We pulled this one from the "stranger than fiction bin." Last December, 40-year-old Jeffrey Brian Cohen was sentenced to a 37-year federal prison sentence for several charges, including wire fraud, aggravated identity theft, and making false statements to an insurance regulator.
Essentially, Mr. Cohen ran a scam insurance company that collected over $100 million in premiums, while never having adequate assets to back up the policies it wrote. In fact, when it came time to pay out on claims against the policies issued by Mr. Cohen's company, his solution was to invest in some serious weaponry, intelligence gathering, and target the government officials who investigated his case, the attorneys in his trial, and even the judge. Let that sink in for a minute, a scam artist runs a giant scam, involving tens of millions of dollars, gets caught and figures that assassinating the government officials who caught him is the solution.
While the more far-fetched elements of this case may be what makes their way into headlines and news accounts, the 5000 defrauded policyholders and those that they have injured are the real victims in this case, whom no one speaks about. A fair portion of these policyholders were right here in Texas and the effects were felt not just by them, but by innocent people who had legitimate injury claims against these policies.
A Trail of Broken Businesses and Broken Lives in Texas
We first became aware of Mr. Cohen's fake insurance business in the normal course of our business. Over a period of time, our firm was involved in 6 liquor liability, or dram shop, cases. In total, these cases involved several people who died as a result of unlawful alcohol service, as well as a couple of other people who were seriously injured.
The biggest obstacle that most people have in a dram shop lawsuit is that a lot of bars just don't have any assets, beyond a few sticks of furniture and their liquor inventory. For this reason, about 1/3 of Texas bars and restaurants choose to carry some form of liquor liability insurance. This responsible decision ensures that in the event the bar does unlawfully serve someone who later injures themselves or others, there are both adequate funds to compensate the victims and to make certain that a bar doesn't go out of business because of bad decisions on their or their employees' part.
Unfortunately, the insurance that these bars purchased from Mr. Cohen's company wasn't worth the paper it was printed on. While Mr. Cohen was living the good life off of their premium payments, a life that included multiple mansions, sports cars, and all the trappings, these bars, who thought they were covered, were actually worse off than if they had no insurance at all. At least not having insurance wouldn't have cost them thousands of dollars in premiums.
Don't get us wrong, our experience tells us that bars which unlawfully serve people are not just having one bad night, rather it is a pattern of behavior, where an establishment thinks that the rules don't apply to them. They chronically over-server their patrons due to the mistaken belief that they can make more money by breaking the Texas Alcoholic Beverage Commission (TABC) serving guidelines than following them. As a result, they dump countless impaired drivers on the roads every night of the week, thereby endangering our communities. We strongly condemn and combat these behaviors to the best of our abilities.
That being said, carrying liquor liability insurance is a responsible decision that each one of these 6 bars took. Despite their bad behavior in over-serving their patrons, the fact they had insurance should be commended.
In each of these 6 cases, it was a welcome sign that we discovered the bars carried insurance. It offered hope to the victims of the bars' negligent behavior and limited the amount of exposure for the owners of these bars. However, such hope was short-lived. As each of these cases progressed, it became more and more apparent that something wasn't right with the insurance company. Calls were no returned. While in most cases, insurance companies quickly retain defense attorneys and go to war in order to minimize what they have to pay on the policy, this insurance company did none of that.
As we proceeded advocating on behalf of the surviving family members and the seriously injured victims, a bombshell was dropped; Mr. Cohen's insurance company declared bankruptcy.
This left both our clients and the bars we were suing in limbo. Suddenly, seriously injured people, burdened with mountains of medical bills, whose only had the misfortune of being in the path of a drunk driver, had the rug pulled out from under them. At the same time, these bars were facing the prospect of judgments that they no longer had the means to pay, all so Jeffrey Cohen could live a life that he had obtained through fraud.
In the end, each and every one of these bars ended up going out of business and our clients received pennies on the dollar for their injuries, lost wages, and suffering.
What Does This Mean?
Most folks will look at the prison sentence that Mr. Cohen received and conclude that 37 years is reasonable. While I respect that federal prosecutors have put this human filth behind bars for a substantial length of time, this case illustrates to me how inadequate our laws are for so-called "white collar" crimes.
For whatever reason, our law treats property crimes as less harmful and damaging than acts of physical violence. While this may make sense on an instinctive animal level, it fails to appreciate just how devastating property crimes can be. Assuming that each of the 6 bars that were insured by Mr. Cohen's fake insurance company had a single owner and then adding in the 6 victims of those bars' negligence, at least 12 lives have been irreparably altered by Mr. Cohen's behavior. That only accounts for 6 of the 5,000 fake insurance policies that Mr. Cohen's company underwrote.
In all likelihood hundreds of people's lives became nightmares, all so Mr. Cohen could live a dream life. If this were a violent crime, such as murder, rape, or assault, we wouldn't even use the word serial in front of the crime, we could prefix the crimes with mass, as in mass-murder, mass-rape, etc. While I'm not suggesting that the victims in this case were harmed to the degree that murder victim or a rape victim would have been, it is beyond dispute that hundreds, perhaps even thousands of years of human endeavors, were collectively flushed down the toilet by Mr. Cohen's behavior. That he should ever be able to walk the earth as a free man is outrageous on a moral level.
Legally, the government charged what it could and obtained the convictions that the evidence allowed them to get. It's often said that a good compromise leaves everyone unhappy and in this instance, Mr. Cohen's sentence illustrates that point.
Lost in the headlines over this "white-collar" crime are the countless victims whose stories will never be told or known. Their pain goes unnoticed. Survivors and surviving family members go on as best they can, quietly bearing a burden they never asked for, and which will never be lifted. While most who read about this story will focus on Jeffrey Cohen and his horrible deeds, whenever people at Grossman Law Offices hear that fraudster's name, we will always thing of those 6 people killed or injured by bars his company supposedly insured and the businesses that failed because of his behavior.