NFL players at risk of financial roughing

Recent schemes against Elway, Vick throw union's approved-adviser list into spotlight

Oct 31, 2010 @ 12:01 am

By Bruce Kelly

Alex Brown (Photo: AP Images)
+ Zoom
Alex Brown (Photo: AP Images)

Several current and former National Football League players recently have found themselves ensnared in alleged Ponzi schemes or legal battles over failed investments.

Last month, former Denver Broncos quarterback John Elway re-vealed that he and his business partner gave $15 million to a hedge fund manager now accused of running a Ponzi scheme.

In September, Alex Brown, a defensive end for the New Orleans Saints, sued his team of investment advisers over $3.9 million in losses, alleging they had “abused the trust” of Mr. Brown and his wife, “and embarked on schemes intended to enrich themselves at the expense” of the couple, including bad investments in airplane hangars.

Also in September, financial adviser Mary Wong pleaded guilty to stealing more than $3 million from investors, including Eagles quarterback Michael Vick and several other NFL players, in a Ponzi scam.

These cases come as the NFL Players Association, the union representing 1,800 players, looks to strengthen the screening process for its financial adviser program, which has come under attack in recent years.

Indeed, NFL players, like all professional athletes and high-net-worth individuals, are highly susceptible to being taken advantage of when it comes to investing their money, observers say.

And professional athletes often are susceptible to the siren call of the “inside deal,” and believe that brokers and advisers have access to such privileged, back-room knowledge, said Arthur Grant, chief executive of independent-contractor broker-dealer Cadaret Grant & Co. Inc.

“They believe the myth that Wall Streeters can double their money in six months, and only if they can get in that private game, they could do that too,” he said.

Started in 2002 — after adviser William “Tank” Black was convicted of stealing $11 million from players he represented — the program requires that advisers have appropriate financial qualifications, such as a certified financial planner mark or registration with the Financial Industry Regulatory Authority Inc., to be included on a select list for players.

Advisers must also undergo a background check, and pay $1,500 to be included on the list and $500 annually to remain on it. There are currently about 450 advisers on the list. The list includes a disclaimer, indicating that the advisers are neither endorsed nor recommended.

In an open case originally filed in 2006, five players are suing the NFLPA over its oversight of the approved list of advisers, alleging that it was negligent in vetting reps.

The league, which runs background checks on advisers, is also named in that lawsuit.

The case centers on a jailed hedge fund manager, Kirk Wright, who stole more than $150 million from clients, including several NFL players, and eventually killed himself in prison. The case was dismissed late last year in a Georgia state court, but the players, including former All-Pro safety Steve Atwater, appealed the decision last spring.

The lawsuit alleges that Mr. Wright was on the adviser list even though he should have been disqualified because liens had been filed against him.

“I'm assuming our case is getting the NFL and the NFL Players Association to review their [adviser] programs,” said Quentin Williams, one of the attorneys representing the five players.

It's unclear if any of the advisers involved in the most recent round of alleged frauds victimizing NFL stars were on the NFLPA's list.

Carl Francis, a spokesman for the union, declined to comment on the recent cases or the lawsuit involving Mr. Wright. He also said the adviser list is private and available only to players.

Mr. Francis added that the union is planning to place more emphasis on financial education for the players.

In July, Dana Hammonds, director of financial programs and adviser administration for the union, told InvestmentNews that the union is in the process of crafting new qualifications which advisers must meet to get on the list.

Greg Aiello, a spokesman for the NFL, did not return calls seeking comment.

TARGETS FOR PREDATORS

One of the major issues is that athletes often rely on referrals from their inner circle. That trust — along with some athletes' lack of sophistication with money — can easily be taken advantage of.

“There are predators out there who are focused on athletes,” said Mr. Williams, the attorney suing the NFL and the player's union in the Kirk Wright case.

E-mail Bruce Kelly at bkelly@investmentnews.com.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Upcoming Event

Apr 30

Conference

Retirement Income Summit

Join InvestmentNews at the 12th annual Retirement Income Summit - the industry's premier retirement planning conference.Much has changed - and much remains to be learned. Attend and discuss how the future is full of opportunity for ... Learn more

Featured video

Events

How to redesign, rebrand and recast your practice

Redesigning and reshaping your practice is a tough pill to swallow for advisers. But what got you here won't get you there, says John Kozuch, a Chicago financial adviser.

Video Spotlight

The Search for Income

Sponsored by PGIM Investments

Recommended Video

Path to growth

Latest news & opinion

How does your advisory firm stack up?

Comparing a firm's pay to the competition can point out vast flaws.

10 signs your client is cheating on you

Sure signs that clients may be on the way out the door.

Morgan Stanley sees slower fee-based asset flows on fiduciary rule delay

Flows to advisory accounts, while still higher than the start of 2016, dropped off more than 20% from Q2 and were the lowest in a year.

How adviser salaries stack up to other jobs

Median compensation hovers just under $100,000 on the low end and reaches nearly $300,000 for bosses.

Finra ranking brokers in effort to crack down on industry's bad apples

All 634.403 reps have been ranked based on factors such as prior regulatory disclosures, disciplinary actions and employment history.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print