$52.6 Million Scammed – Same Sad Story

Sixteen current and former NFL players are suing North Carolina-based bank BB&T for nearly $53 million in alleged investment losses in connection with now-banned financial adviser Jeff Rubin and his employees at Pro Sports Financial. The allegation state that Rubin and his employees at Pro Sports Financial opened accounts in their names and place tens of millions of dollars in dubious, unauthorized investments – including an illegal Alabama casino venture. Roughly $30 million of the losses are tied to the casino project, while another $30 million is tied to other investments, according to the players’ attorney Andrew Kagan of the Ft. Myers (Fla.)-based Kagan Law Firm. If substantiated, this lawsuit would represent the biggest reported financial loss by a group of players in the history of the NFL.

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With names like Jevon Kearse, Ray Lewis, Frank Gore, Santonio Holmes and Clinton Portis, the scammed enveloped some of the NFL’s greatest players. “It’s unbelievable that this could happen, and happen to so many people,” Kagan said. “Unfortunately, BB&T [formerly BankAtlantic], ignored plenty of red flags and allowed tens of millions of dollars to be transferred from clients’ accounts without their knowledge or permission. The sad thing is that by allowing this to happen, the bank has caused irreparable harm to the clients and ruined lives in the process. The money that was supposed to have supported these guys for the rest of their lives has been taken from them and many have been left with nothing. This is truly a tragic story.”   At the center of this saga is Jeff Rubin, who received a lifetime ban from working in the financial industry in March of 2012 by the Financial Industry Regulatory Authority (“FIRA”) for recommending an investment in an illegal gambling project which resulted in the loss of more than $40 million by 32 NFL players. Closely tied to this previous scandal was NFL super agent Drew Rosenhaus (Cut to scenes of Terrell Owens doing sit-ups in his driveway. However, Owens later filed suit against Rosenhaus for introducing him to Rubin and recommending that Owens hire Rubin to manage his finances. Owens says that accepting that recommendation ultimately cost him up to $6.5 million in investment losses). Rosenhaus and Jeff Rubin had an unusually close business relationship that spanned upwards of seven years. That relationship might have resulted in Rosenhaus breaching the fiduciary duties all agents who are certified by the NFLPA owe to their clients. The relationship has been scrutinized by the National Football League Players Association in part because of a series of issues surrounding Rubin, who is at the center of a bankruptcy filing for the failed casino that cost the players as much as $40 Million.  When asked to justify its stiff penalty the FIRA stated that “[t]his case demonstrates how broker misconduct can target high-income, inexperienced and vulnerable investors…Jeffrey Rubin took advantage of professional athletes who placed their trust in him.”   The NFLPA sent a memo to players in May – albeit two months after Rubin was banned by FINRA – announcing the ban and stating that Rubin was no longer registered in its financial adviser program. Fred Taylor, an alleged victim of the scammed, commented that he didn’t want “to talk about this because people almost try to put you in a shell of ‘the dumb jock’ and now you’re a victim. I was always afraid to open my mouth about it. But in my mind, at this point, I’m in a position where I’ve been taken advantage of and I want to shed some light on how these things can happen because I don’t want it to happen to any other guys. I can be one of those people to shed light on it and try to keep players from being taken advantage of in the future.”    
Taylor further commented that he thought that “a certain amount of responsibility should fall on the NFLPA’s shoulders for allowing a financial adviser to say, ‘Hey, I’m registered with the players’ union.’ Of course players put some stock in the [players association] registering financial advisers and it certainly creates a false sense of security. If they’re going to allow financial advisers to sport the registration through the [players association], they should do something on an on-going basis to [vet them]. They should go and see the pattern of investments advisers are putting players into so they can see what kind of risk level they’re exposing the players to. If they’re going to let these guys tout their registration with the [players association], the union should engage in some kind of risk analysis. Otherwise, eventually, they might find themselves involved in lawsuits.”

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  The following is a list of the athletes who are bringing suit against Rubin:

Alleged losses in players’ lawsuit against BB&T

Jevon Kearse – $7,958,000

Jamaal Anderson – $5,813,000

Lito Sheppard – $5,011,000

Santana Moss – $4,852,000

Ray Lewis – $3,778,000

Brandon Meriweather – $3,545,000

Jacob Bell – $3,339,000

Clinton Portis – $3,136,000

Gerard Warren – $3,000,000

Fred Taylor – $2,993,000

Derrick Gaffney – $2,295,000

Greg Jones – $2,006,000

Kenard Lang – $1,648,000

Frank Gore – $1,600,000

Santonio Holmes – $1,159,000

Tavares Gooden – $515,000

 Tax-Trap

Sigh…. This behavior and lack of due diligence appears to be par for the course these days in the athlete world. Athletes blinding trusting advisors who turn out to be predators that take advantage of the inherent trust bestowed upon them by their clients.  However, a large percentage of the responsibility still lies with the athlete. With any business venture there needs to be “checks and balances” that act as a safeguard against this type of fraudulent behavior. This lesson rings true not only with athletes, but with any business owner – enact safeguards to protect your assets and have a second set of eyes looking over ventures. One can only hope that Fred Taylor’s optimism becomes a reality, when he hoped that this newest saga would “shed light on and try to keep players from being taken advantage of in the future.”