Professional Athletes Are Common Targets for Financial Scams and Fraud

Chicago-based Stoltmann Law Offices has represented professional athletes who’ve suffered losses from dealing with broker-advisors who’ve swindled them. Sometimes having fame, extreme riches, and athletic prowess is inadequate protection against getting swindled by a broker. Although professional athletes can certainly afford to hire the best financial advisors, all too often they get thrown in the dirt by dishonest professionals.

Aroldis Chapman is a flame-throwing relief pitcher for the New York Yankees, possessing one of the highest-velocity fastballs in the game. He also briefly helped the Chicago Cubs win a World Series in 2016. But his throwing skill didn’t benefit him when a financial advisor allegedly embezzled millions from him to fund a lavish lifestyle.

In October (2020), Chapman filed a lawsuit against Pro Management Resources in Coral Springs, Florida, for reportedly embezzling $3 million from his account. The company is a commission-based financial advisory firm. Chapman has accused PMR advisor Benito Zavala of “misappropriating Chapman’s funds toward extravagant purchases, including an $836,000 home in Valrico, Fla., first-class plane tickets, clothes, cars and jewelry.” The firm declined to comment on the suit.

Zavala allegedly had discretion over Chapman’s financial matters such as credit cards, investment accounts, loans and tax filings. The suit claims that Zavala, beginning in 2016, began paying Chapman’s bill late, citing “cash flow issues,” encouraging Chapman to take out tens of millions of dollars in high-interest loans in 2016 and 2017. Zavala would often “unlawfully transfer funds from Chapman’s accounts to himself, Chandler Costa, an exotic dancer he met at a nightclub and with whom he formed a romantic relationship, and Chandler’s brother, Derrick Costa,” according to the suit.

Zavala also used Chapman’s personal American Express card, along with other cards he opened in Chapman’s name, to purchase luxury items for himself, Costa and another person with whom he was involved who worked as a bartender at a nightclub, reports WealthManagement.com.

The Stoltmann Law Offices have successfully represented professional athletes who’ve been fleeced by broker-advisors. In 2009, the firm helped former Chicago Bulls star forward Horace Grant win a $1.46 million arbitration award against the Morgan, Keegan brokerage firm, which sold him mutual funds that lost money in municipal bonds.

Grant, who played with the Bulls from 1987 to 1994, when they won three NBA championships, alleged that Morgan Keegan, a Memphis, Tenn.-based broker, sold him four high-yield bond funds. The firm marketed the funds as “conservative investments appropriate for retirees who were looking to protect their principal.” In 2007, the funds plummeted by an average of 58 percent, according to Grant’s complaint filed in March 2008 with the Financial Industry Regulatory Authority, or Finra, which runs the arbitration forum for investors. Similar bond funds lost 6.9 percent that year, the complaint said.

Have you invested with broker-advisors who have invested in high-risk investments or not honestly reported their performance? 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.

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!