The purpose of this website is to educate and empower Four Star’s investors. The site has been created as a resource and communication tool that will enable the sharing and reviewing of information.

The legal documents posted here are publicly available as court records. Documents are published as PDF files, and require the free Adobe Acrobat Reader to read. Click here to download the free Adobe Acrobat Reader.

Four Star is a complex case. To help victims fully understand its intricacies and to stay informed, it is hoped that a centralized place with access to relevant information will allow investors to uncover the truth.

Please keep checking back for updates.

If you have any information such as documents, tips or leads that might help in the investigation of Four Star, please contact info@fourstarfraud.com.

News

June 03, 2009

According to recently filed court documents, the Four Star Trustee has reached a proposed settlement in his litigation against Four Star insider David Roberts. The proposed settlement shows Roberts agreeing to pay $4.9 million to settle the dispute without any admission of liability.

If approved by the court, attorneys hired by the Trustee to pursue the case as well as creditor Credit Suisse bank will both net huge payments -- more than $3 million in fees and net recovery proceeds.

According to court filings, here’s a breakdown of the proposed attorney payments and net proceeds from recovery:

- $926,111.61 contingency fee to Trustee litigation counsel, Frandzel, Robins, Bloom & Csato.
- $269,311.97 to creditor Credit Suisse for reimbursement of expense payments.
- $1,852,223.21 to creditor Credit Suisse per agreement to split with Trustee any net proceeds of recovery by 50%.

According to the court filing, the Trustee currently has $2,395,978.18 of funds on hand that he has recovered in the bankruptcy case. The $4,900,000.00 from the Roberts’ case is being held in a segregated Trust account pending court approval of the proposed settlement and release of funds.

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In newly filed court papers, the Four Star Bankruptcy Trustee is objecting to a “priority unsecured” claim filed by the U.S. Department of Justice. The DOJ's claim stems from a $1,019,136.97 criminal fine it obtained against Four Star in the federal telemarketing fraud case. Four Star and former Four Star executive Mark Cohn were prosecuted and convicted in that criminal trial. Now the Four Star Trustee is seeking to disallow the “priority status” of the DOJ claim, which is one of hundreds of creditor/investor claims filed in the bankruptcy action. In its filing, the Trustee states:
“…while, this Objection does not seek to disallow the Claim, it does seek a determination by the Court that its priority is subordinate to tardily-filed general unsecured creditors pursuant to 11 U.S.C. Section 726(a)(4) on the grounds that the Claim is based on a criminal fine and is not compensation for actual pecuniary loss.”

A hearing on the objection has been scheduled for July 17th at 10 am before federal bankruptcy Judge Thomas B. Donovan.

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May 20, 2009

In a sign that the Four Star bankruptcy is now close to wrapping up, the Trustee overseeing the case is in the process of hiring special counsel to help finalize creditor claims. In court papers, the Trustee included the following key figures about the claims filed in the Four Star bankruptcy:

General unsecured claims - $205,384,200.89
Priority unsecured claims - $7,633,200.89
Secured claims - $24,639,706.81
Unknown claims - $149,000

The Trustee noted in his filing that the only remaining major litigation to be resolved is a lawsuit filed against Four Star insider and investor David Roberts. The Trustee is seeking to recover as much as $12 million in the Roberts case, which went to a court trial earlier this year. The Judge has yet to issue a verdict in the case.

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It’s unfortunate that no one has challenged the Securities and Exchange Commission over its handling of the Four Star matter. Like in the Madoff case, Four Star was investigated by government regulators at the Securities and Exchange Commission back in 2000 and 2001 and cleared of any wrongdoing. Had the SEC been doing its job competently and aggressively many victims would have been spared losing their life’s savings in the Four Star fraud. Let's hope the Obama Administration is serious about reforming an agency that's grown too cozy with deal-making financiers. The SEC needs to be back in the business of truly protecting investors.

