USA v. Samuel Mouli Cohen - October 13, 2010 Filing Opposing Bail

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

MELINDA HAAG (CASBN 132612)United States Attorney

BRIAN J. STRETCH (CASBN 163973)Chief, Criminal Division

JEFFREY R. FINIGAN (CASBN 168285)Assistant United States Attorney

450 Golden Gate Ave., Box 36055San Francisco, California 94102Telephone: (415) 436-7200Fax: (415) 436-7234email: [email protected]

Attorneys for Plaintiff

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

UNITED STATES OF AMERICA,

Plaintiff,

v.

SAMUEL COHEN, a/k/a Mouli Cohen,

Defendant.

))))))))))))

No. CR 10-0547 SI

UNITED STATES’ OPPOSITION TODEFENDANT’S MOTION TO VACATEDETENTION ORDER AND TO ADMITDEFENDANT TO BAIL

Date: October 19, 2010Time: 10:00 a.m.Court: Hon. Susan Illston

U.S. Opp. Re BailCR 10-0547 SI

Case3:10-cr-00547-SI Document25 Filed10/13/10 Page1 of 17

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

TABLE OF CONTENTS

I. Burden of Proof and Factors to Consider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II. Factual Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

A. The Defendant’s Scheme To Defraud Underlying The Indictment . . . . . . . . . . . . . . . . . . 1

B. The Detention Hearing Before Judge Nagle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

C. The Defendant’s Phone Calls Since Being Arrested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

D. The Defendant’s Proposed Bail Packages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

III. There Are Several Misrepresentations In The Defendant’s Motion . . . . . . . . . . . . . . . . . . 8

A. The Defendant Has Never Cooperated With The Government . . . . . . . . . . . . . . . . . . . . . 8

B. Many Statements in the Motion are False and Others are Irrelevant . . . . . . . . . . . . . . . 10

IV. The Defendant Is Properly Detained And The Motion Should Be Denied . . . . . . . . . . . . 12

V. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

U.S. Opp. Re BailCR 10-0547 SI i


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

TABLE OF AUTHORITIES

FEDERAL CASES

United States v. Evans, 62 F.3d 1233 (9th Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

United States v. Gentry, 455 F. Supp. 2d 1018 (D. Ariz. 2006) . . . . . . . . . . . . . . . . . . . . . . . . . 13

United States v. Koenig, 912 F.2d 1190 (9th Cir. 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

United States v. Kouyoumdjian, 601 F. Supp. 1506 (C.D. Cal. 1985) . . . . . . . . . . . . . . . . . . . . . 1

United States v. Madoff, No. 09-1025, 2009 WL 728379, at *2 (C.A. 2 (N.Y) Mar. 20, 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

United States v. Motamedi, 767 F.2d 1403 (9th Cir. 1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

United States v. Reynolds, 956 F.2d 192 (9th Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

United States v. Stanford, 630 F. Supp. 2d 751 (S.D. Tex 2009) . . . . . . . . . . . . . . . . . . . . . . . . 13

FEDERAL STATUTES

18 U.S.C. § 3142(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

18 U.S.C. § 3142(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 8

U.S. Opp. Re BailCR 10-0547 SI ii


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

The defendant has filed a Motion to Vacate Detention Order and Admit Defendant to

Bail (the “Motion”). The government opposes the Motion on the basis that the detention order

by United States Magistrate Judge, Margaret Nagle, of the Central District of California, was

well-reasoned and based on plentiful facts establishing a serious risk of flight and danger to the

community. Further, additional information set forth herein combined with the fact that the

defendant’s proposed bail package is now significantly inferior to the one proposed to Judge

Nagle should compel this Court to deny the Motion.

