León Cosgrove

Before the Panama Papers: Pursuing Complex, High-Value Fraud Recovery for the French Government

By: Scott B. Cosgrove

_89063523_panama_index_draft2In 2011, CDR Creances, an instrumentality of the French government, obtained judgment in a fraud case awarding it six South Florida properties valued in excess of $120 million. That judgment derived from a 1990 $90 million mortgage fraud against a French bank by convicted fraudsters Maurice and Leon Cohen, who are currently serving time in a South Florida federal prison for tax evasion on their ill-gotten gains.

Recent revelations by the Miami Herald from the so-called “Panama Papers” have confirmed the Cohens’ use of offshore shell companies created by the Panamanian law firm Mossack Fonseca to defraud CDR. In an April 4, 2016 article, I told the Miami Herald: “The Cohens were clients of Mossack Fonseca and abused the anonymity provided by these offshore corporations for years. Money designated to pay CDR was diverted to Swiss Bank accounts owned by these secretive entities. It made our efforts to recover the misdirected proceeds incredibly difficult, and having access to these papers would have certainly smoothed the road to recovery. To the extent others have used Mossack Fonseca to create corporations for improper purposes, they have reason to be deeply concerned.”

Recovery of Property Used to Launder Stolen Funds

Nevertheless, and despite the lack of a roadmap like the Panama papers, CDR’s legal and forensics teams have been able to reconstruct the Cohen’s complex web of money-laundering shell companies, bank accounts, money transfers, and property purchases. And since 2011, because of those efforts, CDR has recovered about $100 million of $186 million in fraud judgments against the Cohens.*

According to a front-page article in the Miami Daily Business Review Feb. 22, 2016, “CDR (also hopes) to gain control of two final pieces of South Florida real estate to recover about $20 million in additional funds, but those properties remain in dispute” due to several purported mortgage liens.

Progress Liquidating the Whitehall Property

In October 2015, the Review also reported on a deal our team at León Cosgrove reached with Regions Bank to allow CDR “to sell one of the two final former Cohen properties: the storied 2-acre Miami Beach Whitehall estate where President John F. Kennedy reportedly had trysts with actress Marilyn Monroe.” That agreement allowed Whitehall immediately to be put on the market with litigation to continue over the proceeds of the sale.

Then in a three-day bench trial before Miami-Dade Circuit Judge Robert Luck, we again represented CDR in its effort to free the last of the six former Cohen properties awarded to CDR, a Fisher Island luxury condo, from two purported liens against it. In that trial, we argued a complex series of claims against purported lien-holder Regions Bank for fraud in extending the loan behind its lien on the disputed Fisher Island property.

Setback in Liquidating Fisher Island Property

Complicating our recovery of CDR funds the Cohen’s used to purchase the Fisher Island condo, a third party, Miami tech millionaire Manny Medina had been sold Regions’ purported mortgage lien interest in that luxury condo through his company, Fisher Island, LLC in 2012. Thus, Mr. Medina became another purported lien-holder preventing CDR from being able to liquidate the property purchased, then mortgaged by the Cohens as part of their elaborate scheme to launder CDR’s stolen funds.

Unfortunately, as a result of the October 2015 bench trial, on February 22, 2016, Judge Luck found in favor of Mr. Medina’s lien… While Judge Luck acknowledged in his ruling that we proved the loan file contained a forged HSBC Bank letter falsely documenting approximately $15 million in a Cohen-controlled account, he concluded that the evidence did not show who falsified the letter. The Miami Daily Business Review quoted me as saying, “We’re respectful of the decision but certainly disappointed with it. At this point the ink is still getting dry on the ruling, and we are considering what our next steps will be. My sense is we will take an appeal.” As the Review also reported, “CDR has taken its Cohen money chase to the Third District Court of Appeal in other cases.” CDR has since filed its notice of appeal, and remains confident that the Third District will find in CDR’s favor.

*Click here to read about CDR’s 2014 Third District Court of Appeals win on behalf of its right to collect in Florida on its New York judgments against the Cohens.

ScottCosgrove_BW_HRScott B. Cosgrove
is a founding partner of León Cosgrove, LLC and a seasoned trial lawyer focusing on complex commercial litigation. His representations involve all manner of commercial disputes, including financial services litigation, fiduciary duty, fraud, partnership, intellectual property, and deceptive/unfair trade practice claims.