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Wall Street Journal / Biz - Money

Ex-Och-Ziff Deal Maker Faces Charges Tied to Alleged African Bribery Scheme

Michael L. Cohen, once a highflying deal maker at hedge-fund giant Och-Ziff Capital Management Group LLC, is facing criminal charges in connection with an alleged scheme that yielded one of the largest foreign bribery settlements in U.S. history.


By

Maria Armental

Och-Ziff Capital Management CEO Daniel Och attended an event last month in Mountain View, Calif.Photo: Kimberly White/Getty Images

Michael L. Cohen, once a highflying deal maker at hedge-fund giant Och-Ziff Capital Management Group LLC, is facing criminal charges that he defrauded an Och-Ziff client in an alleged scheme connected to the firm’s investments in Africa, federal prosecutors said.

According to an indictment filed in Brooklyn federal court in October and unsealed Wednesday, Mr. Cohen and others conspired to defraud the client—identified as a U.K.-based charitable foundation—by recommending investments in the African mining sector without disclosing that he stood to receive millions of dollars in the transaction.

In addition to fraud and conspiracy charges, Mr. Cohen is accused of making false statements and obstructing justice, and of allegedly working to conceal details of the transaction from U.S. securities investigators and a federal grand jury.

Ronald White, a lawyer for Mr. Cohen, denied the charges.

“Mr. Cohen has done nothing wrong and is confident that when all the evidence is presented, it will be shown that the government’s charges are baseless,” Mr. White wrote in an emailed statement.

Mr. Cohen served as head of Och-Ziff’s European office and had oversight of the fund’s investments in Europe, the Middle East and Africa. He resigned from Och-Ziff in 2013 amid a federal investigation into whether the firm had paid bribes to African governments to get business. The U.S. Foreign Corrupt Practices Act bars firms doing business in the U.S. from giving money or items of value to foreign officials for business.

The indictment is the latest development in multiple yearslong U.S. investigations into Och-Ziff’s activities in Africa. The firm itself isn’t accused of wrongdoing in the matter, which relates to Mr. Cohen’s alleged schemes to conceal conflicts of interest and profit personally from an investment in an African mining company.

According to the indictment, Mr. Cohen induced the unnamed charitable foundation to buy shares in an African mining company without disclosing that one of the proposed sellers of shares personally owed Mr. Cohen $18 million, for a loan to buy a luxury yacht. Mr. Cohen and the seller—an unnamed co-conspirator in the indictment—allegedly arranged for Mr. Cohen to keep $4 million from the sale of the shares.

The federal investigation led last year to a civil complaint by the Securities and Exchange Commission against Mr. Cohen and another former Och-Ziff executive. The SEC accused them of spearheading a bribery scheme that allegedly funneled millions of dollars in bribes to high-level officials in African countries to secure mining assets and other deals.

In 2016, Och-Ziff agreed to pay $412 million to settle related civil and criminal claims. The firm also reached a three-year deferred prosecution agreement with federal prosecutors and agreed to bolster its internal controls, while an African subsidiary​pleaded guilty in Brooklyn federal court to conspiracy to commit bribery. The deferred prosecution deal only covered the firm.

Mr. Cohen has asked in a court filing that the SEC complaint against him be dismissed, citing timing and jurisdictional issues and saying that the regulator “relies on speculation and innuendo for its core premise that Mr. Cohen knew of any violations of law.”

Daniel Och, a former Goldman Sachs Group Inc. trader who founded the hedge-fund management firm and serves as its chairman and chief executive, agreed to pay a civil sanction of $2.2 million to the SEC for a record-keeping violation without admitting or denying the allegations.

— Scott Patterson and Michael Rothfeld contributed to this article.

Write to Maria Armental at maria.armental@wsj.com

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