I. Burden of Proof and Factors to Consider

Judge Nagle ordered the defendant detained based on findings that he is both a flight risk

and a danger to community. Exhibit A to Finigan Declaration filed concurrently herewith. The

defendant’s request to vacate that order must be made to this Court, since this Court has original

jurisdiction of the matter. United States v. Evans, 62 F.3d 1233, 1238 (9th Cir. 1995). This Court

now reviews Judge Nagle’s order de novo. United States v. Koenig, 912 F.2d 1190, 1191 (9th

Cir. 1990). Detention is appropriate where a defendant is either a danger to the community or a

flight risk; it is not necessary to prove both. United States v. Motamedi, 767 F.2d 1403, 1406

(9th Cir. 1985); United States v. Kouyoumdjian, 601 F. Supp. 1506, 1508-10 (C.D. Cal. 1985).

The government bears the burden of showing that the defendant is a flight risk by a

preponderance of the evidence and that the defendant poses a danger to the community by clear

and convincing evidence. Motamedi, 767 at 1407; 18 U.S.C. § 3142(f). Applying these

standards, the Court must determine whether there are conditions of release that will reasonably

assure the appearance of the defendant and the safety of any other person and the community.

18 U.S.C. § 3142(g). The Court must consider: (1) the nature and circumstances of the offense;

(2) the weight of th evidence; (3) the history and characteristics of the defendant; and (4) the

nature and seriousness of the danger posed by the defendant’s release. 18 U.S.C. § 3142(g).

II. Factual Background

A. The Defendant’s Scheme To Defraud Underlying The Indictment

Although long running and complex in its execution, the defendant’s scheme to defraud

was relatively straightforward on its face. In short, the defendant defrauded victims by selling

U.S. Opp. Re BailCR 10-0547 SI 1


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

them shares of Ecast stock for $2.00 or $3.50 per share while lying to them that Ecast was about

to be acquired by Microsoft. All told, the victims purchased 2,211,500 shares of Ecast for a total

of $5,854,000 between October 2002 and July 2003. During the time the defendant was selling

these Ecast shares to the victims, he was fully aware that Ecast was not going to be acquired by

Microsoft and that the Ecast shares were worth less than 10 cents each. Further, based on

records compiled by Ecast related to the defendant’s stock transfers during the time period in the

indictment, the defendant sold more shares of Ecast than he possessed. Between November

2000 and May 2003 the defendant sold more than 6,000,000 shares of Ecast – and this figure

does not even include the Ecast shares the defendant fraudulently sold to the victims underlying

the indictment or his father-in-law. According to various stock purchase agreements, the most

Ecast shares the defendant ever possessed was 5,000,000 or 6,000,000. Either way, the

defendant sold millions of shares of Ecast beyond what he owned.

After the initial investments, the defendant advised one victim, Hari Dillon, who in turn

advised other investors, that Microsoft’s acquisition of Ecast was final pending regulatory

approval by the United States and EU. In 2004, the defendant began telling Dillon that there

were certain fees involved with obtaining U.S. and EU approval and that the investors would

have to pay their share of the costs and if they did not pay their share of the fees that they would

lose their shares and their investments. The defendant regularly made these demands of Dillon

and the investors from approximately July 2004 through January 2008. All told, the victims paid

another approximately $30,000,000 (on top of the original investment) towards alleged fees and

costs associated with finalizing Microsoft’s alleged acquisition of Ecast.

In late 2008, the victims finally discovered that the defendant had been lying about

Microsoft’s acquisition of Ecast. Dillon and two other victims, met with the defendant in

approximately December 2008 and the defendant once again repeated his lies about the

Microsoft/Ecast deal coming to a close as soon as EU approval was finalized. Dillon and the

other victims confronted the defendant that they knew there was no such deal and the meeting

ended shortly thereafter. A number of civil lawsuits were filed in connection with the

defendant’s fraudulent scheme and they have been consolidated in San Francisco Superior Court



1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

under Case No. 09-488442 and are pending. Within a few months of this confrontation in

December 2008, the defendant vacated his rented mansion in Belvedere and moved to Beverly

Hills to avoid the victims from the indictment, nearly all of whom live in the Bay Area.

