Ecast Founder Accused of $28 Million Investment Fraud

By Evan Mix

Published on July 08, 2009

A lawsuit filed last week in California accuses Samuel Cohen, founder of interactive media provider Ecast, Inc., of defrauding a group of investors of more than $28 million since 2002. The alleged victims included at least two nonprofit organizations. One, the Vanguard Public Foundation, was founded by actors Danny Glover and Harry Belafonte and dedicated to civil rights and social justice issues. Another, called In Spirit, provided grants to support quadriplegics in the San Francisco Bay Area.

The suit claims that Cohen fabricated an elaborate scheme in which he falsely told investors that Ecast was negotiating an acquisition deal with Microsoft. Cohen allegedly claimed that Microsoft was offering an exchange rate on the transaction that would increase the value of the investments by a factor of ten, then asked investors to pay expensive fees supposedly related to the transaction. Cohen allegedly stashed the money in secret bank accounts, periodically using it to make purchases or distributing it to family members for their personal use.

Through his lawyer, Marshall Grossman, Cohen disputed the allegations. According to Grossman, Cohen never claimed to be involved in a business deal with Microsoft and never received any money from Vanguard or any other investors. In 2003 and 2004, Cohen faced similar lawsuits alleging that he told Ecast investors that the company was in acquisition negotiations with Microsoft or another large company. Both previous suits were settled out of court. Another separate lawsuit making similar allegations is currently pending.

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