Billionaire hedge fund manager Steven Cohen settled with the Department of Justice at least for now but his long-running divorce battle rumbles on.
Cohen's legal motion to dismiss a fraud claim filed by ex-wife Patricia Cohen over a soured real estate investment was denied Monday by a federal judge in New York.
District Judge William Pauley's ruling, however, dismissed a racketeering complaint she filed against the SAC Capital head. "Civil RICO (Racketeer Influenced and Corrupt Organization Act) and marriage do not go together like a horse and carriage," the judge wrote.
The case focused on allegations that Cohen misled his soon-to-be-ex-wife about the value of an $8.7 million investment in Queens, New York cooperative apartment conversions during the 1980s. Cohen allegedly told her the investment was lost.
But Patricia Cohen learned after the couple's 1990 divorce that the finance titan received a $5.5 million settlement on the investment, and never disclosed it to her.
She accused Cohen of fraud. The couple's separation agreement "specifically disclaimed" that Cohen made any representation about the investment's value, Pauley wrote. But, ruling that Patricia Cohen might have reasonably relied on the statement that the investment was lost, the judge denied the financier's motion to dismiss that claim.
SAC Capital in November pleaded guilty to criminal insider-trading charges in a November settlement with the Justice Department, which included $1.2 billion in penalties and termination of its trading of investments for outsiders.
Cohen wasn't charged in that case. But the star prosecution witness in the continuing insider-trading trial of Mathew Martoma, a former SAC Capital portfolio manager, testified last week that federal investigators told him Cohen was their ultimate target.
Pauley noted that the only thing distinguishing the Cohen family dispute from others "is the seemingly inexhaustible legal resources that each side has brought to bear." And he threw in a final comment on the length of the proceedings.
"This is a case to restore faith in the old-fashioned idea that divorce is something that lasts forever," wrote Pauley, who added that the couple's legal battles "have covered a span over twice the length of their marriage."