The defendant was indicted on July 15, 2010, and a no-bail warrant issued with the

indictment. The defendant was arrested on the warrant in Los Angeles in early August of 2010.

B. The Detention Hearing Before Judge Nagle

On August 12, 2010, a few days after his arrest, the defendant had a detention hearing in

Los Angeles before Judge Nagle. At the detention hearing the government set forth most of the

facts underlying the indictment and pointed out the following: (1) the defendant has sent more

than $3,000,000 to Swiss bank accounts within the last 2 years; (2) the defendant has perpetrated

this same scheme to defraud on other individuals (including his father-in-law from whom he

stole more than $7,000,000 beginning in July 2003); (3) the defendant and his wife have lived an

extravagant and luxurious lifestyle financed by the proceeds of the defendant’s fraud; (4) the

defendant is an Israeli and U.S. citizen; (5) the defendant was (prior to his incarceration) a

frequent international traveler; (6) despite reaping millions from his schemes, the defendant has

failed to pay taxes for years; (7) the defendant is 52 years old and his sentence exposure is

decades by statute and more than 15 years by the guidelines and will include millions of dollars

in restitution; (8) the defendant has no ties to the NDCA since moving away in 2009 to get away

from the victims; and (9) in addition to the fraudulent scheme, the government has evidence that

the defendant has walked away from numerous significant debts and simply has no conscience

when it comes to taking people’s money.

For example, with respect to this last point, as of July 20, 2010, the defendant owed

Prime Jet $275,000 for private jet rentals, Jet Edge $20,000 for private jet rentals, AmEx

$170,000 for a variety of personal expenses, and Javier Burillo several million dollars for

defrauding him in connection with investments unrelated to Ecast. Since the hearing, the

government has also learned that the defendant has refused to pay his former counsel, the

Skadden Arps firm, millions of dollars in fees and costs. See fn 3 infra.



1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

As the transcript from the hearing shows, Judge Nagle’s main concern was the amount of

money the defendant stole and the fact that he refused to account for any of it to the Court.

Judge Nagle asked defense counsel at least four separate times “where is the money” and she

never received an answer. Exhibit A to Defense Motion at 14-17. Judge Nagle stressed that the

lack of information from the defendant regarding the money “creates a real question for this

Court with respect to is there money available elsewhere.” Id., at 16. “How come he’s got

nothing to post, the wife’s got nothing to post? The Court is very concerned.” Id., at 17.

Judge Nagle’s concerns were entirely reasonable and logical and this Court should have

the same ones. And, since the defendant continues his refusal to explain what he did with tens of

millions of dollars, this Court should arrive at the same conclusion as Judge Nagle. Judge Nagle

found that “the bail resources being offered are [not] adequate to mitigate the risk of flight in this

case.” Id., at 34.1 Judge Nagle articulately summed up the core reason for detaining the

defendant:

What the Court is really focused on is the access to money. The access to moneytypically brings with it the access to evade all of the constraints put upon someone thatshould limit their ability to flee. Where there is a lot of money at stake or to be had oraccessible to a defendant, the ways of fleeing are greater than they are to someonewithout that kind of access to funds. Id., at 39.

Judge Nagle also found the defendant poses a danger to the community: “the defendant

poses a risk to the safety of other persons or the community because of the seriousness of the

allegations in the indictment which suggest that he presents an economic danger to the

community.” Id., at 41.

C. The Defendant’s Phone Calls Since Being Arrested

Since being taken into custody, the defendant has been held in a number of different

facilities between Los Angeles and the NDCA. Along the way, the defendant’s phone calls have

1 Although Judge Nagle did not take it into consideration, this Court should be awarethat in July of 2010, the defendant offered to settle the aforementioned civil litigation related tohis fraudulent scheme for $10,000,000. Defense Exhibit A at 28-29. Thus, he has either hiddenat least $10,000,000 from his schemes or else he was lying, as usual, and never intended to settlethe litigation, but was simply prolonging the process to suit his agenda and costing everyoneinvolved more money and time.



