Mouli Cohen - Government's Response for Bail Pending Sentencing

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1 MELINDA HAAG (CABN 132612) United States Attorney

2 MIRANDA KANE (CABN 150630)

3 Chief, Criminal Division

4 W. DOUGLAS SPRAGUE (CABN 202121) HALLIE MITCHELL (CABN 210020)

5 Assistant United States Attorneys

6 450 Golden Gate Avenue, Box 36055 San Francisco, California 94102

7 Telephone: (415) 436-7200 Facsimile: (415) 436-7234

8 E-mail: [email protected]

Attorneys for Plaintiff 9

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13

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

14 UNITED STATES OF AMERICA,

15 Plaintiff,

16 v.

17 SAMUEL COHEN, a/kIa Mouli Cohen,

18 Defendant.

No. CR 10-0547 CRB

GOVERNMENT'S RESPONSE TO DEFENDANT'S MOTION FOR BAIL PENDING SENTENCING

DATE: TIME:

January 24,2012 2:15 p.m.

19 Honorable Charles R. Breyer

20 Three business days after defendant was convicted of29 counts subjecting him to a

21 possible life sentence, his wife filed an application to renew her passport-paying an extra fee to

22 expedite its processing and making sure she obtained a special passport "for those who frequently

23 travel abroad." (Exhibit 1.) Having taken the next step-getting his sentencing date

2 4 continued-defendant now predictably seeks to take the penultimate step: to be released from

25 custody and into a 6'" floor ocean-view apartment in Beverly Hills less than 15 miles from both

26 the private airport in Van Nuys that defendant knows so well and LAX. And he seeks to be

27 released under significantly less restrictive conditions than the Court imposed before he tried to

28 bribe a security guard, before he was convicted of multiple counts of mail fraud, money

GOVT. RESP. TO MOT. FOR BAIL; CR 10-0547 CRB

Case3:10-cr-00S47-CRB Document322 FiledOl/18/12 Page2 of 20

1 laundering, and tax evasion, and before he learned he his preliminary Guidelines range of

2 imprisonment is 360 months to life. There is simply nothing this unrepentant con man will not

3 do to avoid responsibility for his crimes or to avoid being separated from the obscene lifestyle he

4 and his wife lived, all funded by defendant's devastating fraud scheme which demolished the

5 financial livelihood of scores of victims, including defendant's father-in-law and the parents of

6 defendant's godson. His motion should be denied.

7 I. PROCEDURAL BACKGROUND

8 On or about August 5, 2010, defendant was arrested in Beverly Hills, California, near

9 where he was renting (in Bel Air) a 9,000+ square foot home - for just himself and his wife - for

10 approximately $50,000 per month. In addition, at that time he had a personal staff, including a

11 chauffeur, bodyguards, and a personal chef. At detention hearings in the Central and Northern

12 Districts of California, defendant claimed he was essentially penniless and could not afford to

13 post money or property. He was represented by a team of attorneys from Skadden Arps.

14 Over the ensuing months, defendant filed at least five motions to be released on bail,

15 shifting his arguments each time. Eventnally, this Court released defendant subject to stringent

16 conditions, including the presence of an armed guard tasked with assuring defendant did not flee.

17 After hearing the evidence in the case and learning that defendant had attempted to bribe one

18 such guard, the Court remanded defendant. The Court subsequently ordered the defendant

19 released, but only to the custody of three armed guards at all times and advance payment of

20 $45,000. (Dkt.270.) The defendant wired that payment within an hour of the Court's order.

21 After a three-plus week trial at which approximately 25 witnesses were called, the jury

22 deliberated for 6 hours and found defendant guilty of fifteen counts of mail fraud, eleven counts

23 of money laundering, and three counts of tax evasion. The government immediately moved for

24 remand, and, after hearing argument, the Court remanded defendant.

25 On or about December 28, 2011, the Probation Office issued its draft Presentence

2 6 Investigation Report. The Probation Office has calculated defendant's guideline range of

27 imprisonment as 360 months to life.

28 Defendant, who will turn 54 this April, now seeks to be released upon far less restrictive

GOVT. RESP. TO MOT. FOR BAIL; CR 10-0547 CRB 2


1 conditions than he faced before attempting to bribe a prior security guard, before being found

2 guilty of 29 counts, and before learning his likely guideline range of imprisonment calls for him

3 to spend probably the rest of his life in federal prison.

4 II.

5

THE LEGAL STANDARDS GOVERNING DEFENDANT'S RENEWED MOTION FOR BAIL

6 Post-conviction, "a defendant no longer has a substantive constitutional right to bail

7 pending sentencing." United States v. Madoff, 316 Fed.Appx. 58, 59 (2nd Cir. 2009)(affirming

8 district court's denial of bail pending sentencing). No longer afforded the presumption of

9 innocence, it is defendant's burden to demonstrate by clear and convincing evidence that he is

10 not likely to flee and will not pose a danger - physical or economic - to the safety of others or the

11 co=unity.

12 The parties agree that 18 U.S.C. § 3143(a)(I) governs the issue of release or detention

13 pending sentencing. [ Section 314 3( a)(1) provides, in pertinent part, as follows:

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... the judicial officer shall order that a person who has been found guilty of an offense and who is awaiting imposition or execution of sentence ... be detained, unless the judicial officer finds by clear and convincing evidence that the person is not likely to flee or pose a danger to the safety of any other person or the co=unity if released ....

