updated 11:51 PM UTC, Dec 4, 2016

Former NFL Player Accused Of Leading Ponzi Scheme

 

Former NFL Player Accused Of Leading Ponzi Scheme

Former NFL Player Accused Of Leading Ponzi Scheme

 

( 4UMF NEWS ) Former NFL Player Accused Of Leading Ponzi Scheme:

Former New York Giants cornerback and top draft pick Will Allen funded a lavish lifestyle for himself by running a $32 million Ponzi scheme that preyed on investors who sought to make an easy buck loaning money to cash-strapped pro athletes, federal regulators allege in a new complaint.

Allen, 36, and business partner Susan Daub, 54, misled investors through their firm Capital Financial Partners by telling them they could profit by funding the athletes’ loans and receiving interest on it of up to 18 percent, according to a Securities and Exchange Commission complaint unsealed Monday night in Boston federal court.

Allen, of Davie, Fla.; and Daub, of Coral Spring, Fla; raised $31.7 million from 40 investors from July 2012 to February of this year but only shelled out $18 million in loans to athletes. They used about $7 million of the ill-gotten gains for personal expenses, including settling tabs they racked up at fancy nightclubs, casinos, pawn shops and limo companies, the feds says.

“They used money from some investors to pay other investors, while at the same time funneling millions of dollars of investor money to themselves – the hallmarks of a Ponzi scheme,” the complaint says.

The SEC says it has frozen Allen and Daub’s assets and is seeking a court order requiring them to return any money they allegedly stole through the scheme.

The complaint notes that Capital Financial provided loans to NBA, NHL, MLB and NFL players but does not specify who accepted the loans, which usually averaged about $600,000. It also cites the company’s website to explain why there is a market in providing loans to millionaire pro athletes.

“In many cases, athletes’ contracts do not allow them to access their guaranteed money during the off season or early in the season when they may need a significant sum to purchase a house or car, pay the bills, or meet a financial demand,” says the website.
While some of the loans to athletes were legit, at least one was fraudulent, according to the complaint.

In April and May last year, Allen and Daub raised $4 million from 24 investors for an NHL player after trotting out a sham promissory note and loan agreement from the unnamed player for $5.65 million, the lawsuit says.

But the player – who isn’t named — never signed that note and the real loan, which was kept from investors, was actually $3.4 million. Even after the hockey player filed for bankruptcy, Daub told investors the loan was “performing as expected,” according to the suit.

The duo used “false documentation in order to mislead investors as to the terms, circumstances, and even existence of some of the loan transaction in which the investors are induced to participate,” the SEC said.

“The defendants sold investors on the idea of lending money to pro athletes, but we allege that’s not where a large portion of the investors’ money went. As in any Ponzi scheme, the appearance of a successful investment was only an illusion sustained by lies,” said Paul G. Levenson, director of the SEC’s Boston Regional Office.

Allen, a star at Syracuse University, was drafted by the Giants in 2001 and played with Big Blue through 2005 before signing with the Miami Dolphins. He played with the Dophins from 2006 through 2011 before spending his final NFL season in 2012 with the New England Patriots on injured reserve.

Considered one the NFL’s top cover corners in his prime, Allen tallied 15 career interceptions. He was arrested in 2010 for driving under the influence.
Messages left with Allen and Daub were not immediately returned.

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