1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

been subject to recording.2 In those recorded calls, the defendant has made many statements

indicating that he has multiple connections in Israel and Russia, he is obsessed with getting out

of custody, and he has significant hidden assets to access if he is released.

On August 14, 2010, the defendant called Yossi (phonetic) in Israel. During that

conversation, the defendant discussed money with Yossi and Yossi advised the defendant that

“Zer (phonetic) transferred 70 and he’s going to transfer another 55 in the next few days. Yossi

says that the quarter of a million was transferred.” The defendant told Yossi that he [the

defendant] had money for his civil proceedings but that he does not have any for his criminal

proceedings.3 The defendant also repeatedly makes statements about needing to make bail. For

example, he stated that they need a really good lawyer so “they can get bail.” While discussing

money, Yossi told the defendant that he [Yossi] would feel more confident if he “had the deed of

the [unintelligible] in his hand” and then the defendant instructed Yossi “not to talk about that on

the phone.” The defendant told Yossi to contact people in Israel and a Russian Rabbi to make

efforts to obtain money. Yossi suggested someone from Africa, whose name Yossi could not

remember. The defendant commented that the Rabbi can make it happen because he has

“connections.” The defendant also told Yossi to advise the Rabbi that “they froze all the assets.”

Also on August 14, 2010, the defendant spoke to his ex wife, Yael, and asked her

whether they could “talk to people from the market from which it is hard to obtain financing.”

The defendant told Yael he was “willing to give all his assets away in exchange for his

freedom.” The defendant spoke to Yael about friends in Russia who could help them obtain

money and that Yael could transfer a “premium” to them. The defendant instructed Yael to “say

2 The calls are mostly in Hebrew and have been translated to English by the FBI.

3 This is significant because it is another lie by the defendant. Although the defendantapparently tells Yossi that he paid for his civil proceedings, documents filed in the civilproceedings belie that claim. Specifically, the defendant’s last counsel, i.e. Skadden Arps, fileda motion to withdraw on or about August 31, 2010. The basis for Skadden’s motion was that thedefendant failed to pay Skadden’s fees. The defendant paid Skadden for less than 10% of thework Skadden performed and, as of the date of Skadden’s motion to withdraw, owed Skaddenfor more than 3,000 attorney work hours and 1,100 litigation support staff work hours.



1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

that we have assets in order to do it quickly” and he says he can’t “liquidate his assets quickly at

the moment.”

On August 15, 2010, the defendant spoke with Rabbi Sasha (phonetic) in Israel. Again,

the conversation centered on obtaining money and the defendant told the Rabbi that “he has

enough assets but he has to get out of here.” The defendant inquired whether the Rabbi knew

anyone in the “alternative market” who could assist and he said he needed “at least one or two

million dollars, including the bail.” The defendant referred to his connections on the outside

who could give a “pledge in order to try to take care of it right away.” The defendant stated to

the Rabbi that he “has to get out of jail.”

Also on August 15, 2010, the defendant called Yossi again. They discussed the

defendant’s need for money and possible sources in Israel and the defendant referred to someone

helping him as “the fat one.” Yossi advised the defendant that “seven round [70?] will be

transferred tomorrow and another 55 in a day or two.” The defendant stated that he “has to get

out . . . [and] . . . once he get (sic) out he will set everything straight with her and he will free it.”

The defendant also referred to having a huge “pledge.”

On August 16, 2010, the defendant called Yossi again. Yossi updated the defendant by

telling him that the “70 went through and 55 will in a day or two.” The defendant makes

reference to the “fat one” again and discusses efforts that the “fat one” is making to assist the

defendant. Yossi told the defendant that the defendant “has the quarter of a million that he

transferred, which is the last of his money.” The defendant commented that he “can’t touch that”

and when Yossi asked why, the defendant said “Yossi knows what they need it for [and] he

doesn’t want to talk about it over the phone.” The defendant also instructed Yossi to go to Rabbi

Sasha and tell him to “put it together at any price” and that “they have assets that they can give

him, if needed.” The defendant went on to tell Yossi to tell the Rabbi that “his assets were all

frozen . . . there is still time to free up assets in order to give him what he needs . . . it won’t be a

problem.”

