Steven Cohen, the billionaire founder of SAC Capital Advisors LP, hid $5.5 million from his ex-wife during their 1990 divorce, her lawyer argued before a federal appeals panel in a bid to reinstate her lawsuit.
Howard Foster, a Chicago-based lawyer for Patricia Cohen, said Steven Cohen didn’t include the money, which Foster said Steven received as part of a settlement of a real-estate dispute, on his 1989 financial statement.
“The financial statement was wrong and deceptive,” Foster today told the panel of the U.S. Court of Appeals in Manhattan. Martin Klotz, a lawyer for Steven Cohen, denied his client hid money.
In March, U.S. District Richard Holwell in New York dismissed Patricia Cohen’s suit, ruling she took too long to bring the case, which was filed in 2009. The judge said Cohen made similar claims in a 1991 lawsuit in which she accused her ex-husband of hiding assets and misrepresenting the value of his investments.
Foster said today that his client didn’t know about the alleged deception until 2008.
“I don’t accept for a minute that he had $5.5 million,” Klotz, of Willkie, Farr & Gallagher LLP in New York, told the three-judge panel. “Mr. Cohen’s statements about the mortgages are completely true.”
18 Months Earlier
Circuit Judge Pierre Leval asked Klotz why it wasn’t enough for the case to continue that Patricia Cohen said in her complaint that her ex-husband left off from the statement “5.5 million bucks” he received 18 months earlier.
Klotz said Holwell dismissed the complaint in part because it didn’t meet a plausibility test and there were other possible explanations such as Cohen not having the money at that point.
“Simply saying he got $5.5 million in 1986 and January 1987 says nothing,” Klotz said.
Foster said that as part of the settlement, Cohen received $5.5 million in cash and a $3 million mortgage. Klotz disagreed, saying Cohen got mortgages that eventually went into bankruptcy.
“He is a hugely successful trader,” Foster told the judges. “He didn’t just lose that $5.5 million. He kept it off the statement.”
Cohen, 55, started SAC in 1992 with about $25 million and the hedge fund firm now has about $14 billion under management.
“I feel my attorney did a good job,” Patricia Cohen said after the oral argument. “I think they really understood the facts that Mr. Foster laid out.”
“I am cautiously optimistic there’s going to be a reversal,” her lawyer said.
Jonathan Gasthalter, a spokesman for Cohen, wasn’t immediately available to comment on the proceedings.
Patricia Cohen said in her lawsuit that SAC Capital was “the product of an ongoing racketeering scheme” that has engaged in insider trading, bank fraud, money laundering and other misconduct.
She also claimed she was entitled to at least half of his business, saying it was developed in part with $1 million that she earned from a real estate business.
Steven Cohen said the couple had $17 million in marital assets in the divorce, and Patricia Cohen accepted a $3.5 million settlement, $2.5 million of which was an apartment, according to the complaint.
Clients of Willkie Farr include Bloomberg LP, the parent of Bloomberg News.
The case is Cohen v. Cohen, 11-1390, U.S. Court of Appeals for the Second Circuit (Manhattan), and 09-cv-10230, U.S. District Court, Southern District of New York (Manhattan).