Top Tampa attorney Barry Cohen owes $ 35 million in loans


TAMPA – Not much looks askance in the lobby of Attorney Barry Cohen’s downtown Tampa office.

A flirtatious statue of Lady Justice still bares her thigh at the front door to visitors, like a blindfolded starlet unexpectedly handed a sword and scales. There are framed front pages hanging on the walls documenting four decades of no-guilt judgments from customers and million-dollar payments.

The decorations aptly reflect the accomplishments and style of Cohen, a 74-year-old with silver hair and a silver tongue who is known across Florida for seemingly incapable of losing a big case. But recently released legal and financial records suggest that some significant money problems lie beneath its well-polished public image.

Documents filed in Tampa federal court late last month, as well as court records and affidavits from New York and New Jersey, show that Cohen owes about $ 35 million to foreign financial firms.

The debt is mainly due to high-interest loans that Cohen has used for at least the last decade to fund his unusually expensive, high-stake and conditional fee litigation. A lender is suing him for reclaiming his money.

Cohen admitted last week that he could have done a better job in the past managing his company’s money. The risky financial instruments that helped open his practice were selected by his company’s business staff without his knowledge, he said.

“I got into this mess because I’m not really good at that sort of thing,” said Cohen. “I am a lawyer and not an administrator.”

Signs of financial distress have haunted the Tampa Bay area’s most prominent attorney.

Some of the top lawyers in his firm have left in recent years. In 2009, he brought in a management consultant to put his company’s finances in order, and a beachfront condo he owns was foreclosed on for several months in 2011.

Cohen has dismissed earlier speculations about his money troubles as defamations of jealous competitors in the legal world. Last week, he continued to downplay questions about his company’s solvency, saying he had plans to work out the debt and expected the proceeds from several large, ongoing cases to ease the money crisis over the next several years.

“It sounds big to the average person, but he’s a big-money guy,” said Elliott Buchman, former chief financial officer of Cohen’s company. “If I told you that Donald Trump owed $ 18 million, no one would think about it.”

However, Cohen admitted that he was not satisfied with his current financial plight.

“I knew it wouldn’t get me down, but I didn’t like it,” he said. “It was a lot of money.”

‘We go on the mat ‘

The son of a Jewish candy store owner from Brooklyn, Cohen moved his family to Tampa as a teenager and graduated from Mercer University in Georgia with a law degree. At some point he picked up the general country stretch that is the informal trademark of a certain category of great American litigators.

At an age when some are considering retirement, Cohen is still happily wrestling with the government and big business. His current clients include relatives of Ibragim Todashev, the Chechen man who was shot dead in Orlando by an FBI agent investigating Tamerlan Tsarnaev, the suspected mastermind of the 2013 Boston Marathon bombings.

Cohen doesn’t turn up his nose at routine injustices when chatting with Larry King or yelling Nancy Grace on national television: One of his current clients is a Hernando County man suing the sheriff’s deputies on alleged brutality.

Cohen said the $ 35 million he owed didn’t cast a shadow over his practice – in fact, he claimed he didn’t know the amount of his debt until a reporter presented him with a dollar figure.

“I know that may sound honorable or apolitical, but I don’t really know because I don’t care,” he said, confirming that he thinks the $ 35 million amount is correct.

“My fortune will repay these lenders and there will be a lot of money,” Cohen said. “I will continue to live the way I live and help people as I help them and do what I love and live my life and practice as a lawyer.”

Less gleefully, he talks about the woman whose lawyer campaign exposed his company’s financial troubles: Natalie Khawam, a former employee who left his company after she claimed to have been sexually harassed by one of Cohen’s corporate consultants.

Khawam, a small but returning actor on Tampa’s celebrity news scene, is the twin sister of Jill Kelley, the celebrity of Bayshore Boulevard whose accidental disclosure of David Petraeus’ extramarital affair with another woman led to the demise of the former CIA director. Kelley said she was followed by the woman who later discovered she should be Petraeus’ mistress.