On August 24, 2010, the defendant was in Oklahoma on his way to the NDCA and he

called Yossi again to discuss money and his custody status. The defendant instructed Yossi not



1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

to transfer money for him to Switzerland anymore and the defendant was pleased that the “55"

had not yet been transferred there. The defendant claimed that the government “caused a hold up

in Switzerland so they can’t do anything there right now.” The defendant repeatedly makes

statements indicating that he is desperate to get out of prison and he states that “once he gets out

everything is over.” When Yossi commented that Yossi did not see the defendant getting out,

the defendant said “it’s a lot easier to get bail in San Francisco . . . it’s not like LA.” Yossi asked

why an account was frozen and the defendant stated it was due to a government order in

Switzerland, but that it might be released in 30 days and that he has a lawyer there (Switzerland)

to take care of everything. The defendant claimed he could not do anything “so long as he is

inside.” Yossi expressed concern about a “guarantee” and the defendant assured Yossi “he has

nothing to worry about . . . the minute he gets out, it’s all over.” The defendant also said they

“have the Switzerland money . . . as soon as that is released, they will have liquidity.” The

defendant vaguely referred to having something that he could “execute” and that he had already

had someone “who can take it immediately.” When Yossi expressed concern about the

authorities being able to “get their hands on it” the defendant assured Yossi that they can not.

Thus, by the defendant’s own words, he has hidden assets that he will access upon his

release. He also states that “the minute he gets out, it’s all over.” The only reasonable

interpretation of this comment is that the defendant has no intention of defending the charges but

simply leaving them behind. He is 52 and facing decades in jail and millions of dollars in

restitution – there is simply no incentive for him to stay and live that future, especially in light of

the lifestyle he is used to. These conversations alone constitute a preponderance of evidence that

the defendant poses a flight risk and they justify detention. Taken together with the remaining

evidence, detention becomes the only reasonable conclusion.

D. The Defendant’s Proposed Bail Packages

When the defendant sought release before Judge Nagle, he offered the following as bail:

(1) $250,000 cash from the defendant; (2) $25,000 in cash from Bill Baulson; and (3) Roger and

Judith McAulay’s home in Poway, CA. Now, the defendant’s own money is off the table, Mr.



1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Baulson apparently came to his senses, and the defendant offers only the McAulays’ home.4 The

new bail package is an absolute non-starter.

Likewise, Mr. Sandel’s offer to allow the defendant to live with him does nothing to

assure the defendant’s appearance. The defendant’s flight from this Court’s jurisdiction would

have absolutely no consequence upon Mr. Sandel, unless he were complicit in that flight.

Further, Mr. Sandel’s generosity must be viewed as that of someone who admits he has known

the defendant only “for a short period of time” and that he is “not involved in any business

relationship” with the defendant and has “no personal knowledge of the facts” underlying the

indictment.

The defense continues to refuse to address Judge Nagle’s concern about what he did with

the millions of dollars he stole. At the time of his arrest the defendant was living in a mansion in

Beverly Hills with a rental payment of approximately $50,000 per month.5 His wife drove a

Jaguar and he was chauffeured around in a Bentley. He employed body guards, a cook, and

several other staff at his mansion. Nevertheless, he expects this Court to believe that upon being

arrested he instantly and inexplicably became penniless. The defendant has a track record of

stealing huge sums of money from absolutely anyone, including taking his elderly father-in-

law’s entire life savings. Thus, having a third party, i.e. his unrelated business partner, put up his

home is meaningless and offers no assurance at all that the defendant will remain to face the

charges.