1 7 It is the defendant's burden to establish by clear and convincing evidence that he will not flee or

18 pose a danger to any other person or to the co=unity. See F.R.Cr.P. 46(c). The Bail Reform

19 Act establishes a presumption in favor of detention. See 18 U.S.C. § 3143(a); S.Rep. No. 225,

20 98th Cong., I" Sess. 26 (1983), reprinted in 1984 U.S. Code Congo & Admin. News 3182,3209

21 ("Once guilt of a crime has been established in a court of law, there is no reason to favor release

22 pending imposition of sentence or appeal."). Some courts have described the "clear and

23 convincing" standard as one that requires support "to a high degree of certainty." See, e.g.,

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26 [Defendant's lengthiest argument is that the Court ordered him remanded pursuant to the

2 7 wrong sub-section of Section 3143. Perhaps the order contained a typo, perhaps the wrong subsection was mentioned in court - it matters not. The correct legal standard was argued and

2 8 addressed by the Court on November 9, and defendant does not argue to the contrary.



1 United States v. Chimurenga, 760 F.2d 400,405 (2nd Cir. 1985).2 Even if a defendant proffers

2 sufficient evidence tending to rebut the presumption, the presumption remains a factor to be

3 considered in evaluating whether a defendant should be detained. See, e.g., United States v.

4 Dillon, 938 F.2d 1412,1416 (I,t Cir. 1991).

5 After conviction, not only is defendant's expectation ofliberty reduced, but the safety

6 interests of the government and the community are magnified. "[T]hat a person has been found,

7 beyond a reasonable doubt, to have committed a criminal act certainly indicates dangerousness."

8 Jones v. United States, 463 U.S. 354, 364 (1983). In addition, ensuring that gnilty persons

9 receive and serve their sentences was a significant impetus to the enactment of 18 U.S.C. § 3143.

10 "[R]elease of a criminal defendant into the community after conviction may undermine the

11 deterrent effect of the criminal law." S. Rep. 225, supra at 26, reprinted in 1984 U.S. Code

12 Congo & Admin. News at 3209. "Congress' desire to reverse what it perceived as a presumption

13 in favor of bail even after conviction under prior bail law demonstrates its recognition that harm

14 results not only when someone is imprisoned erroneously, but also when execution of sentence is

15 delayed because of argnments that in the end prove to be without merit." United States V.

16 Shoffner, 791 F.2d 586, 589 ("J'h Cir. 1986)(internal citation omitted).

17 Furthermore, as defendant concedes, economic danger provides a basis for detention

18 under Section 3143(a)(I). In United States V. Reynolds, 956 F.2d 192 (9th Cir. 1992), for

19 example, the Ninth Circuit denied the defendant's motion for bail pending appeal because the

20 defendant failed to meet his burden of establishing by clear and convincing evidence that he did

21 not constitute an economic danger to the community. See also United States V. Jinwright, 2010

22 WL 2926084 at *2 (W.D.N.C. July 23, 2010)(detaining 56 year old defendant facing significant

23 sentence based on economic danger; collecting cases supporting economic danger as basis for

24 detention); United States V. Miell, 2009 WL 1956451, *2 {N.D. Iowa 2009)(ruling that

25 defendant's conviction of tax evasion coupled with available wealth to finance flight presented

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2In his closing argnment, defendant emphasized what a high standard "clear and convincing" is, graphically arguing it is the standard the state must meet before it can remove a child from its parents.


Case3:10-cr-00S47-CRB Document322 FiledOl/18/12 PageS of 20

1 substantial risk of flight); Madoff, 316 Fed. Appx. at 59.

2 m. ARGUMENT

3 Every factor in the Bail Reform Act weighs heavily in favor of detention. Nothing short

4 of incarceration will stop this pathological liar from fleeing and continuing to defraud others.

5 A. The Nature and Circumstances ofthe Offense Weigh in Favor of Detention

6 The Court presided over the three-plus week trial in this matter, so the Court is quite

7 familiar with the hideous nature of defendant's layered fraudulent schemes. Accordiogly, the

8 government will not rehash them in detail here. In summary, the evidence overwhelmingly

9 established that no later than 2000 (victims Farrells and Merrills) defendant began falsely telling

10 anyone he thought had money that Ecast was about to be acquired, and that, as a result,

11 purchasing defendant's "founder's shares" would result in huge profits for these victims and the

12 entities-including charitable ones-with which the victims were affiliated. In furtherance of his

13 scheme, defendant rented an opulent mansion on the tony island of Belvedere, California, and he

14 told prospective victims that he owned not only the mansion, but at least one private jet.' He

15 decorated that mansion with fake art that he falsely told his unsuspecting victims was original,

16 includiog pieces by Calder, Picasso, Miro, and Matisse. He hosted a party at the mansion in

17 August 2002 and falsely told guests he was a philanthropist looking for worthwhile causes to

18 receive portions of the $60 million he sought to donate.

19 Over the ensuing years, defendant perpetuated his scheme by telling his investors that the

20 Ecast acquisition was being delayed by United States regulators. He dragged out the scheme by

21 providiog false hope of impendiog success by falsely claiming that the United States regulators

22 had finally approved this non-existent deal, only to introduce the victims into the next delay:

23 European Union regulators. Through it all, defendant convinced his victims that they needed to

24 put up more and more money in the form of "bonds and fees" required for the deal to remain

25 viable. He also lulled his victims along with misdirection within the primary fraud, such as by

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27 'Indeed, as discussed in more detail below, defendant also lied to his wife about owning

28 the plane(s).