On March 28, an attorney for Khawam’s bankruptcy administrator asked a federal judge to mortgage Cohen’s share of a $ 22.3 million settlement paid by biotech firm Genzyme. Khawam had introduced Cohen to the whistleblowers, whose complaints had started the case even though she left the firm before the litigation was closed.

The motion alleging that Khawam owes at least $ 450,000, states that Cohen is “bankrupt or will soon be insolvent,” and cites lawsuits in New Jersey Federal Court and New York State Court, in whose debts are described. Attached was an affidavit from Khawam alleging that she was told by a colleague in 2009 that “Cohen’s law firm was underwater”.

Cohen doesn’t deny some of the dire financial realities exposed by Khawam’s legal maneuvers, but he does deny their claim to a portion of his income – to say the least.

“It’s a cop — case, and I’m not going to solve it. I wouldn’t get it for 10 cents,” he said. “We’re going to the mat.”

Khawam didn’t answer calls for this story. Michael Beltran, the attorney who filed the latest filing on behalf of their bankruptcy trustee, said neither he nor Khawam would comment.

Loans on legal fees to fill legitimate need

The court documents illustrate a paradox: how could a lawyer famous for his track record of lucrative court victories be so heavily in debt?

One answer lies in the unorthodox sources Cohen’s company turned to for cash. In high-level civil litigation – where years go by and costs can run into the millions between judgments or settlements – firms that work for conditional fees often have to take out loans or invest their own money.

But for at least a decade, Cohen has been using a method of financing that other lawyers consider particularly risky: he “sells” his expected legal fees for cash at greatly reduced prices. While useful for paying the bills during lengthy litigation, the agreement can potentially be as ruinous for attorneys as high-interest payday loans.

Such financial instruments have not always been beneficial to Cohen. RD Legal Funding, a New Jersey company suing Cohen for his money back, claims that one of its transactions was to give Cohen $ 3 million in 2009 to add $ 4.2 million in legal fees He was expecting to “buy” from litigation against WellCare, a healthcare company whose executives committed Medicaid fraud.

And that didn’t include interest. In pleadings filed in New Jersey in December, RD Legal Funding alleged that Cohen now owed $ 6.8 million for the $ 3 million originally paid to him – part of the $ 20.8 million which, according to the company, are due in total.

John Morgan, a wealthy Orlando litigation attorney, said this type of transaction serves a legitimate need – banks are reluctant to view a potential court settlement as collateral – but can “stifle” attorneys who become overwhelmed.

“There are a lot of people who settle a case and they don’t make any money. They just transfer their fees to a finance company,” Morgan said.

A New York firm, Counsel Financial, has also provided Cohen with a $ 17 million line of credit, of which approximately $ 2.6 million has been repaid, according to an affidavit drawn up by the company’s president for the Tampa federal case emerges.

Counsel Financial and RD Legal Funding executives did not respond to requests for comment.

Cohen says he is working out plans to repay both lenders, a claim backed by legal documents. Counsel Financial President Michael Callahan said in an affidavit on Tuesday that his company and Cohen’s company “have been on friendly terms and have worked together towards repayment of the loan since the loan began.”

In a letter filed in federal court in New Jersey on March 20, an attorney for RD Legal Funding said the company had “negotiated” the debt with Cohen.

“I know we’ll solve it in the end,” said Cohen. “I know I have a damn good life.”

He said he had tobacco cases in the pipeline to settle Counsel Financial and his payment from a client in a Connecticut criminal case will take care of the debt to RD Legal Funding.

Additionally, he said, it would bring together larger lawsuits he cannot speak about, revelations of wrongdoing that will turn Cohen’s brand of courtroom alchemy into dollar numbers with seven or more zeros.

With so much on the horizon, what is $ 35 million?

“It’s like Monopoly money,” Cohen said.

News researcher John Martin contributed to this report. Peter Jamison can be reached at [email protected] or (813) 226-3337. Follow him on Twitter @petejamison.

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