III. There Are Several Misrepresentations In The Defendant’s Motion

A. The Defendant Has Never Cooperated With The Government

4 In the event the Court entertains such an offer, the government will respectfullyrequest that the Court conduct the statutorily required inquiry into the source of the funds used topurchase the home. 18 U.S.C. § 3142(g)(4) (court shall conduct inquiry into source of bailmoney to establish not proceeds of fraud). Mr. McAulay has been the defendant’s businesspartner for many years, including at Ecast, and the Court should make sure that none of theproceeds used to purchase his home originated from the victims of the defendant’s scheme.

5 Agents interviewed a representative of the owners of the mansion and were advisedthat the defendant told them he needed to rent their mansion because he was remodeling his ownmansion in Beverley Hills. Yet another lie by the defendant.



1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

The defendant claims he offered to cooperate with the United States Attorney’s Office

and that he cooperated with the Securities and Exchange Commission (“SEC”) in its separate

investigation into the defendant’s activities. Both claims are false.

First, with respect to this office, and as set forth at the detention hearing, the defendant’s

previous attorneys contacted law enforcement and this office in an attempt to obtain information

about whether the defendant was begin investigated. Those attorneys never offered any

statement or evidence from the defendant nor did anyone ever offer to have the defendant self-

surrender in the event of an indictment. Defense Exhibit A at 30-31. Calling the U.S.

Attorney’s Office to fish for information on behalf of your client does not constitute cooperation.

The defendant claims he was well aware that law enforcement officers were looking for him at

his mediation in San Francisco in July 2010, but that he did not thereafter flee. However, the

defense had (and still has) no response to the government’s point at the detention hearing that if

the defendant truly wanted to cooperate he wold have presented himself to the agents who were

looking for him at his July 2010 mediation in San Francisco. Id., at 30. Instead, he refused to

appear at the mediation in person and hid in his attorney’s office.

Second, with respect to the SEC, while the defendant produced documents and provided

testimony to the SEC, that is far different from cooperating with a criminal investigation. More

importantly, the evidence shows that the defendant produced fraudulent documents to the SEC

and lied throughout his SEC testimony. Those are not the actions of a person cooperating with

the SEC. Specifically, the declaration and release agreements relied on by the defense were

procured by fraud. Defense Motion Exhibits B and C. Mr. Dillon’s name is misspelled on his

declaration. Mr. Glover has stated that he did not knowingly sign the release. He said the

signature looks legitimate, but that he trusted the defendant and sometimes signed documents at

the defendant’s urging without reading them. This explanation is far more credible than the

defendant’s, because it simply makes no sense for Messrs. Dillon and Glover to have executed

releases for $30,000 each after investing millions with the defendant. Further, there are multiple

witnesses in addition to Mr. Dillon who have stated that the defendant personally told them

about the fake Microsoft/Ecast deal. There are also multiple email communications between Mr.



1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Dillon and the defendant wherein Mr. Dillon refers to Microsoft and the defendant never corrects

Dillon or indicates in any way that he does not understand what Dillon was referring to. As for

false testimony, examples of false statements to the SEC are the following: the defendant

testified that he never sold Ecast shares after leaving Ecast in October of 2002 and he testified

that he never told anyone Microsoft was going to acquire Ecast.

The defendant’s use of termination letter from the SEC is a red herring. As this Court is

well aware, government agencies decline to take action on matters for myriad reasons, many of

which do not necessarily reflect the agency’s position regarding the merits of the claims being

investigated. Indeed, the SEC Enforcement Manual specifically cautions against drawing such

conclusions based on a termination letter:

The termination letter should be signed by staff at the Assistant Director level or aboveand a copy of the Commission's Wells Release (Securities Act Release No. 5310), whichauthorized termination notices, should be attached to each termination letter. As noted inthe Commission’s Wells Release, the provision of a termination notice “must in noway be construed as indicating that the party has been exonerated or that no actionmay ultimately result from the staff's investigation of that particular matter. All that sucha communication means is that the staff has completed its investigation and that at thattime no enforcement action has been recommended to the Commission. SECEnforcement Manual, page 40, Section 2.6.2 (emphasis added).

