Fresh off their Super Bowl victory, players with the NFL's New Orleans Saints are suing a former teammate — now a rep affiliated with Securities America Inc.— in a legal battle involving esoteric investment products.
In a lawsuit filed in federal court in New Orleans, defensive end Charles Grant and tight end Jeremy Shockey allege that one-time Saint Kevin Houser, acting as an agent of Securities America, promoted Louisiana tax credits as a way to raise money for Louisiana Film Studios LLC, which is engaged in the production of commercial and other film ventures.
Mr. Houser allegedly “kept all or a portion of the monies provided by [Mr. Grant and Mr. Shockey] as a ‘commission' or ‘finders fee' or benefited in other ways to enrich himself at the expense of plaintiffs,” states the lawsuit, which seeks class action status.
According to the lawsuit, Mr. Grant gave Mr. Mr. Houser $425,000 in January 2009 and was to receive $565,000 in state tax credits. Mr. Shockey gave Mr. Houser $85,000 and was to receive $113,000 in tax credits.
The lawsuit claims that, while he played for the Saints, Mr. Houser promoted as an agent of or in association with Securities America the tax credits to Mr. Grant and Mr. Shockey, other teammates, coaches and a former teammate. The credits were purportedly being sold to help raise money for Louisiana Film Studios, which is also named in the suit.
“Despite repeated demands for information on either the issuance of the agreed upon tax credits or the return of the funds, [Mr.] Houser continued to represent to the plaintiffs that the tax credits would be delivered, or their money returned to them,” the lawsuit states.
According to the complaint, Mr. Houser and “his wife were actually creditors of Louisiana Film Studios and had a financial interest in the cash proceeds derived from the sale of the tax credits.”
According to a report in the New Orleans Times-Picayune, nearly two dozen former or current Saints players — including Super Bowl MVP Drew Brees — invested $1.7 million to buy what they believed were tax credits in a film studio project. It turned out that Louisiana Film Studios never applied for the tax credits, the paper reported.
Mr. Houser was a special teams long snapper with the Saints from 2000 to 2008. He played two games with the Seattle Seahawks in 2009.
Since last summer, Securities America has been enmeshed in legal problems over esoteric investment products, high risk private placements.
The Massachusetts Securities Division sued Securities America in January for allegedly misleading investors over private placements issued by Medical Capital Holdings, a defunct medical receivables firm that the Securities and Exchange Commission has charged with fraud.
According to records of the
Financial Industry Regulatory Authority Inc., investors have filed arbitration complaints against some of the firm's top advisers and executives.
Jimmy Castex, Mr. Houser's attorney, did not return a call seeking comment.
"This was not a securities transaction," wrote Janine Wertheim, a Securities America spokeswoman, in an e-mail. "It involved the 2002 Louisiana Motion Picture Tax Incentive Act. The adviser, who made the transition to Securities America with the Brecek & Young acquisition (in January 2009), received no compensation and simply recommended his teammates look at the project."
Ms. Wertheim stressed that Securities America did not approve the tax credits as a products for its advisers.
