- NCAA Basketball
- NCAA Football
- Fantasy MLB
- Fantasy NBA
- Fantasy NFL
- Other Sports
- Alternative Medicine
- Food and Nutrition
- Health Care
- Medical Treatments
- Mental Health
- Weight Loss
- Women's Health
- Alcohol Addiction
- Drug Addiction
3 NFL PLayers and Soccer Star Heather Mitts Cheated in Scheme
PHILADELPHIA (CN) - Three NFL veterans and a woman pro soccer player claim in court that they lost millions of dollars because SunTrust Bank and others let their investment adviser put their money into a Ponzi scheme.
Click here to read Courthouse News' Securities Law Review.
Philadelphia Eagles players Joshua Feeley, Brent Celek and Kevin Curtis, and Philadelphia Independence soccer player Heather Mitts "basically lost their entire investment accounts," they say in their federal complaint.
They sued SunTrust Bank, Martin Kelly Capital Management, William Crafton Jr. and CSI Capital Management, alleging securities violations, fraudulent misrepresentation, negligent hiring and professional malpractice.
The athletes say Crafton became their investment adviser and money manager in or about 2006.
"From the inception of defendant Crafton's representation of each plaintiff, plaintiffs each had specific conversations with Crafton about employing a conservative investment strategy, with a liquid portfolio of assets aimed at preserving the money that each plaintiff had and would accumulate during their professional athletic career," the complaint states. "Crafton expressly understood and acknowledged the short and unsecure nature of income that accompanies playing professional sports, especially professional football in the NFL, where the average career lasts only 3-4 years, and so he assured plaintiffs he was a very conservative, low risk-taking money manager.
"Defendant Crafton employed the same schemes and strategies in soliciting the assets, trust and confidence of each plaintiff by specifically representing to them that he was a 'licensed and registered financial advisor'; and he was 'approved by the NFL Players Association'; and he represented significant professional athletes in multiple sports; and he employed a very conservative, safe and liquid investment strategy aimed at growth with little to no risk. Crafton specifically told each plaintiff that they could at any time get out of the investments Crafton placed them in because he said every investment he placed them in was a very safe, liquid asset.
"However, contrary to his express representations, starting in 2005 with plaintiff A.J Feeley and then following with Heather Mitts and then plaintiffs Curtis and Celek, defendant Crafton placed each plaintiff in high-risk, alternative investments, which were Ponzi schemes or other fraudulent investments run, managed, controlled, operated and/or created by individuals with whom Crafton had a personal relationship, business dealings or kickback agreements. These investments were unsuitable and illiquid and Crafton had some financial interest and undisclosed relationship with each investment that was never disclosed to plaintiffs.
"Crafton and defendants CSI, Martin Kelly and SunTrust each failed to advise plaintiffs that Crafton, improperly utilizing his discretionary authority over plaintiffs' assets, would materially change plaintiffs' stated and known investment strategies and would instead concentrate the plaintiffs' investment portfolio in unsuitable, privately held, unsecured, illiquid securities. "Crafton knowingly made false and material misrepresentations to plaintiffs before the date Crafton placed plaintiffs into certain high-risk, illiquid investments, by stating he would take plaintiffs' money and invest it in safe investments that would provide a steady stream of income to plaintiffs throughout their lives.
"In fact, Crafton at various times throughout his relationship with plaintiffs, sold, merged or transferred their assets among the various defendants CSI, Martin Kelly and Suntrust and in doing so the defendants made express and affirmative representations to plaintiffs about their financial safety and well-being, defendants' expertise in handling wealth management for professional athletes and how the defendants 'specialize' in the Sports and Entertainment field. ...
"Contrary to statements and representations such as these defendant Crafton did not invest plaintiffs' money in safe investments and did not provide high-quality wealth management services, but rather misappropriated their funds for his personal use; invested plaintiffs' money in illiquid, high risk, alternative investments; invested plaintiffs' money in Ponzi schemes run by his friends and colleagues; and/or transferred and/or commingled plaintiffs' money among other investors and athletes whom Crafton represented to prevent them from discovering Crafton's frauds, schemes and poor investment strategy as well as plaintiffs' financial losses.
"Crafton never advised plaintiffs of his relationship with these people and entities, never disclosed that he received substantial commissions and kickbacks for investing plaintiffs' money in these investments, and was able to manipulate the actual dissemination of information concerning these investments, their holdings and the actual worth so that plaintiffs could not discover the truth about their investments, their portfolio's actual value or defendants' investment strategies for their assets.
"Crafton and his staff followed Crafton from CSI to MKCM to SunTrust, and they actively participated in Crafton's scheme to generate commissions for himself, capital for his colleagues' Ponzi schemes and to obtain a high valuation of Crafton's 'roster' of professional athletes, so Crafton could sell his 'roster' among defendants who paid in excess of $2.7 million for Crafton's 'roster,'" the complaint states.
The athletes claim Crafton put, "in many cases, more than 60 percent of the plaintiffs' assets in high-risk and illiquid, alternative investments and Ponzi schemes, some of which Crafton and his team of advisors had personal relationships with and/or were actually registered 'brokers' for said investments."
The athletes say SunTrust told them in 2010 that an investment Crafton had chosen for them was under investigation, but "Crafton and his financial advisory Team, who were employed by Suntrust as a result of the acquisition of MKCM by SunTrust, began a telephone and email campaign with Crafton's 'roster' of players assuring them that nothing was wrong, that plaintiffs' money was safe and that defendant SunTrust was attempting to create problems and misstate facts so that Crafton's 'roster' of players (including plaintiffs) would change financial advisors from Crafton to other members of the SunTrust Sports & Entertainment Group and that would enable SunTrust to terminate Crafton's three (3) year contract. ...
"Meanwhile, defendant Crafton had been allowed to manipulate plaintiffs' portfolio values and was making significant transfers and purchases of unsuitable, illiquid and unsafe alternative investments and was issuing fraudulent certificates to plaintiffs in an attempt to conceal plaintiffs' actual monetary losses from the investments Crafton placed them in and all the while defendant Crafton was employed by and under the oversight, supervision and control of defendants CSI, MKCM and SunTrust."
In sum, they say, if the corporate defendants had properly supervised Crafton, the "defendants could have and would have prevented the plaintiffs from losing millions of dollars of their money that Crafton had placed in these alternative investments."
The athletes seek compensatory and punitive damages, disgorgement of management fees, and attorney fees. They are represented by Andrew Smith.
Sign up for the OV Daily Newsletter