Long Ridge Road") for evidence of mail and wire fraud and false statements to insurance regulators. Gov. Ex. 3 at 5.15 The search warrant authorizedthe seizure of various documents and records and computers, "related peripheral[]" devices, and electronic data "pertaining to the" list of items to be seized. Id. at 3-4. The affidavit stated the procedure by which Cohen's electronic data would be reviewed to minimize the risk that information not subject to the search warrant would be viewed. Id. at 18-19.16

On June 25, 2014, federal agents executed the search warrant. ECF No. 2 84 at 8.17 According to the government, "Cohen inquired why the agents were executing the warrant thatday." Id. As in the search of 950 Ridgebrook Road, "procedures were employed to minimize the risk that the investigative team had access to attorney-client privileged information." Id. During the search, agents found notes containing a "target list" that included "DE Folks" and "MD government and judges," a recently-executed will, survivalist gear, firearms, financial and corporate records, and electronic evidence. Id.; Gov. Ex. 4; Hr'g Tr. at 16.

That day, Cohen was arrested at his home and given his Miranda warnings. ECF No. 284 at 8; Hr'g Tr. at 11-12. Cohen signed a written Miranda waiver form and made a lengthy statement to Agents Costello and Perry about "major financial frauds." Gov. Ex's. 5, 6 at 18.18 During the interview, the scope of the investigation changed when agents executing the search warrant alerted Agents Perry and Costello that wigs, masks, survivalist gear, notebook, firearms, and Cohen's last will and testament had been found in the home. Hr'g Tr. at 14-15. Agents Perry and Costello asked Cohen about those items,and whether he had planned to harm Delaware officials or other government personnel. Id. at 15-17.

At the end of the interview, Cohen signed a written consent form authorizing the search of his Lexus car. Gov. Ex. 7; Hr'g Tr. at 18.19 The consent form notified Cohen that he had "the right to refuse" consent and to "require us to secure a search warrant," and "any incriminating evidence . . . may be used against [him] in court." Gov. Ex. 7. Cohen later added his Mercedes car to the consent form; however, nothing was seized from that car. Id.; Gov. Ex. 9; ECF No. 284 at 11.20

Inside the Lexus agents found, attached to a clipboard, a Google Maps printout of directions from Baltimore to the Delaware Lieutenant Governor's home and from there to Vice Chancellor Laster's home. ECF No. 284 at 11; Hr'g Tr. at 21-22. Inside the clipboard were about 119 pages of computer printouts and handwritten notes. ECF No. 284 at 11. Agents also found a voice recorder, spotting scope, rifle tripod, and ammunition. Id.; Gov. Ex. 8.21

After agents found an empty 9mm Smith & Wesson pistol case at Cohen's home, and Cohen told agents the firearm was at "Checks N' Keno," agents obtained a warrant to search the business premises located at 6408 Reisterstown Road. Gov. Ex. 10. Agents seized the pistol, electronic media, and documents. Gov. Ex. 11.

According to the government, agents continued to subject the seized evidence to measures designed to protect the attorney-client privilege. ECF No. 284 at 12.

B. Procedural History

On June 24, 2014, a grand jury indicted Cohen on five counts of making false statements to an insurance regulator under 18 U.S.C § 1033(a). ECF No. 1.

On June 27, 2014, Magistrate Judge Beth P. Gesner ordered Cohen detained pending trial. ECF No. 12.22

On September 16, 2014, a superseding indictment charged Cohen with five counts of wire fraud in violation of 18 U.S.C. § 1343, two counts of money laundering in violation of 18 U.S.C. § 1957, and five counts of making false statements to aninsurance regulator in violation of 18 U.S.C § 1033(a). ECF No. 26. The superseding indictment "expanded the scope of the charges from a six month time span involving false statements to one regulatory authority about one bank to a five-year wire fraud scheme." ECF No. 117-1 at 3. It included forfeiture allegations of $100,000,000.00 in connection with the wire fraud charges, $866,667.67 in connection with the money laundering charges, and $100,866,666.67 in substitute assets. ECF No. 26 at 15-16.

On November 5, 2014, the government obtained warrants to seize the following property subject to forfeiture: (1) a toy collection; (2) Fidelity investment accounts; (3) jewelry found at 2419 Long Ridge Road; (4) personal property found at 950 Ridgebrook Road; (5) four M&T Bank accounts; and (6) nine Susquehanna Bank accounts. See ECF Nos. 86-1 to 86-6 (seizure warrant applications). On November 12, 2014, the government obtained warrants to seize (7) the monetary value of a Cincinnati Life Insurance policy; and (8) a 2012 Infiniti G37 coupe ("Infiniti G37"). See ECF Nos. 86-7, 86-8. The seizure warrant applications sought assets constituting proceeds of the offenses23 and substitute assets.24

On November 17, 2014, after a hearing, Magistrate Judge Timothy J. Sullivan granted Cohen's appointed counsel's motion to withdraw and found that Cohen had made a "knowing,...

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