Texas Longhorn legend sold investors bum steer: Prosecutor

Kicker Russell Erxleben allegedly made false promises about WWI German bearer bonds and a Paul Gauguin painting

Feb 1, 2013 @ 12:41 pm

By Andrew Osterland

This Longhorn could be headed for a long haul in prison.

Russell Erxleben, a legendary field goal kicker and punter for the University of Texas Longhorns who later played parts of six seasons in the NFL, was charged last week with one count of securities fraud, five counts of wire fraud and two counts of money laundering. He faces up to 140 years in prison if convicted on all counts.

The charges were filed by Richard Durbin Jr., U.S. attorney for the Western District of Texas. Prosecutors claim that beginning in 2005, Mr. Erxleben devised a scheme to solicit money from unnamed individuals “by means of false and fraudulent pretenses, representations and promises.” The indictment also accuses the former kicker of maintaining a Ponzi scheme, paying off earlier investors with cash from later backers. That scheme, according to prosecutors, pulled in $2 million from investors.

Part of the alleged plan involved investing the funds in defaulted German gold bearer bonds issued in the 1920s and '30s to help finance reconstruction in that country after World War I. The German government never paid off the bonds, and their status remains unresolved.

Prosecutors claim Mr. Erxleben, who kicked an NCAA record 67-yard field goal in a game against Rice University in 1977, planned to package bonds into an asset-backed security and market them to institutional investors. According to the indictment, the Longhorn great promised investors “100% or greater annual returns for up to 30 years.”

Mr. Erxleben also allegedly raised money to purchase a painting by post-Impressionist painter Paul Gauguin. He told investors that the painting, titled “The Sorcerer of Hiva-Oa,” could be worth as much as $58 million and that it was in the process of being authenticated. It is not clear whether the painting is authentic, but the Justice Department claims Mr. Erxleben was not authorized to sell any interests in the work, nor was the group intending to purchase it.

“A lot of people are looking to invest outside the mainstream markets and it's easy to make mistakes,” said Robert Elder, communications director for the Texas State Securities Board. “You need to invest in what you know or in what you can conduct due diligence on.” The investigation was conducted jointly by the board and the IRS criminal division.

Mr. Erxleben is currently being represented by public defender David Peterson. Mr. Peterson did not immediately return calls for comment.

This isn't the football great's first run-in with securities cops. In 1999, he was convicted for fraudulent foreign currency trading that led to $28 million in losses for investors, according to Mr. Elder. Mr. Erxleben spent five in years in jail for that offense. One element of the current securities fraud charge is that Mr. Erxleben failed to disclose to investors his prior conviction.

The three time All-American, who was drafted in the first round of the 1979 NFL draft by the New Orleans Saints, allegedly started in on his latest schemes shortly after his release from prison. Football-loving Texans were apparently easy marks for Mr. Erxleben.

“In his currency scam, a big part of his connection with investors was due to his being a University of Texas football player,” Mr. Elder said.

No information on the victims of Mr. Erxleben's alleged scheme was disclosed. A hearing of the case is scheduled for Feb. 12 in Austin.

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