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Article from the Wall Street Journal on how some investors and feeder fund money managers in the Madoff fraud are busy scrambling to invoke the "I knew nothing" and "I was a victim" defense -- a common cry heard in the Four Star Ponzi case as well.
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MAY 18, 2009
Madoff Victims Investigated
Criminal Probe Expands to High-Profile Investors Who Say They Were Stung

By AMIR EFRATI

The criminal investigation into who knew about Bernard L. Madoff's massive fraud has expanded to include some of his highest-profile investors, according to people familiar with the matter.

Jeffry Picower and Stanley Chais, two philanthropists who invested heavily with Mr. Madoff, and Carl Shapiro, one of the money manager's oldest friends, are among at least eight Madoff investors and associates being scrutinized by the U.S. attorney's office in Manhattan, these people said.

Federal investigators have gathered evidence they think will show that Messrs. Picower and Chais told Mr. Madoff how much in returns they wanted. Their accounts soon would reflect those amounts, people familiar with the investigation said.

Prosecutors are continuing to probe Madoff family members and employees, but the investigation now includes investors who have claimed to be among the hardest-hit victims of the fraud, both directly and through their foundations. Mr. Madoff pleaded guilty in March and is set to be sentenced in June.

Aiding investigators is their discovery that Mr. Madoff was a "meticulous" record keeper who kept correspondence between some clients and the firm, said people familiar with the probe.

Prosecutors haven't charged any Madoff investors with criminal wrongdoing. A lawyer for Mr. Picower, 67 years old, said his client wasn't complicit in the fraud and suffered losses in the billions. A lawyer for Mr. Chais, 82, a money manager who channeled West Coast clients to Mr. Madoff's firm, said he was unaware of a criminal probe of Mr. Chais and his client didn't have knowledge of Mr. Madoff's Ponzi scheme. Mr. Chais "has cooperated fully" with investigators, the lawyer said. A representative for Mr. Shapiro, 96, said Mr. Shapiro had no knowledge of the fraud.

Madoff Fraud Case
Messrs. Picower and Chais already have been accused of seeking fictitious gains in civil lawsuits brought against them by Irving Picard, an attorney at Baker & Hostetler LLP who is trustee in the bankruptcy liquidation of Mr. Madoff's firm, Bernard L. Madoff Investment Securities LLC. As part of his effort to recover assets for Mr. Madoff's victims, Mr. Picard alleged that Messrs. Picower and Chais sought -- and then received -- better returns than thousands of other Madoff investors.

In some cases, their returns reached 300% or 950% a year, Mr. Picard has alleged. The two men made withdrawals from Mr. Madoff's firm of more than $6 billion in supposed profits above and beyond the principal they deposited for themselves, family members and foundations, the lawsuits allege.

Messrs. Picower and Chais have denied the claims, either directly or through their lawyers. A lawyer for Mr. Madoff declined to comment on Mr. Picard's allegations or the criminal probe of investors.

Prosecutors are now weighing whether the actions and evidence cited in the civil lawsuits rise to the level of criminality, according to people familiar with the matter. More broadly, they are reviewing records to see if certain longtime investors had special access to Mr. Madoff, as well as whether they got specific returns in a manner that suggests they knew the returns were a fraud.

Among the other Madoff investors and associates whose account records and other information kept by the Madoff firm are being scrutinized by the government for signs of complicity, according to people familiar with the matter: Frank Avellino, a Florida accountant who ran an investment fund that channeled client money to Mr. Madoff; Noel Levine, a real-estate investor who works out of a two-room office located next door to where Mr. Madoff ran his fraudulent investment operation, on the 17th floor of the Lipstick Building in Manhattan; and Palm Beach investor Robert Jaffe, a son-in-law of Mr. Shapiro who referred potential investors to Mr. Madoff.

None of these people have been accused of criminal wrongdoing by the government.

A lawyer for Mr. Avellino declined to comment. Mr. Levine, 89, said he had no knowledge of fraud and that he and his family lost millions of dollars. A spokesman for Mr. Jaffe said he had no knowledge of the fraud.

