Former SEC Examiner/GPB Executive Indicted for Obstruction of Justice
Michael Cohn, a former Securities and Exchange Commission examiner who was recently hired as managing director and chief compliance officer at GPB Capital Holdings, has been charged with obstruction of justice, unauthorized computer access and unauthorized disclosure of confidential information.
Michael Cohn, a former Securities and Exchange Commission examiner who was recently hired as managing director and chief compliance officer at GPB Capital Holdings, has been charged with obstruction of justice, unauthorized computer access and unauthorized disclosure of confidential information. Cohn was arraigned Wednesday morning before United States Circuit Judge Joseph Bianco and released on a $250,000 bond.
While employed with the SEC, Cohn allegedly accessed and disclosed confidential information to GPB, a New York-based a private equity firm that manages more than $1.5 billion in assets.
“When Cohn left the SEC to join GPB, he left with more than his own career ambitions,” said William Sweeney Jr., assistant director-in-charge of the FBI’s New York field office. “The proprietary information he allegedly retrieved—from databases he wasn’t authorized to access—included compromising information about a GPB investigation and sensitive details related to the same.”
Cohn previously worked as a securities compliance examiner and industry specialist in the SEC’s enforcement division, where he assisted investigations into violations of securities laws.
In approximately October 2018, Cohn left the SEC to join GPB, and prior to leaving, allegedly accessed information on SEC servers relating to an investigation into GPB.
Cohn was reportedly not authorized to access the highly sensitive material, which included confidential information, privileged attorney-client work product and contacts with law enforcement and other regulatory agencies, the prosecutors said.
During discussions with GPB about obtaining a job there, Cohn allegedly told GPB’s senior management that he had inside information about the SEC’s investigation, which he disclosed.
“No one gets a pass for breaching the security of government computer networks and misusing sensitive and confidential information for their own benefit,” said United States Attorney Richard Donoghue.
Cohn is presumed innocent unless and until proven guilty. If convicted, he faces a maximum sentence of 20 years’ imprisonment on the obstruction of justice count, a maximum of five years on the unauthorized computer access count, and up to one year on the unauthorized computer disclosure count.
As previously reported by The DI Wire, GPB announced its decision in August 2018 to temporarily halt raising new money and suspending redemptions to focus on accounting and financial reporting on two of its private offerings, the GPB Automotive Portfolio and the GPB Holdings II.
In March 2019, representatives from the Federal Bureau of Investigation and the New York City Business Integrity Commission made an unannounced “visit” to the company’s headquarters in Manhattan. At the time, GPB said that the agencies obtained a search warrant to collect materials from the premises and believed that the visit was a continuation of previous ongoing inquiries.
Specifically, GPB disclosed that in the summer of 2018 it received a subpoena from the U.S. Attorney’s Office – Eastern District of New York that requested documents related to a waste management fund in connection with the NYC Business Integrity Commission’s investigation.
Additionally, the firm has received subpoenas from the SEC and the New Jersey Bureau of Securities and said that it is cooperating with the various agencies and their document requests.
While GPB was not told the cause of the investigations, other than they are in connection with potential violations of general securities laws and regulations, the company pointed out that much of the information requests concern issues raised by former operating partner, Patrick Dibre.
GBP sued Dibre in July 2017 for allegedly reneging on the sale of multiple car dealerships in the New York metropolitan area, and the company is seeking the return of $42 million it had paid to the former business partner.
GPB is in the process of completing its audit after hiring a new firm, EisnerAmper LLP, to replace Crowe LLP, which resigned “due to perceived risks…that fell outside of their internal risk tolerance parameters.” The audit was expected to be completed last month.