1 promising that his first wife, Yael,' or his friend, "Mr. E" were about to make huge donations. In

2 all, from 2000 through late 2008 when his scheme was discovered, defendant fleeced his victims

3 out of more than $35,000,000 by purporting to sell more Ecast shares than he ever owned based

4 on the promise of a fictitious acquisition and its attendant bonds and fees. See United States v.

5 Nicolo, 706 F.Supp.2d 330,334 (W.D.N.Y. 201O}(detaining defendant who Court observed

6 "could not be trusted to abide by any conditions" of release or not to engage in additional

7 wrongdoing, noting that defendant's crimes "did not involve a momentary lapse of judgment or a

8 single event, but repeated acts over a period of seven years at least" ... and that his case

9 demonstrated his "deceit and [his] willingness to take virtually any action to accomplish what

10 [he] thought was in the best interest of' himself and that "[t]ruth, honor, integrity apparently have

11 no place in [his] heart."}(additional citations omitted); United States v. Nouri, 2009 WL

12 2924334, *2 (S.D.N.Y. 2009}("I simply do not trust him to return to court were he released.").

13 The lack of regard defendant showed for victims was stunning. He knew, for example,

14 that Mike Farrell was a roofer ten years younger than defendant struggling to operate his own

15 small business. Nonetheless, he tried to take every penny Farrell had while claiming he was

16 presenting Farrell with such a wonderful opportunity out of "friendship." After defendant

1 7 figured he had taken Farrell for all he was worth, defendant ended the "friendship." Similarly, he

18 claimed to Danny Glover, Hari Dillon, Sam Mills, and others associated with the Vanguard

19 Public Foundation that he truly believed in the non-profit's work and shared its vision. As the

20 "deal" dragged on and on, more than once did defendant tell Dillon that defendant was going out

21 of state (and country) to work on the deal, when, in fact, defendant was headed off to luxurious

22 vacations in the Caribbean, Italy, Israel, and France-all paid for by people like Mike Farrell,

23 William Meeker, Gina Warren, Danny Glover, Hari Dillon, Sam Mills, Mary Mills, Susanna

24 Moore, Jane Segal, and so many others.

25 And while raking in tens of millions of dollars and spending it on private jet trips ranging

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27 'As also discussed below, defendant lied to his second wife, Stacy, and the IRS about his

28 marital status vis-a-vis his first wife, Yael.



1 from Milan, Italy, to Monterey, California, simply for lunch, a private jet trip for Jennifer Lopez

2 and her dog, a private jet trip for Elton John, a 25-carat diamond ring for $1.4 million, a Jaguar, a

3 Bentley, a Ferrari, a Rolls Royce, initially renting a mansion for $15,000 per month (he paid

4 more rent in later years), defendant paid no taxes to the United States. See United States v.

5 Khanu, 675 F.Supp.2d 69,72 (D.C. Cir. 2009)("Defendant was convicted of tax evasion for

6 having substantial amounts of cash not declared as income on his tax returns. Accordingly, the

7 Court is wary of assuming that the amounts of cash that have been disclosed are the only sources

8 of cash available .... ").

9 In short, as the Court succinctly put it in United States v. Masters, 730 F.Supp. 686, 689

10 (W.D.N.C. 1990), "[f]ranldy ... Defendant is an uurepentent [sic] con-artist who will continue to

11 prey on any person gullible enough to listen to his sales talk. Nothing short of post-conviction

12 incarceration will ensure the safety of the community."

13 B. The Weight ofibe Evidence Weighs Heavily in Favor of Detention

14 This factor cannot weigh any more heavily in favor of detention. As the Court witnessed,

15 the evidence was overwhelming, both in quality and quantity. All twelve jurors no doubt agreed

16 with that characterization, having taken only 6 hours to convict defendant of 29 counts after a

17 three-week trial.

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C. Defendant's Lack of Character, Lack of Employment, Lack of Family Ties, Lack of Ties to the Community, Financial Resources, and Past Conduct All Weigh Overwhelmingly in Favor of Detention

20 There is not one shred of evidence to suggest that this defendant cares for anyone but

21 himself. In addition to the victims the Court saw and heard about during the trial testimony, and

22 as discussed below, the defendant callously stole the life savings of his father-in-law, he lied to

23 his second wife (among many other lies) about his marital status with his fIrst wife, he has

24 traveled extensively overseas, and he has fInancial accounts in multiple countries. He cannot

25 come close to meeting his burden of proving, by clear and convincing evidence, that he is neither

26 a flight risk nor an economic danger to the community.

27 1. Extensive International Travel and Ties

28 Defendant was born in Israel and maintains dual U.S.lIsraeli citizenship. While he has



1 signed a purported waiver of extradition, the Court now has the benefit of having seen how many

2 docwnents the defendant signed-and forged-having no intention of honoring their contents, or

3 at least the contents that could benefit anyone other than defendant. Based on the evidence at

4 trial, there is no question the defendant would fight extradition regardless of any purported

5 waiver, and that asswnes he is (I) apprehended (2) in a country with an extradition treaty.

