NFL Quarterback Sanchez Allegedly Bilked in $30M Ponzi
Three professional athletes are suing a financial advisor who appealed to their Christian faith while defrauding them, Bloomberg writes.
Former New York Jets quarterback Mark Sanchez and major league baseball pitchers Jake Peavy and Roy Oswalt allegedly lost about $30 million investing in a Ponzi scheme by Ash Narayan, a former broker at RGT Capital Management who made off with $2 million in “hidden” compensation as a result, according to a recently unsealed Securities and Exchange Commission lawsuit seen by the newswire.
RTG is suing Narayan and the CEO of The Ticket Reserve Inc., a sports-ticket-selling company to which Narayan diverted his clients’ funds, for breach of fiduciary duty as a result of financial mismanagement and excessive debt, Bloomberg writes.
According to the suit, Narayan hid several conflicts of interest when pitching TTR to his clients, including the fact that he was on its board, owned over three million shares and raised more than 90% of its capital, Bloomberg writes. TTR, meanwhile, allegedly had trouble generating revenue for years and sought new investor money to pay off expenses, including paying back earlier investors, according to the newswire.
Narayan allegedly ignored his clients’ risk profiles and, instead of investing in low-risk and conservative products, directed their funds toward TTR despite at one point getting an email from its CEO that the company’s “revenue sucks,” the newswire writes.
At least two of the victims allegedly met Narayan through church-related activities, according to Bloomberg. Sanchez, who will be the starting quarterback for the Denver Broncos this year, allegedly met him Narayan in 2009 as a result of going to the same church and trusted him because of his faith, having his paychecks go directly into a brokerage account, according to the newswire. Sanchez allegedly only agreed to invest $100,000 in TTR in 2011, but Narayan moved more than $7 million of the football player’s money into the company, Bloomberg writes.
Peavy, meanwhile, says he trusted the broker because he mistakenly thought Narayan was a certified public accountant and because of the broker’s charitable work with churches abroad, according to the newswire.
The San Francisco Giants player allegedly had the bulk of his $15 million wealth invested in TTR without his authorization, according to Bloomberg. Narayan also allegedly invested about $7 million in TTR on behalf of Oswalt, who retired two years ago after playing with the Houston Astros, the newswire writes. Oswalt, who had about 80% of his major league paychecks going into the account, allegedly never gave Narayan authorization to invest in TTR, according to Bloomberg.
TTR was founded in 2001 as a sports ticket futures market and by 2015 had a $3.3 million operating loss and $47.1 million in cumulative net equity losses, according to the Wall Street Journal. A civil complaint filed in May charges Narayan as well as Richard Harmon, its chief executive, and John Kaptrosky, its chief financial officer, the Journal writes. A lawyer for Harmon said in a statement that both he and Kaptrosky “were in fact victims of someone else’s alleged wrongdoing,” according to the publication.
Narayan allegedly forged client signatures to move funds into TTR and mislabeled what were finder’s fees as loans or “director’s fees,” the Journal writes. In addition, Narayan, Harmon and Kaptrosky allegedly created false promissory notes, according to the publication.
A federal judge granted the SEC’s request to freeze the assets of Narayan, TTR and Harmon and Kaptrosky but it’s unclear whether the athletes can get their money back, according to the Journal.
Meanwhile, Russ Alan Prince writes in Forbes that what athletes really need to do to prepare for retirement from professional leagues is to learn how to say “no” to excessive spending.