A spokeswoman for the U.S. Attorney's office, which has brought criminal charges against only Mr. Madoff, 71, and his outside auditor, declined to comment. The auditor, David Friehling, who also had investments with Mr. Madoff, is out on bail. His lawyer has declined to comment.

It's unclear why Mr. Madoff would allegedly have given some investors such high returns and why some investors allegedly made requests for specific gains. Mr. Picard's lawsuit against Messrs. Picower and Chais doesn't speak to possible motive, only alleging that the defendants knew or should have known they were "reaping the benefits" of "manipulated purported returns, false documents and fictitious reports."

Originally from the New York City borough of the Bronx, Mr. Chais for many years lived as a money manager in Beverly Hills, Calif. He invested substantial client funds with Mr. Madoff. He now lives in New York.

Accounts of Mr. Chais and his family averaged annual returns of 40% with Mr. Madoff, and as much as 300%, Mr. Picard alleged. Mr. Chais also requested fictitious losses from Mr. Madoff's firm, apparently to offset gains he made through other investments in order to avoid taxes, Mr. Picard alleged. Mr. Chais's foundation, wiped out in the scandal, had $178 million in assets as of 2007.

In a letter to clients about Mr. Picard's suit, Mr. Chais said it was filled with "inaccuracies." Eugene Licker, a lawyer for Mr. Chais, said Mr. Chais is extremely ill, suffering from a blood disorder.
Mr. Picower, who lives in Palm Beach, Fla., and Manhattan, is a lawyer, accountant and investor who led buyouts of health-care and technology companies. Mr. Picower's foundation, heavily invested with Mr. Madoff, at one point stated its investment portfolio was valued at nearly $1 billion.

Mr. Picower and his wife, Barbara, had two dozen accounts with Mr. Madoff and received annual returns of more than 100% in 14 instances, reaching as high as 950%, Mr. Picard alleged.

Correspondence between Mr. Picower or one of his employees and the Madoff firm suggests complicity, Mr. Picard alleged. In May 2007, for example, a foundation employee named April Freilich requested gains on Mr. Picower's behalf, according to the suit. The Madoff firm then recorded purported trades in his account as having occurred in January and February 2006, according to the lawsuit. That and similar moves in May 2007 netted Mr. Picower $55 million in fictitious gains, the suit alleged.

William Zabel, a lawyer for Mr. Picower, his wife and his foundation, said they were "totally shocked" by Mr. Madoff's fraud and "were in no way complicit in it." He said they and their foundation, now closed, lost billions of dollars. Mr. Zabel, who also represents Ms. Freilich, declined to comment on her behalf.

Federal investigators are reviewing evidence that they think suggests Mr. Shapiro also knew his returns were fraudulent, according to people familiar with the matter. Unlike Messrs. Picower and Chais, Mr. Shapiro, a women's clothing entrepreneur, was never in the finance business. He is one of Mr. Madoff's oldest friends and biggest financial backers and helped Mr. Madoff start his investment firm in 1960.

In 1971, Mr. Shapiro sold a clothing brand for about $20 million. Over the years, that sum grew to hundreds of millions of dollars and some say more than $1 billion, the vast majority of it from Mr. Madoff, according to people close to Mr. Shapiro.

Mr. Shapiro personally lost an estimated $400 million from the fraud, including $250 million invested with Mr. Madoff 10 days before the fraud collapsed, said people familiar with the matter. His foundation lost more than $100 million.

—Robert Frank contributed to this article.
Write to Amir Efrati at amir.efrati@wsj.com

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May 13, 2009

Two fraud cases with very similar stories. Watch the PBS Frontline documentary on Bernie Madoff:

http://www.pbs.org/wgbh/pages/frontline/madoff/

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May 11, 2009

According to newly filed court documents, the sentencing of Four Star executive Ronald I. Anson has once again been postponed. Anson's sentencing had been scheduled for May 18th. The new sentencing date and time: Monday August 31, 2009 at 11:00 a.m. before U.S. District Court Judge George H. King, Courtroom 650, Roybal Federal Building, 255 East Temple Street, Los Angeles.