6 Defendant also has maintained multiple bank accounts in foreign countries, including

7 Switzerland and the Cayman Islands. In fact, the termination letters for/our Swiss accounts were

8 provided only in December 2011. (Def's Motion for Bail, Ex. A.) In connection with previous

9 requests for bail, defendant reluctantly and untimely disclosed a list of sixty bank accounts

10 maintained in the names of defendant, his wife, and defendant's shell companies. Although

11 defendant did not disclose in what countries those accounts were maintained, it appears that at

12 least more than 10 of them were held in Switzerland and the Cayman Islands. (Supp. Dec!. of

13 Benjamin Lichtman, Ex. A, filed on or about September 19, 2011.) Trial evidence showed that

14 very soon after being confronted and sued by his victims, defendant transferred millions of

15 dollars in stock and cash to Switzerland. Having demonstrated the ability and desire to hide

16 assets overseas to put them beyond the reach of his victims and the United States judicial process

17 makes it more likely he is willing to hide himself overseas for the same purpose.'

18 Finally, defendant has traveled extensively throughout the world, enhancing the

19 possibility that he maintains contacts and funds abroad. Just a sampling of his international

20 travels in the last few years before his arrest included Mexico, England, France, Russia, Greece,

21 and Italy-all by private jet. Perusing the pages of defendant's wife's publication The Kosher

22 Billionaire's Secret Recipe reveals that defendant and his wife simply cannot exist without

23 frequent and luxurious overseas jaunts. Indeed, whatever words defendant can muster through

24 his latest team of attorneys notwithstanding, the action of his wife applying for an expedited

25 26 'Incredibly, in connection with prior requests for bail, defendant claimed that he sent

millions of dollars to Switzerland in 2009 in response to a ''banking crisis" until he was "satisfied 27 regarding the integrity of the banking system" because he was "concerned about Wells Fargo" so

he transferred money to Switzerland ''to protect shareholders and his own family". (Dkt. 17 at 28 13-14; Dkt. 30 at 9.)



1 renewal of a non-standard passport (with extra pages for more frequent international travel) three

2 business days after defendant was convicted of defrauding scores of victims out of tens of

3 millions of dollars shows precisely what her and her husband's reaction was to his conviction:

4 immediate flight.

5 2. Unlimited Financial Resources

6 Defendant's wife is currently paying approximately $3,000 per month to rent the 6th floor,

7 ocean-view Beverly Hills apartment with a balcony" in which defendant seeks to be released.

8 Yet she remains unwilling to post any property or cash for his bail. After interviewing many

9 attorneys in the Bay Area criminal defense bar, defendant has selected and retained yet another

10 team of defense attorneys. Prior to the current team, he had retained well-respected and not

11 inexpensive attorneys from Los Angeles. Prior to that team, he had retained another team of

12 defense attorneys from the Bay Area. Prior to that team, he had retained Skadden Arps.

13 Defendant appears to have unlimited financial resources when it comes to hiring attorneys, yet

14 nothing to post for bail. Even more telling is that many of defendant's legal teams went to great

15 pains to clarifY that, at least initially, they were retained "for bail purposes only." Only when

16 Magistrate Zimmerman directed defendant to hire attorneys for all purposes did he fInally do so.

17 Defendant is intelligent, and all along he knew the evidence the Court has now seen. That he has

18 been and remains obsessed with bail is quite telling, if not surprising.7

19 The Court has also seen that despite intense efforts to trace the tens of millions of dollars

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6 As discussed below, in another action speaking volumes, defendant has DELETED the provision from the Court's prior order setting bail that required entrance to the balcony to be alarmed so guards would know if defendant entered it.

7The Court may recall from fIlings in connection with prior requests for bail (see 24 generally Dkt. 44 at 10) that the government translated many of defendant's calls from jail-all

conducted in Hebrew-revealing multiple conversations concerning defendant's efforts to obtain 25 money from his contacts in Russia and Israel, repeated statements about how defendant just had 2 6 to make bail and then it would be "all over" and "everything is done", that he was ''willing to

give all his assets away in exchange for his freedom", directing others not to talk about certain things "over the phone", to put together financing for bail "at any price" and do "whatever it takes", and that once he is out on bail he would be able to "free up" his many "assets", including

28 giving financial backers "one of the pictures". Artwork perhaps.

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1 defendant fleeced from his victims, substantial amounts of money remain missing. Only

2 defendant knows what happened to that money and the history of the sixty bank accounts

3 controlled by defendant throughout the world. Defendant undoubtedly has the funds to flee - it

4 would require much less money to get out of the country than it would to retain even one of his

5 teams of attorneys.

6 3. Lack of Family Ties

7 And defendant has presented no evidence that there is anyone or anything in California,

8 or even the United States, that would make it difficult for him to leave.

9 Defendant's father is deceased, and his mother and sister live in Israel. In opening

10 statement, defendant's former attorney asserted that defendant's son was involved in "religious

11 studies" in Israel, thus explaining his absence from the trial. If true, this is additional evidence of

12 an incentive to flee. Notably, in his current motion, defendant says nothing about his son's

13 current whereabouts. Indeed, upon information and belief, defendant's son left the United States

14 for Israel within weeks of his father's arrest and has not returned. The only other information of

15 record regarding defendant's son that government counsel recalls occurred in connection with a

16 prior request for bail when the CEO of Critical Solutions explained that defendant's son

1 7 attempted to negotiate Critical Solutions' fees."