In light of the overwhelming evidence of the defendant’s fraud, this Court should disregard the

SEC’s letter to the defendant as it sheds no light on the detention issues.

B. Many Statements in the Motion are False and Others are Irrelevant

The defendant’s arguments regarding his father-in-law and Mr. Burillo have been

unequivocally contradicted by those witnesses, as well as the defendant’s brother-in-law. FBI

and IRS agents have interviewed Robert Stripling (the defendant’s father-in-law), Stephen

Stripling (the defendant’s brother-in-law) and Javier Burillo.

Robert Stripling has confirmed that he sent millions of dollars to the defendant to

purchase Ecast stock, and thereafter, to pay for costs associated with EU approval of Microsoft’s

takeover of Ecast (as represented to him by the defendant). Stephen Stripling invested with his

father and corroborates his statements that he made the investment with the defendant based on

misrepresentations that Ecast was going to be acquired by Microsoft and that money was needed

to cover fees associated with EU approval of the transaction. By the defendant’s own admission,



1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

he sold Robert Stripling 134,000 shares of Ecast for $400,000 in January of 2003. The defendant

was only able to sell Dr. Stripling Ecast shares at $3 each at a time when the defendant knew

they were worth less than 10 cents each by lying to Dr. Stripling and telling him that Microsoft

was going to acquire Ecast.

Mr. Stripling (and the victims underlying the indictment are corroborated by even more

victims who have sued the defendant for making false statements in connection with selling

Ecast stock). In December of 2003, Michael Farrell and others sued the defendant (Michael

Farrell, et al. V. Samuel Cohen, et al., San Francisco Superior Court, Case # 03-422354) for,

among other causes of action, defrauding the plaintiffs in connection with the sale of Ecast

shares. Specifically, the plaintiffs alleged that Cohen made numerous misrepresentations that

Ecast was about to be acquired by such companies as Microsoft, Cisco, Qwest, and others. In

February of 2004, Roger Ashkenazi sued the defendant (Ashkenazi v. Cohen, et al., San

Francisco Superior Court, Case # 04-429059) for, among other causes of action, defrauding the

plaintiff in connection with the sale of Ecast shares. Specifically, Ashkenazi had a stock

purchase agreement with the defendant dated June 13, 2002, wherein the defendant claimed to

own 5,000,000 shares of Ecast and sold them to Ashkenazi for $1,040,000. Among the many

misrepresentations alleged by Mr. Ashkenazi was that the defendant told him that Ecast was on

the verge of going public.

Like the Striplings, Mr. Burillo has advised the FBI and IRS that he paid several million

dollars to the defendant for numerous investments (unrelated to Ecast) and that the defendant has

failed to return a single dollar to him. Mr. Burillo has provided documentation of his

investments with the defendant and the IRS has traced more than $3,000,000 of those

investments going to the defendant’s personal expenses instead of the investments as represented

to Mr. Burillo. The phone calls preceding the defendant’s arrest involved the defendant lying to

Mr. Burillo – as he had on so many previous occasions – that he (the defendant) was just about

to pay Mr. Burillo back. The defendant also lied to Mr. Burillo about being in Europe at the time

of his last call with Mr. Burillo shortly before his arrest. Mr. Burillo states that the only reason

he maintained seemingly amicable contact with the defendant was because he hoped to recover



1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

some of the millions the defendant stole from him.

The defendant’s letters of support are irrelevant with respect to the issues of whether he

poses a flight risk or danger to the community. Frankly, they are from people who either do not

know him that well, know nothing about his fraud, are related to him, or who depend upon him

for financial support. For example, approximately $20,000,000 of the money stolen by the

defendant in this case passed through the defendant’s wife’s bank accounts and she financed the

publication of her book, Stacy Cohen, The Kosher Billionaire’s Secret Recipe, Atria Books

(2007), with money the defendant stole from the victims. It is telling that she fails to corroborate

the defendant’s claim that the money he stole from her father was really just Robert Stripling’s

way of giving money to his daughter. None of the people who wrote the letters are willing to

risk a dime for the defendant.

