In yet another example of pro athletes' money mishaps, Mike Tyson has sued an advisory firm and his former adviser, alleging that the money manager swiped $300,000 and caused millions in lost income.
The famed boxer is just the latest professional athlete to have run into financial trouble. Last year, Morgan Keegan & Co. Inc. paid former Chicago Bulls basketball star Horace Grant $1.6 million in an arbitration case involving losses in the firm's bond funds, which invested in mortgage-backed securities.
“You can't take someone who grows up poor and doesn't have the infrastructure that money provides you, give them a massive fortune and expect them to know how to handle the money,” said Andrew Stoltmann, a plaintiff's attorney who represented Mr. Grant and other pro athletes in similar cases.
“Financial professionals come out of the woodwork, salivating at the opportunity to financially rape and pillage these unsuspecting athletes,” he added. “The pitches are relentless and they are targeted heavily.”
Other high-profile sports stars caught up in financial troubles, if not scandals, over the years have included John Elway, David Akers and Kyle Orton from the National Football League, and Major League Baseball players Johnny Damon and Scott Eyre.
On Feb. 20, Mr. Tyson and his wife, Lakiha Tyson, sued Live Nation Entertainment Inc., one of its subsidiaries, SFX Financial Advisory Management Enterprises Inc., ex-adviser Brian Ourand and a slate of unnamed plaintiffs in Los Angeles Superior Court. The Tysons are suing all the parties for breach of fiduciary duty, fraud and unjust enrichment.
The Tysons' relationship with SFX and Mr. Ourand goes back to 2005, according to the lawsuit. Mr. Ourand, at the time a senior executive, provided them accounting work, financial advice and management, according to the suit.
Mr. Ourand also was in charge of managing Mr. Tyson's bankruptcy trust, which was a top priority because it prevented the couple from earning “non-fight” income in excess of $225,000, according to the complaint. Mr. Tyson has been trying for a decade to close the bankruptcy proceeding, which forces him to surrender any income over that amount.
In April 2011, the Tysons noticed that money they were allowed to retain was not going toward paying off their debts, the suit said. The couple claim that around that time, Mr. Ourand, who oversaw the bankruptcy trust, “was making false statements to the Tysons' legal advisers, making closure of the bankruptcy more difficult.”
“The Tysons were compelled to forgo lucrative business opportunities while the bankruptcy proceedings were pending,” according to the claim. “The Tysons suffered millions of dollars in damages based on the false, deceptive and faulty financial advice given by Mr. Ourand in order to advance, and cover up his scheme.”
In July of that year, the couple heard from Mr. Ourand via e-mail from an address that was not affiliated with SFX. Shortly after, the couple heard from another executive at SFX, Eugene Mason, who said he was now responsible for the Tysons' affairs, according to the suit.
After pressing SFX for more information, the Tysons discovered that Mr. Ourand allegedly had stolen $300,000 from their accounts.
Though the firm returned some of the money, the Tysons claim that SFX asked them to sign a settlement agreement that would release the firm from legal claims. When the two refused to sign the document, SFX allegedly refused to return their client files, according to the case.
A call to Mr. Ourand, who lives in Miami, according to the complaint, was not returned. A search through records of the Financial Industry Regulatory Authority Inc. and the Securities and Ex-change Commission turned up no information about him.
Jacqueline Peterson, a spokeswoman for Live Nation, declined to comment, saying that the firm had not been served yet.