18 Defendant asserts he would not harm his wife by fleeing. First, defendant has shown he

19 will harm anyone if it benefits him. His words to the contrary are utterly meaningless.

20 Second, that may be true, but as evidenced by the post-conviction expedited passport

21 renewal with space for frequent international travelers, the plan may have been for her to join

22 him overseas.

23 Third, defendant will lie to anyone-including his wife-about anything ifhe thinks it

24 will advance his narcissistic objectives. For example, he lied to his wife about owning the

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26 "Defendant's daughter lives in New York, but he has used her to advance his purposes,

too. A Deputy United States Marshal informed undersigned counsel that before trial defendant claimed he desperately needed special phone privileges while in custody because his daughter

28 had died. Defendant's daughter subsequently attended trial.

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1 private planes. He even went to absurd lengths to do so, having the private jet rental crew clean

2 out all evidence of it being a rented jet and filling the cabin with "Cohen" china and "M.S"

3 decals before every flight. More tellingly, defendant lied to his second wife (and the IRS) about

4 his marital status. In 2003, defendant and Stacy Cohen were married in Europe. (Holiday card

5 from Stacy Cohen's now-deceased father, attached hereto as Exhibit 2.)9 In 2004, the newlyweds

6 honeymooned in Greece, accompanied by dolphins. (Pages 133-34 of The Kosher Billionaire's

7 Secret Recipe by Stacy Cohen, attached hereto as Exhibit 3.) All the while, defendant remained

8 separated from, yet married to, his first wife, Yael, until February or March 2005. (Certificate of

9 Dissolution of Marriage, attached hereto as Exhibit 4). Nonetheless, defendant filed his 2004,

10 2005, and 2006 tax returns under the status of "married filing separately", listing his wife as Yael

11 Cohen. Defendant claims he is married, or not, and to whom, as it suits him.

12 Fourth, how defendant treats "family" is revealing in considering not only the "family

13 ties" component of the Bail Reform Act, but also the "character" and ''past conduct" factors.

14 Shortly before he died of cancer, the FBI interviewed Dr. Robert Stripling, who was Stacy

15 Cohen's father. Some of the information Dr. Robert Stripling and his wife provided is as

16 follows:

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defendant told Dr. Stripling that defendant had become wealthy by inventing a painting restoration process that was subsequently sold to Johnson & Johnson;

defendant boasted that he was the only person to have received United States citizenship from the first President Bush;

defendant told Dr. Stripling that defendant owned two private jets, but that one of them was always leased out to various Hollywood personalities;

defendant told Dr. Stripling that Ecast was about to be acquired by Microsoft and that if Dr. Stripling invested in Ecast, Dr. Stripling would make a ''very high rate of return" of approximately 600% to 700%;

In 2003, Dr. Stripling took out a $400,000 loan and provided those proceeds to defendant for an interest in Ecast;

9 As additional citation, the Court may recall the 2003 e-mail from Dillon to defendant 28 congratulating defendant on his decision to get married on a yacht in the Mediterranean.


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Dr. Stripling subsequently transferred his IRA and took out a second mortgage on his home and transferred these proceeds to defendant for equity in Ecast;

defendant told Dr. Stripling not to mention the Ecast deal to anyone, because the Microsoft acquisition was a secret;

defendant later told Dr. Stripling that Microsoft's acquisition of Ecast was delayed because of problems obtaining European Union approval due to monopoly concerns, and that Dr. Stripling's money was needed to help persuade the EU commissioners to approve the acquisition;

while taking his money, defendant constantly called Dr. Stripling and referred to him "Dad", but after all Dr. Stripling's money was gone----approximately $10 million-defendant would take weeks to return calls;

after their money was gone and Dr. and Mrs. Stripling had a leak in their house needing repair and other home purchase needs and called defendant for money, defendant required them to provide an itemized list of what the money would be used for;

when Dr. Stripling could not pay the loans he took out to buy equity in Ecast, defendant told him to stop making payments for three months and then defendant would "make the bank a deal"; defendant offered the bank $125,000 to settle both loans, but on the condition that Dr. Stripling amend his life insurance policies to name defendant-not even his own daughter-as the beneficiary; and

based on defendant's representations, Dr. Stripling believed that once Microsoft purchased Ecast, Dr. Stripling would get all of his investment back, and then Dr. Stripling planned to use the money to fund the arts in the Lubbock, Texas, area (where Dr. Stripling lived and had retired from a successful career as a pediatric surgeon), specifically, buying musical instruments for underprivileged children and helping fund the ballet. 10

19 Dr. Stripling later penned a holiday letter to Stacy and Mouli in which he wished them a happy

20 holiday season, congratulated Stacy on publishing her books, noted they have had a nice time but

21 "for being poor," and noted his one Christmas wish: for Mouli to replace his IRAs. (Letter

22 attached as Exhibit 5.)

23 Fifth, although not family, the defendant also defrauded his purported close friends,

24 Javier and Rose Burillo, out of millions of dollars while agreeing to serve as godfather to their

25 son. Defendant impressed Javier and Rose with "his" private jet, upon which he took Javier and

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27 10Source: FBI 302 of interview of Dr. Robert Stripling and his wife Melissa that took

28 place on September 21,2010, bates labeled SC00203-206.


