Beginning in January 2008, and continuing until the fall of 2013, Cohen defrauded insurance policyholders and prospective insurance policyholders in order to obtain more than $100 million in insurance premiums, by falsely representing the financial status of Indemnity-DC, Indemnity and other Cohen controlled entities to insurance policyholders, prospective insurance policyholders, the rating agency A.M. Best, to independent auditors, the D.C. Insurance Commissioner and the Delaware Insurance Commissioner.

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False information for ratings

According to Rosenstein’s statement, Cohen created false financial documents, including bank statements, letters of credit, and confirmations of bank account balances. Cohen transmitted some of these false documents to A.M. Best in order to obtain financial ratings for Indemnity-DC and Indemnity that were not based on the companies’ true financial condition. Cohen then touted the A.M. Best ratings to current and potential policyholders and regulatory agencies. Cohen also transmitted false and fraudulent emails, management representation letters, financial statements, and other documents to the auditing firms Marcum and BDO so the auditors would provide an unqualified audit opinion on Indemnity-DC and Indemnity financial statements that Cohen knew were false. Cohen used the name and identity of a bank official to create a false bank confirmation.

To conceal the true financial condition of the companies, according to the plea agreement, Cohen transmitted fraudulent audited and unaudited financial statements for Indemnity-DC and Indemnity to the D.C. Insurance Commissioner and the Delaware Insurance Commissioner. Cohen also made false statements to representatives of the Delaware Insurance Commissioner in June 2012.

The Delaware Insurance Commissioner began civil proceedings against the Cohen companies in June 2013. In October 2013, two attorneys referred Cohen’s criminal offenses, including the false statements to an insurance regulator offense to which he pled guilty, to federal authorities. On February 20, 2014, Rosenstein said in a statement, Cohen threated one of the attorneys who had referred his case in an effort to prevent the attorney from communicating with federal law enforcement concerning the crimes Cohen committed in the operation of his insurance companies.

Cohen faces a maximum sentence of 20 years in prison for each of the wire fraud and obstruction of justice counts, 15 years in prison for making false statements to an insurance regulator, and a mandatory two years, consecutive to any other sentence, for aggravated identity theft. Cohen remains detained until his sentencing on Aug. 6, 2015.