The defendant claims to be involved with a variety of legitimate companies. However,

what is missing from the defendant’s claims is an explanation about where his income has come

from over the last decade. There is no evidence that any of the defendant’s ideas/companies

have actually generated any income for him – and if they have, the defendant has failed to pay

tax on that income. The government’s references at the detention hearing and to this Court relate

to the fact that the government is unaware of the defendant earning any actual income by a

legitimate means over the last decade. To the contrary, the evidence is that he defrauded the

victims underlying the indictment, his in-laws, and Mr. Burillo of approximately $40,000,000,

and lived an obscenely lavish lifestyle on their life savings.

IV. The Defendant Is Properly Detained And The Motion Should Be Denied

The government has shown, well beyond a preponderance, that the defendant poses a

significant risk of flight if released. There is irrefutable evidence that he has sent millions of

dollars to Swiss bank accounts. The defendant stole more than $40,000,000 from various

victims beginning in 2002 and it is reasonable to infer that he has secreted money beyond the

government’s reach. Indeed, in his calls from prison has repeatedly referred to having assets that

he will access upon his release and that this will “all be over” once he is released. It will be over

for him because he will flee. He has Israeli citizenship and significant contacts in Israel and



1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

apparently elsewhere as well. In similar situations, wealthy defendants charged with financial

fraud, who had access to assets abroad and international connections, and who were facing

lengthy sentences, have been ordered detained. See United States v. Stanford, 630 F.Supp.2d

751 (S.D. Tex 2009); United States v. Gentry, 455 F.Supp.2d 1018, 1033 (D. Ariz. 2006)

(Gentry presents as an intelligent, talented man with dramatically diverse personalities: (1) a

bright, exemplary side-a man whose family, close friends and church members truly believe he is

an honest, spiritual, and law-abiding pillar of our community; and (2) a dark side-a man whose

greed, avarice and imagination to deceive is seemingly limitless). As in Stanford and Gentry,

neither the absence of a criminal record nor the support of people with clear bias (or lack of

knowledge regarding the defendant) is not determinative. The issue is whether there is sufficient

evidence that the defendant will flee if released and the answer to that inquiry in this situation is

definitively affirmative.

The defendant is also a danger to the community. As far as the government can tell, the

defendant has made his living over the last decade entirely on various fraudulent schemes

whereby he has stolen millions of dollars from friends, relatives and strangers. The defendant

offers no evidence that any of his alleged legitimate business ventures generate any income.

Nevertheless, prior to his arrest the defendant lived an extravagant and expensive lifestyle. He

therefore is either financing it with proceeds of his past fraudulent schemes or perpetrating new

ones. He is a con man, plain and simple, and therefore a danger to society. See United States v.

Reynolds, 956 F.2d 192 (9th Cir. 1992) (danger to community may include potential economic or

pecuniary harm in context of whether to grant bail pending appeal); see also United States v.

Madoff, 316 Fed. Appx. 58 (2d Cir. 2009) (unpublished) (affirming district court’s denial of

pretrial bail; citing and quoting Reynolds)

///

///

///

///

///



1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

V. Conclusion

Judge Nagle’s Order of August 12, 2010, was based on strong and abundant evidence

that the defendant is a flight risk and a danger to society. Since then, the evidence in support of

detention has only strengthened considerably. Accordingly, the government respectfully request

that this Court deny the defendant’s motion to vacate Judge Nagle’s Order.

DATED: October 13, 2010 Respectfully submitted,

MELINDA HAAG United States Attorney

/S/________________________________JEFFREY R. FINIGANAssistant United States Attorney



USA v. Samuel Mouli Cohen - October 13, 2010 Filing Opposing Bail

Documents

Transcript of USA v. Samuel Mouli Cohen - October 13, 2010 Filing Opposing Bail