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1 Rose to Monterey, Las Vegas, and other entertaining locations. Defendant told Javier that

2 defendant made a lot of people a lot of money in ''the Ecast deal," and that the President of the

3 United States personally gave defendant his United States citizenship. While wining and dining

4 Javier and Rose like he did so many others, defendant told Javier that a company the Court will

5 recall-Procinea-was a great investment, that defendant had put $50 million of his own money

6 into it, and that Javier would get his $1 million investment back and much more in just a few

7 months. Javier initially invested that $1 million, refinancing his home to free up that cash.

8 Javier later gave defendant a Ferrari in exchange for more equity in Procinea. Defendant

9 promised Javier that ifProcinea did not work out, Javier's investments were protected by another

10 company that would return Javier's investment. Defendant subsequently pitched another

11 investment to Javier, this time a company called "Electrolyte" that, according to defendant, used

12 a formula for water with less sugar but more electrolytes than its competitor, Gatorade.

13 Defendant told Javier that this product was already being tested in a hospital, and that the worst

14 case scenario was that Coca-Cola would buy Electrolyte. Javier Burillo invested $2.05 million in

15 Electrolyte's purported holding company, Signet Ventures, another name with which the Court is

16 familiar. In all, Javier Burillo "invested" more than $5 million with defendant, purportedly in

17 Procinea, Electrolyte, Voltage Capital, and Teva Pharmaceuticals. l1

18 Finally, neither defendant nor his wife appear to have any family or close friends, at least

19 in California, and none willing to post meaningful bond. As listed on her November 15, 2011,

20 passport renewal, Stacy Cohen's "emergency contact" is a friend in Dallas. As discussed below,

21 Stacy Cohen has no known positive relationship with any family member, because defendant and

22 she stole and spent her father's money and her siblings' inheritance. Roger McAulay is plainly

23 an inappropriate surety, having begrudgingly admitted during trial that he recently helped the

24 defendant move hundreds of thousands of dollars in and out of various bank accounts and that

25 the defendant still owes him $100,000. McAulay also failed to disclose that he struck a side deal

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11 Javier Burillo was not the only investor defendant duped into "investing" in these companies. The government will provide more details of these overlapping schemes in connection with sentencing proceedings.



1 with Alex Sandel through which the latter would cover half of the $600,000 McAulay was

2 posting should defendant flee. When recently contacted by the government, Sandel stated that he

3 was unaware his responsibilities for bail continued past trial, and that he would need to contact a

4 lawyer and figure out how to proceed. No other solvent sureties are proposed. The lack of

5 family ties in California and in the United States certainly weighs in favor of detention.

6 4. Lack of Community Ties, Lack of Employment

7 Similarly, defendant has not had a legitimate job since at least October 2002 when Ecast

8 forced him to resign from the company he used as his personal piggybank and as the central part

9 of his fraudulent scheme. From that time until his arrest in August 2010, his business plan was

10 simply to defraud people out of their money until the victims had no more, then terminate contact

11 with them, all while spending their money to fund an absurdly obscene lifestyle. Demonstrating

12 his lack of ties to any community, defendant secretly abandoned his mansion in Belvedere and

13 fled to Bel Air in early 2009 after being confronted by his victims. He traveled overseas

14 extensively by private jet in 2009, showing that to the extent he has any ties to anywhere, they are

15 overseas. Defendant provides zero evidence of any community or business ties, merely stating

16 that he introduced such evidence in his prior motions, but failing to cite to any such evidence.

17 (Def. Mot. at 6-7.)

18

19

5. In Addition to Posing a Severe Risk of Flight, Defendant is an Economic Danger to the Community

20 The only way defendant knows how to obtain a living is by defrauding people. He is a

21 morally bankrupt con man with no sense of personal responsibility or care for anyone but

22 himself, particularly financially. There is no reason to believe defendant is capable of suddenly

23 ceasing his addiction to fraud if released on bail. Nor is he above using others to do his bidding,

24 whether by relaying instructions or by bringing him a cell phone. Indeed, even to prevent him

25 from committing fraud by using the landline to which he would have access, the government

26 would have to monitor, transcribe, and decipher coded, cryptic phone conversations conducted in

27 Hebrew. As set forth below, the Bail Reform Act requires no such extraordinary measures to

28 contain the actions of a convicted defendant whom obviously no one trusts, else there would be


Case3:l0-cr-00S47-CRB Document322 FiledOl/l8/l2 PagelS of 20

1 no need to discuss armed guards, electronic monitoring, and phone taps.

2 Citing lack of trust in defendants, courts have routinely detained defendants based upon

3 the risk of economic danger to the community. See generally United States v. Norman, 2009 WL

4 464078, *3 (S.D.Fla. 2009)(noting defendant's "fundamental lack of respect for the rule oflaw"

5 and finding he ''poser d] a threat of economic danger to the community"); United States v.

6 Kimoto, 2008 WL 4516315, *4 (S.D.TIL 2008)(finding defendant was an economic danger to the

7 community based on his demonstrated "propensity to endanger the economic interests of others

8 within the community"); United States v. Napier, 1998 WL 437273, *2 (E.D.Pa. 1998)(defendant

9 "has a history of fraud and dishonesty" and ''that he continues to lie with impunity", so the Court

10 was "not convinced that there are any conditions that will adequately protect the community"

11 from further fraud if defendant were released on bail).

