Pro Sports Icons Getting Swindled by Fraudsters Is Far Too Common

Chicago-based Stoltmann Law Offices has represented athletes who’ve suffered losses from dealing with broker-advisors who have fleeced them. Just because a person is a professional athlete and makes tens of millions of dollars for playing a sport doesn’t mean they are financially sophisticated. Far too many great athletes fall prey to con men and advisors who rip them off.

Sadly, there’s a long list of athletes who’ve been defrauded by advisors. Some have achieved great fame in their sports such as boxer Mike Tyson, pitcher CC Sabathia, NBA great Kareem Abdul Jabbar and quarterbacks John Elway and Bernie Kosar. Sometimes all it takes is one crooked advisor to do a lot of financial damage. For example, major league pitchers Jake Peavy and Roy Oswalt and Quarterback Mark Sanchez had three things in common: They were well-paid athletes and shared the same financial advisor. Ash Narayan, an Irvine, California-based advisor with RGT Capital Management, pleaded guilty to defrauding the stars of some $30 million. Narayan was forced to pay nearly $19 million in restitution and serve 37 months in prison.

How were these pros swindled? Prosecutors stated that “from December 2009 to early 2016, he advised his clients to invest in a money-losing online sports and entertainment ticket company in Illinois (The Ticket Reserve, Inc.) without telling them that he was on the board, or that it was a risky and unprofitable business,” according to The Los Angeles Times.

“Narayan also sometimes directed RGT employees to forge his clients’ signatures on authorizations to transfer funds to The Ticket Reserve, Inc., which went into receivership — a legal action in which a court appoints a receiver to manage a business while the court tries to resolve problems that could ruin the business, such as insolvency — in 2016,” authorities said.

All too often shifty advisors take advantage of a combination of athletes’ ignorance of financial matters, their need to trust a professional and their failure to watch what their advisors are doing with their money. The result is that they can lose millions through terrible investments, embezzlement or incompetent money management. This toxic formula has been repeated several times in recent years.

Former Pittsburgh advisor Louis Martin Blazer III was accused of embezzling more than $2.3 million from pro athletes in 2017. “When his ploy was discovered,” according to wealthmanagement.com, “Blazer made ‘Ponzi-like payments’ and lied to SEC examiners about taking money from five clients, at least two of which who were professional athletes, from 2010 and 2012.” Blazer also settled a case in 2012 in which retired NFL running back Kevan Barlow sought compensatory damages upward of $4 million and punitive damages of $12 million for “misappropriated, mismanaged, squandered, and/or stole[n] millions (of dollars).”

Have you invested with broker-advisors who have sold you inappropriate investments that ignore your risk tolerance? FINRA and the SEC have strict rules on disclosing risk profiles on all investments sold by brokers and investment advisers. If they fail to fully inform you of downside risk, you may have a case in arbitration.

Firms are also legally required by FINRA to monitor and supervise what their brokers are selling – their investments must be vetted and authorized by the firms – and have an obligation to investors to fully reveal true risk and return information about the vehicles sold. Investors can file FINRA arbitration complaints if these rules are broken.

If you invested with a broker-advisor and lost money as a result, you may have a claim to pursue through FINRA Arbitration. Please contact Stoltmann Law Offices, P.C. at 312-332-4200 for a free, no obligation consultation with a securities attorney. Stoltmann Law Offices is a contingency fee law firm which means we do not get paid until you do!