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January 13, 2009

According to newly filed court documents, the sentencing of Four Star executive Ronald I. Anson has once again been postponed. Anson's sentencing had been scheduled for January 26th. The new sentencing date and time: Monday May 18, 2009 at 11:00 a.m. before U.S. District Court Judge George H. King, Courtroom 650, Roybal Federal Building, 255 East Temple Street, Los Angeles.

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November 20, 2008

According to newly filed court documents, the sentencing of Four Star executive Ronald I. Anson has been postponed to January of 2009. The new sentencing date and time: Monday January 26, 2009 at 11:00 a.m. before U.S. District Court Judge George H. King, Courtroom 650, Roybal Federal Building, 255 East Temple Street, Los Angeles.

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October 08, 2008

Four Star executive Ronald I. Anson is scheduled to be sentenced for his role in a tax evasion scheme on December 8, 2008 at 11 am before U.S. District Court Judge George H. King, Courtroom 650, Roybal Federal Building, 255 East Temple Street, Los Angeles.

Court records filed in May show federal prosecutors charged Anson with “conspiracy to defraud the United States” in an alleged scheme that resulted in a tax loss to the U.S. Treasury of approximately $9 million.

Anson recently pleaded guilty to the federal charges.

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September 30, 2008

Four Star executive Mark F. Cohn has been sentenced to five years probation and two years home detention for his role in defrauding investors in the multi-million dollar Four Star Ponzi scheme.

According to one news report, before being sentenced on Monday, Cohn told Los Angeles U.S. District Judge Philip Gutierrez: "I wish I could erase all the bad things I did. No amount of apologies can correct or take away the pain I caused others. I will work hard to pay back the victims I have harmed."

Cohn, who now resides in Arizona, was charged with conspiracy and wire fraud last October. He pleaded guilty to the charges and faced a maximum of 10 years in federal prison.

Several victims spoke at Monday's sentencing hearing, describing how Cohn had ruined their financial lives, and urged the Court to impose a ten year maximum sentence.

Instead, Judge Gutierrez gave Cohn five years probation, two years home detention and ordered him to perform 2,500 hours of community service. He was also ordered to attend mental health and substance abuse counseling, and pay $23 million in restitution to victims. However, prosecutors have acknowledged in court filings that in light of existing judgments against Cohn totaling at least $100 million, the Four Star executive is unlikely to "substantially" pay the restitution.

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September 23, 2008

According to newly filed court papers, the sentencing of Four Star executive Mark F. Cohn has now been rescheduled to Monday September 29th 10 am before Judge Philip S. Gutierrez, Courtroom 790, Roybal Federal Building, 255 E. Temple Street, Los Angeles.

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September 17, 2008

The September 22nd sentencing of Four Star executive Mark Cohn has been postponed -- possibly to Monday September 29th. The rescheduled date will be posted once it's finalized, so please keep checking back.

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September 04, 2008

According to newly filed court papers, the Los Angeles U.S. Attorney’s Office has reached a sentencing agreement with Mark F. Cohn that would preclude the Four Star executive from serving additional prison time for his role in the Four Star Ponzi. Instead, the sentencing agreement (if approved by the court) would require “home detention” for Cohn for a period of two years, as well as place the Four Star executive on five years probation. Cohn’s sentencing hearing is scheduled for September 22nd at 10 am in Los Angeles.

According to the sentencing recommendation, Four Star executives Jack Garrett and Ronald Anson have also pleaded guilty to federal felony charges stemming from a tax evasion scheme.

To read the sentencing agreement, please click here.

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July 08, 2008

According to court papers, federal prosecutors have filed charges against Ronald I. Anson and Jack E. Garrett accusing the Four Star executives of participating in an illegal hotel partnership tax scheme.

Court records filed in May show prosecutors charging Anson with “conspiracy to defraud the United States” in an alleged scheme that resulted in a tax loss to the U.S. Treasury of approximately $9 million. The U.S. Attorney’s Office accused Garrett of “aiding and assisting preparation of false tax return.” In its filing, federal prosecutors asserted that the total amount of government tax loss from Garrett’s “preparation and signing of these false returns is $357,906.”