12 Like the defendant in Nicolo, truth, honor, and integrity have no place in this defendant's

13 heart. This Court has now seen three weeks of evidence---and conduct outside court that

14 included attempting to bribe a security guard-that establishes this defendant, like the one in

15 Masters, is an unrepentant con man with a militant lack of responsibility who is willing to say or

16 do anything regardless of the consequences, provided it advances his cause. If released, he will

17 prey upon anyone by any means possible and will make every effort to avoid the severe

18 consequences he justly faces for his deplorable actions. Nothing short of incarceration will stop

19 him or protect the community.

20 D. Defendant's Proposed Conditions are Woefully Inadequate

21 Against the backdrop of overwhelming evidence of guilt, no meaningful family ties,

22 community ties, or employment, seemingly unlimited fmancial resources, frequent international

23 travel by private jet, and despicable past conduct, defendant attempts to carry his burden of clear

24 and convincing evidence by suggesting less restrictive conditions than he faced before he was

25 convicted of29 counts and before he leamed he faces the possibility of dying in prison. See

26 United States v. Georgiou, 2010 WL 701892, *2 (E.D.Pa. 201O)(finding defendant had failed to

27 show he was not a flight risk, in part because he was "effectively facing a life sentence"); United

28 States v. Bedoya, 1990 WL 164826, *1 (S.D.N.Y. 1990)(based on defendant's "demeanor at trial



1 and ... that he [wa]s faced with spending a significant portion of the rest of his life in custody," he

2 had an incentive to flee and no respect for his legal obligation not to); United States v. Nicolo,

3 706 F.Supp.2d 330, 333 (W.D.N.Y. 201O)(noting that a relatively older defendant facing a

4 lengthy prison sentence ''may feel that he has little or nothing to lose by fleeing").

5 The Court should not even reach this issue, because defendant cannot establish that he is

6 neither a flight risk nor a danger to the community. If the Court reaches the issue, however, no

7 conditions will reasonably assure against defendant's severe risk of flight and ongoing danger to

8 the community, but defendant's proposed conditions of release are a non-starter. 12

9 The following table illustrates some of the more lenient conditions defendant seeks after

10 being convicted, trying to bribe a guard, and learning he faces 30 years to life in prison:

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Transport from jail to 6th floor ocean view apartment in Beverly Hills

Transport generally

Travel to attorneys' office

Armed guards 2417

Removal from apartment of computers, cell phones, weapons, etc.

Alarm on apartment balcony

Travel to and accommodations in San Francisco addressed

Two federal agents and one private security guard

Handcuffs

Addressed

3

Federal agents

Yes

Yes

Two private security guards

No restraints

Not addressed

I

Private security

No

No

25 12 A negotiation is just how defendant sees the issue. He cannot believe he is entitled to 26 less restrictive conditions after so much has changed. Rather, he has thrown out an opening

offer, but undoubtedly will offer to add conditions should the Court find his initial proposal 27 inadequate. The government respectfully requests that the Court refuse to engage in this game

and simply rule that the proposed conditions are insufficient, if the Court reaches the issue. The 28 government requests an evidentiary hearing if the Court is entertaining any conditions of release.


1

2

3

4

5

6

7

8


::::ound of private security

Private security company with demonstrated experience in protecting against flight

Payment in advance to security company

Private security company's insurance nolicv

All fonner law enforcement

Yes

2 weeks

$10,000,000

Some fonner law enforcement

No

1 week

$2,000,000

9 Defendant now seeks to reduce the number of guards employed to assure he does not flee,

10 seeks not to have an alann on the balcony, and seeks not to be restrained while being transported.

11 These intentional and material omissions from this Court's prior orders are quite revealing.

12 Defendant does not even address the matters he inunediately complained of upon his prior

13 release---medical appointments, religious services, exercise, and walks in the park.

14 No matter what conditions defendant proposes, the Bail Refonn Act does not suggest that

15 the Court or the government should be put through the extraordinary burden of crafting or

16 monitoring conditions of a convicted fraudster. In United States v. Morrison, 2009 WL 2973481

17 (E.D.N.Y. 2009), for example, the defendant sought post-verdict bail by agreeing to submit to

18 monitoring of all non-legal communication, surrender of cell phones, electronic monitoring, and

19 home detention guaranteed by a private security firm using a minimum of five agents 2417, and

20 patting down any visitors. [d. at * 1. The Court noted that the private security guards do not have

21 the specialized detention training and experience possessed by correctional officers who work in

22 correctional facilities. [d. at *2, n.3. The Court also agreed with the government's position that

23 if a defendant "is a flight risk such that the conditions that would ensure return would require the

24 creation of a detention facility outside the detention facility, that is really beyond what [18 U.S.C.

25 Section] 3142 requires", and noted that position found "abundant support in case law." [d. at *2

26 (multiple citations omitted). Furthermore, the Court adopted the reasoning of other courts in

27 finding that the conditions of home detention cannot be relied upon without good faith

28 compliance from defendant unless the home is equipped and staffed like a real prison. [d. at *3.



