April 6, 2010 / 8:56 PM / 10 years ago

Steve Cohen's ex-wife seeks to bolster lawsuit

*Ex-wife claims illegal trading proceeds helped start SAC

*Amended complaint adds new defendants

By Matthew Goldstein

NEW YORK, April 6 (Reuters) - The ex-wife of Steven A. Cohen, already suing her former husband for millions of dollars in damages, now claims the trader cheated her out a piece of his $12 billion hedge fund empire.

In an amended lawsuit filed on Tuesday, Patricia Cohen claims her former husband “defrauded” her out of “a substantial, if not controlling, interest in SAC Capital.”

SAC Capital Advisors is the hedge fund Cohen started in 1992. He had divorced Patricia Cohen a few years earlier.

“These recycled allegations are ridiculous,” said Jonathan Gasthalter, a spokesman for SAC Capital and Steven Cohen. “They are nothing more than a blatant extortion attempt arising from a divorce that was finalized over 20 years ago.”

The amended complaint seeks to bolster Patricia Cohen’s allegation that her ex-husband tried to hide millions of dollars in trading proceeds from her during their 1989 divorce.

The complaint, which Patricia Cohen’s lawyer said had been filed in Manhattan Federal Court, had yet to appear on the court’s electronic docketing service as of late afternoon on Tuesday.

Cohen, who first sued her ex-husband last December, has alleged the hedge fund manager used some of the trading profits to establish SAC Capital.

She contends that roughly $10 million of the trading proceeds came from an illegal insider trading tip that Cohen received in 1985 about General Electric’s acquisition of RCA.

The U.S. Securities and Exchange Commission, in 1986, investigated allegations of insider trading in shares of RCA and took testimony from Cohen. During the questioning, Cohen, who was a top trader at Gruntal & Co at the time, repeatedly asserted his Fifth Amendment right against self-incrimination, according a deposition transcript.

The SEC ended the investigation without filing any charges against Cohen.

The amended complaint adds several new defendants, including her ex-husband’s brother, Donald Cohen, who Patricia Cohen alleges also engaged in insider trading in RCA shares.

The lawsuit alleges Cohen’s brother and Gruntal officials helped the hedge fund manager hide the trading profits in a company called SAC Trading.

Donald Cohen, a Florida accountant and financial planner, could not be reached for comment. On Cohen’s website, it says he served as SAC Capital’s chief financial officer for two years.

Patricia Cohen claims she became aware of her ex-husband’s deception in the past two years.

“Steve has successfully hidden his deceit and misconduct from Patricia, with active participation and schemes by his brother” and other defendants, according to the amended complaint.

In a related development, Paul Batista, Patricia Cohen’s former attorney, recently sued his ex-client and her new lawyer, Gaytri Kachroo, seeking to place a lien on any monetary judgment she receives from the lawsuit.

The lawsuit filed by Patricia Cohen is called Cohen v. Cohen, 09 CV 10230. (Reported by Matthew Goldstein)

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