The U.S. Securities and Exchange Commission is suing a former New York Giants player for allegedly helping to run a Ponzi scam. According to the regulator, Will Allen and his business partner Susan Daub raised over $31 million from investors, promising them profits from loans made to professional athletes. Allen and Daub managed Capital Financial, which was compromised of several companies.
The SEC said that the alleged financial scam took place from 7/12 through 2/15 and involved over 40 people investors, who were told they could make up to 18% in interest. The Commission contends that Allen and Daub misled investors about the circumstances, terms, and the existence of certain loans.
For example, according to the complaint, last year, at least two dozen investors handed over approximately $4 million that was supposedly going to go toward a $5.6 million loan for an NHL player. They were given a copy of a promissory note and loan agreement that was supposed to have been signed by both Allen and the player. The player was to make monthly payments.
However, says the regulator, the loan was a sham and the player never signed the agreement or promissory noted nor did he ever receive a $5.65 million loan. That said, earlier this year, Capital Financial submitted proof of claim, after the NHL player filed for bankruptcy, listing the company as one of its creditors. The amount was for $3.429,750, along with a $3.4 million promissory note that the player signed, as well as a loan agreement. Still, that figure is a far cry from the $5.6 million loan that investors told they were getting involved in.
Also, some $7 million of client funds was allegedly used to fill a payment shortfall to other investors, while other of their funds is said to have gone toward personal spending at nightclubs and casinos. A federal court has since frozen the assets related to the alleged Ponzi scam and the Commission wants to impose penalties.
If you were the victim of a Ponzi scam and sustained substantial losses, contact our securities fraud law firm today.
SEC Accuses Ex-Giants Cornerback Allen of Running Ponzi Scheme, Bloomberg, April 7, 2015
Did Ex-NFLer Will Allen's Alleged Ponzi Scheme Prey On Jack Johnson?, DeadSpin, April 7, 2015
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