1 Similarly, in rejecting a defendant's proposal for electronic monitoring, video

2 surveillance, no cell phones, a 24-hour guard, and recorded phone calls, the Court in United

3 States v. Agnello, 101 F.Supp.2d 108, 114-16 (B.D.N.Y 2000), held as follows:

4 These measures, while elaborate, do not assure the safety of other persons and the co=unity in a manner remotely co=ensurate to pretrial detention in a

5 government facility .... [Defendant's] activities inside the house will not be observed, nor is it reasonable to believe that the defendant could not evade

6 monitoring by obtaining access to co=unication devices and employing other methods to carry on criminal activity and to endeavor to obstruct justice. A

7 security guard posted outside, video cameras directed at the outside of the house, and monitoring of telephone lines cannot be relied upon without good faith

8 compliance from the defendant .... [Cloncerns are not overcome by the defendant's offer to hire a private security company, no matter how reputable, to

9 provide security guards, electronic surveillance and video surveillance, and to absorb the costs of doing so. The burden on the government remains substantial

10 .... Government personnel must still review the surveillance tapes and monitor the defendant's compliance with the conditions of his confinement. As the Second

11 Circuit has instructed, such extraordinary burdens are not contemplated by the Bail Reform Act in order to allow an individual to be released who otherwise

12 should be detained. Moreover, the protection of the co=unity provided by the proposed home detention remains inferior to that provided by confinement in a

13 detention facility. Security guards are not trained to act as jailers or detectives, and a home is not a secure facility. A defendant who has demonstrated his

14 unsuitability for pretrial release by actions calculated to subvert the criminal justice process should not be able to buy his way out by constructing a private jail,

15 which cannot provide the same assurance of safety to the co=unity that Congress sought to secure in the Bail Reform Act.

16

17

18

19

20

21

22

23

24

25

26

27

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ld. See also United States v. Koltun, 1998 WL 1033063, *2 (E.D.N.Y. 1998)(''the efficacy of

such 'home detention centers' in assuring safety is dubious. Either the home must be equipped

and staffed like a real prison, or the defendant must be trusted to obey the conditions of release. I

am not required to do the former ... and I cannot trust [defendant] .... "); United States v. Orena,

986 F.2d 628, 632-33 2nd Cir. 1 993)(noting that electronic surveillance systems can be

circumvented, that monitoring equipment can be rendered inoperative, and that the "[s]afety of

the co=unity will be assured only if the government provides trustworthy, trained staff to carry

out the extensive monitoring of homes, telephones, and travel .... We fmd nothing in the Bail

Reform Act that requires the government to staff home detention centers or allow dangerous

defendants to be at large based upon their promise not to violate conditions ofbail.")

Also dealing with a convicted defendant with friends and family in Israel and dual

citizenship, the Court in United States v. Ness, 2008 WL 3842961 (S.D.N.Y. 2008), found



1 defendant had failed to establish by clear and convincing evidence that he was not a flight risk.

2 The Court noted defendant's ties to friends and family in Israel, his dual citizenship, connections

3 in Belgium and Switzerland, and substantial money sent abroad but never recovered. Id. at *3.

4 The Court also found that defendant's promise to tum over his passports and to submit to

5 electronic monitoring were insufficient to meet his burden of clear and convincing evidence. Id.

6 (citing United States v. Londono-Villa, 898 F.2d 328,330 (2nd Cir. 1990)(holding district COurt'S

7 release order pending sentencing clearly erroneous even when defendant's sister and brother-in-

8 law had posted $1 million bond, defendant surrendered passports and executed waiver of

9 extradition applicable to any country in which he may be found and submitted to monitoring)).

10 IV. CONCLUSION

11 Defendant's incentives to flee are enormous. He faces the possibility of spending most of

12 the rest of his life in prison, a drastic change from the life ofluxury defendant led as he traveled

13 by chauffeur-driven Rolls Royces and Bentleys from mansions in Belvedere and Bel Air to

14 private airports where he boarded private jets en route to vacations in the Caribbean, the south of

15 France, Italy, Greece, Russia, and Israel. In addition to losing his freedom, he faces financial

16 destruction ifhe remains where United States courts can reach him, including the certainty of

17 being ordered to pay tens of millions of dollars in restitution in this case and millions more in

18 connection with the multiple civil lawsuits pending against him.

19 All the factors under Section 3142(g) of the Bail Reform Act weigh heavily in favor of

20 detention: the nature of his long-running crimes of dishonesty and deceit; the weight of the

21 evidence against the defendant convicted of 29 counts; the history and characteristics of the

22 defendant, which are replete with lies, deceit, and fraud devastating victims including

23 defendant's so-called friends, his/amity, and the parents o/his godson; and the nature and

24 seriousness of the danger that would be posed by releasing this unrepentant con artist back into

25 the co=unity, and thereby undermining the deterrent value of convictions of multiple serious

26 offenses resulting from years of deceptive conduct.

27 Defendant's wholly unsupported assertions to the contrary notwithstanding, the

28 overwhelming weight of the evidence is that defendant is a severe flight risk and a menacing



1 danger to the community. He cannot, and has not, come close to meeting his burden of proving

2 by clear and convincing evidence that he is neither, and nothing short of incarceration will

3 reasonably assure against these indisputable risks. His renewed motion for bail pending

4 sentencing should be denied.

5 II

6 DATED: January 18,2012

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GOVT. RESP. TO MOT. FOR BAlL;

Respectfully submitted,

MELINDA HAAG United States Attorney

lsi W.DvO~UYGrrL·Ansnsn;PRA~GmUE~--------

HALLIE MITCHELL Assistant United States Attorneys

CR 10-0547 CRB 20

Mouli Cohen - Government's Response for Bail Pending Sentencing

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Transcript of Mouli Cohen - Government's Response for Bail Pending Sentencing