Both Anson and Garrett initially pleaded not guilty to the government allegations, but recent court filings indicate the two Four Star executives may be in the process of changing those pleas to guilty.

In addition to serving as Four Star executives, Anson and Garrett were both certified public accountants.

Prosecutors filed the charges in U.S. District Court for the Central District California. To read the charges against Anson, please click here. To read the charges against Garrett, please click here.

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June 12, 2008

The sentencing date for Four Star executive Mark F. Cohn has been moved again. It's now scheduled for September 22 at 10 am before Judge Philip S. Gutierrez, Courtroom 790, Roybal Federal building, 255 E. Temple Street, Los Angeles.

Reasons for the postponement were spelled out in newly filed court papers. Here’s an extended excerpt:

“… (rescheduled) to permit the parties to fully review recently obtained trial transcripts, trial exhibits, and financial records, to determine whether to object to the Pre-Sentence Report (“PSR”). The parties anticipate that the additional time will permit the parties to limit issues for the Court’s determination, including related-conduct issues of first impression.

In the period since the Court granted the first continuance, the government has obtained hundreds of pages amounting to a partial transcript of defendant’s 20-day Maryland trial, plus trial exhibits. In addition, an IRS Special Agent has recently completed a weeks-long analysis of financial records. Defense counsel and government counsel met with the agent on June 6, 2008 and identified further possible financial analyses, which may necessitate obtaining additional exhibits from the Maryland trial.”

For more information, please contact:
Evan J. Davis, AUSA
phone: (213) 894-4850
email: Evan.Davis@usdoj.gov

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March 30, 2008

Government prosecutors have requested and been granted another postponement in the sentencing of Four Star Executive Mark F. Cohn. According to papers filed in Los Angeles U.S. District Court, the government sought a delay on the heels of concern about a pre-sentence report for Cohn. Here’s an excerpt from the court filing:

“.. the sentencing of defendant be moved from May 12, 2008 to July 21, 2008, to permit the government sufficient time to gather evidence to determine whether to object to the Pre-Sentence Report (“PSR”).

Government counsel has a week-long trial scheduled to begin on March 25, 2008, and an oral argument before the Ninth Circuit on April 8,2008. Given the press of these matters and the difficulty in obtaining required information with which to evaluate the PSR, the government is requesting additional time in which to file objections to the PSR. In so doing, to allow parties the full time allowed in which to file sentencing positions, the parties are also requesting that defendant’s sentencing date be moved.”

The new date for sentencing Cohn on fraud and conspiracy charges stemming from the Four Star Ponzi case will now take place July 21, 2008 at 10 am before Judge Philip S. Gutierrez, Courtroom 790, Roybal Federal building, 255 E. Temple Street, Los Angeles.

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March 22, 2008

Newly filed court documents show that the bankruptcy Trustee for Jack Garrett recently sold the Four Star President’s Calabasas, California home for $1,255,000. The proceeds will be divided among creditors of Garrett’s. Since 2004, Garrett has claimed residency in Boca Raton, Florida.

In other developments, the bankruptcy Trustee for Four Star has filed a motion seeking “partial summary judgment” against Four Star insider David Roberts. The Trustee alleges that “intentionally fraudulent transfers” (payments)from Four Star to Roberts totaling $12.9 million dollars were made between 2000 and 2002. The Trustee is seeking full recovery of the $12.9 million. A hearing has been scheduled to consider the motion on April 30th.

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March 05, 2008

Newly filed papers in federal court show that government prosecutors intend to call Four Star executive Mark Cohn as a witness in the wiretapping trial of Los Angeles private investigator Anthony Pellicano. To read the court filing (posted on the Smoking Gun website), please click here.

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February 14, 2008

According to newly filed court papers, the sentencing of Four Star executive Mark Cohn has been postponed until May. The sentencing (which had been scheduled for March 17th) will now take place at 10 a.m. on May 12th before Judge Philip S. Gutierrez, Courtroom 790, Roybal Federal building, 255 E. Temple Street, Los Angeles.

