Former Morgan Stanley advisor Darryl Cohen was arrested on Thursday morning for allegedly defrauding current and former NBA players including Jrue Holiday, Chandler Parsons and Courtney Lee.

Cohen is charged with one count of conspiracy to commit wire fraud and one count of wire fraud, according to federal prosecutors. Each count carries up to a 20-year prison sentence. He is also facing investment advisor fraud charges, which carry a maximum five-year prison sentence. Three others, including former NBA players agent Charles Briscoe, were also charged.

In the indictment, which was unsealed on Thursday, the Justice Department alleged that Cohen and the others engaged in two fraud schemes to transfer roughly $13 million from NBA clients for his personal use. The players weren't named in the DOJ's announcement.

The DOJ claimed that Cohen and his alleged co-conspirators induced the three clients to purchase overpriced life insurance policies that Cohen later used to do renovations on his home and pool, as well as pay off his credit card bills and give money to a romantic partner.

Prosecutors also alleged that Cohen directed the basketball players to give donations to a nonprofit, which he ultimately used to build athletic facilities in his backyard.

"These defendants believed that defrauding their professional athlete clients of millions of dollars would be a layup. That was a huge mistake, and they now face serious criminal charges for their alleged crimes," said Damian Williams, the U.S. Attorney for the Southern District of New York, in a Thursday announcement.

Cohen was an advisor for Morgan Stanley from 2015 to 2021, according to his Financial Industry Regulatory Authority profile. The DOJ said in its indictment document that the alleged fraud schemes took place from roughly 2017 to 2020. Morgan Stanley fired Cohen in 2021 for "transactions not disclosed to or approved by Morgan Stanley and use of an unapproved platform to engage in inappropriate communications with clients," according to FINRA filings.

"We fully cooperated with the investigation and have resolved clients' claims related to Mr. Cohen," Morgan Stanley said in a statement. "Mr. Cohen was terminated from the Firm in March 2021 and has since been barred from the securities industry by FINRA."

The Securities and Exchange Commission also charged Cohen on Thursday for allegedly defrauding Holiday, Parsons and Lee out of over $1 million.

Cohen's lawyer, Brandon Reif, did not immediately respond to a request for comment.

The three basketball players had previously filed claims against Morgan Stanley with FINRA. Those cases were later settled. Phil Aidikoff, who represented Holiday, Parsons and Lee, declined to comment due to the confidentiality agreements in the FINRA settlements.