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Law360 (March 16, 2021, 6:20 PM EDT) -- The federal government has recommended a prison sentence of up to six months for a former U.S. Securities and Exchange Commission staffer who pled guilty last fall to improperly accessing confidential information about an investigation into a private equity firm that he later joined.
Prosecutors said Monday that a maximum six-month recommendation is sufficient to punish Michael Cohn for the theft of the investigation information, which they said he leaked to GPB Capital Holdings LLC while applying for a job there.
"While it is unlikely, given his conviction, that the defendant will find future employment at a government agency, it is nevertheless important for the sentence issued in this case to afford general deterrence to other government employees who may be tempted to use their access to confidential information improperly to secure private sector employment," the memo said.
The government added that in order to prevent similar situations in the future, "the punishment must outweigh the potential benefit."
Cohn's sentencing hearing is scheduled for March 24, roughly six months since he pled guilty last September to a misdemeanor count of stealing government property. The ex-SEC staffer previously faced a Jan. 11 sentencing date but managed to convince a judge to push it back due to COVID-19 concerns and expected disputes on sentencing guidelines.
While Cohn interviewed at GPB, he conveyed to those working at the firm that he had inside information pertaining to the SEC's investigation into GPB, according to the memo. Cohn sent insider information to the firm numerous times, the memo said.
He accepted a role as chief compliance officer at GPB in 2018, where he would make $400,000 annually and would likely oversee the "very investigation he unlawfully learned about when at the SEC."
Before Cohn's plea, a bench trial was set to begin — over the objections of the government — on charges of obstructing the SEC investigation, unauthorized computer access and disclosing confidential information without authorization.
But his trial was delayed because of the suspension of jury trials in New York due to the coronavirus pandemic. Despite opposition from the government, which normally has to consent for a criminal bench trial to proceed, U.S. District Judge Gary Brown granted Cohn's request for a nonjury proceeding, citing "unusual, if not unique, circumstances."
On Monday, prosecutors said that Cohn's behavior violated the public trust that citizens place in government employees to maintain ethical standards. They continued that by accepting his new role, Cohn placed himself in a position where he could "unlawfully influence" the firm's response to the regulator's investigation.
"The defendant's offense was serious," the memo said. "As an employee at a government regulatory agency, the defendant had unusual access to highly confidential, sensitive information, and the defendant's conduct in obtaining that information unlawfully and then using it for his own personal gain was wrong."
Scott Resnik, an attorney who represents Cohn, told Law360 on Tuesday that on behalf of Cohn, they will ask the court "for a sentence of probation, which is a sentence consistent with the plea agreement and the conduct to which he pled, specifically looking at information to prepare for a job interview."
Counsel for the government declined to comment.
The government is represented by Lauren Elbert and Artie McConnell of the U.S. Attorney's Office for the Eastern District of New York.
Cohn is represented by Scott Resnik, Michael Rosensaft, Vikas Khanna and Jake Nussbaum of Katten Muchin Rosenman LLP.
The case is U.S. v. Cohn, case number 2:19-cr-00097, in the U.S. District Court for the Eastern District of New York.
--Additional reporting by Craig Clough and Stewart Bishop. Editing by Gemma Horowitz.
Correction: An earlier version of this story misstated the charges to which Cohn pled guilty. The error has been corrected.
For a reprint of this article, please contact reprints@law360.com.