The Four Star executive entered a guilty plea to fraud and conspiracy charges in late 2007. He faces up to ten years in federal prison for his role in the Four Star case.

According to papers filed in U.S. District Court-Central District California, the government and Cohn agreed to postpone the sentencing "... until after the government has resolved how to proceed with other targets in this action, which resolution should occur by April 2008."

Cohn remains under “supervised release” in Arizona after serving a four year prison term on a separate conviction of telemarketing fraud.

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December 03, 2007

According to newly filed court records, a federal judge has agreed to postpone the sentencing of Mark F. Cohn until March 17, 2008. Originally, Cohn’s sentencing was scheduled for January 28, 2008.

The postponement comes after Cohn’s attorney filed a motion stating, “…(Cohn) has had difficulty obtaining and requires additional time in which to obtain documents relevant to his sentencing from the Federal Bureau of prisons and various medical professionals … “

Medical issues were a point of controversy in 2004 during Cohn’s last criminal sentencing. In January 2004, Cohn was sentenced to more than four years imprisonment after being convicted of telemarketing fraud and money laundering.

To learn more about Cohn's 2004 sentencing (including the dispute over his medical issues), please click here to read a court transcript of the 2004 sentence proceeding.

Cohn’s current sentencing on conspiracy and wire fraud charges, stemming from the Four Star Ponzi case, will now take place on March 17, 2008 at 10 a.m. before Judge Philip S. Gutierrez, Courtroom 790, Roybal Federal building, 255 E. Temple Street, Los Angeles.

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November 19, 2007

According to a letter recently written and sent by the U.S. Attorney’s Office in Los Angeles to investors in the Four Star case, prosecutors plan to request that the federal court impose a victim “restitution obligation” of $19 million as part of the judgment against Four Star executive Mark F. Cohn. Cohn recently pleaded guilty to criminal charges of conspiracy and wire fraud. He faces up to ten years in prison.

However, according to the letter, the $19 million in restitution will be limited to the approximately 100 victims who invested in the so-called “arbitrage” deals. Even so, the letter goes on to say that the U.S. Attorney doubts the government can collect on the $19 million because of numerous existing civil judgments against Cohn.

The U.S. Attorney letter states that victims of Four Star interested in expressing their feelings to the federal court about the sentencing of Mark F. Cohn (which is scheduled for March 17, 2008) can submit correspondence to the following contact and address:

Elizabeth Morony
U.S. Probation Officer
600 U.S. Courthouse
312 North Spring Street
Los Angeles, CA 90012

To read the U.S. Attorney’s full letter, please click here.

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November 07, 2007

According to newly filed papers in federal court, Four Star executive Mark Cohn has pleaded guilty to fraud and conspiracy charges. Cohn had previously entered a not guilty plea to criminal charges filed against him by the U.S. Attorney's Office. Cohn faces up to ten years in prison and will be sentenced on January 28, 2008 at 10 a.m. before Judge Philip S. Gutierrez, Courtroom 790, Roybal Federal building, 255 E. Temple Street, Los Angeles.

To read the change of plea filing, please click here.

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November 05, 2007

According to papers filed in federal court, the trial date for Four Star executive Mark Cohn has been scheduled for December 18, 2007 at 9:00 am, Courtroom 790, Roybal Federal building, 255 E. Temple Street, Los Angeles. Cohn's trial will be presided over by Judge Philip S. Gutierrez. Cohn faces charges of conspiracy and fraud. According to court papers, Cohn has pleaded not guilty.

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October 17, 2007

A copy of the criminal charges filed in federal court by the U.S. Attorney against Four Star executive Mark Cohn is now posted on this web site. Cohn is accused of conspiracy and wire fraud in the Four Star case, and faces a possible 10-year prison term if convicted. He's scheduled to appear in a Los Angeles courtroom on October 22nd to hear the criminal charges against him. To read the U.S. Attorney’s court filing, please click here.

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