It’s no secret that large sums of money change hands every day in professional sports, both at the college and pro level. Even the NCAA, which has rules that are meant to protect its amateur athletes, isn’t immune from issues related to big money. As a result, athletes are at a risk of fraud and need to be vigilant and alert with regard to their finances.
Why is an Athlete More at Risk?
The career span of an athlete is typically very short and can be made even shorter by injury or diminution of skills. They don’t benefit from a long-term work life to build and manage their wealth Therefore, practical financial advice and management is indispensable for professional athletes as well as college athletes about to turn professional.
Professional Athletes are particularly susceptible to investment fraud as their wealth is typically new and increases very quickly. Consequently, they could be targets for many advisors who would like to “help” them with their finances.
These consultants are capable of taking advantage of the athlete’s wealth, pushing high risk investments (often represented to be low risk investments) that offer high fees and commissions for the advisor, rather than providing the opportunity to fully capitalize on the returns which should be available for the risk involved.
What does the law say?
In most states, it is illegal for sports agents to give gifts to college athletes. The law requires agents to register with state regulators before they approach an athlete, and violators can be prosecuted.
Often though, financial advisors find loopholes to these regulations. The NCAA prohibits athletes from accepting money or gifts, but shady financial advisors are often able to skirt around this by offering to “assist” in the management of the athlete’s investments. Brokers, insurance agents, and bankers will often solicit athletes who show promise in their future professional careers.
While playing at Pennsylvania State University from 2008-2011, five financial advisors approached Cincinnati Bengals defensive tackle Devon Still. He was a prime target, as it was clear he would go onto to play in the NFL and receive a high salary. In his senior year, he was procured by a broker who convinced him to invest $100,000 after joining the NFL. Mr. Still never got his money back. The broker was banned from the securities industry for life after failing to appear at a disciplinary proceeding.
Mary Wong was well known amongst the University of Nebraska football team. She would host barbecues at her home for the players, who loved her short ribs. She would also woo the players with clothes, private jet flights, and nightclub parties.
The players were more inclined to take these gifts because she wasn’t offering money outright. She wasn’t a sports agent either. Therefore, as a financial advisor to players who had nothing to invest yet, the players felt there was no risk in accepting her gifts.
Ms. Wong was able to convince former Dallas Cowboys linebacker Steve Octavien to give her $80,000 including his signing bonus in 2008. His entire $80,000 “investment” disappeared.
Mary Wong pleaded guilty to securities fraud in 2010 related to an alleged Ponzi scheme. She is serving a sixty-three month sentence in federal prison.
Because of the risks posed to amateur and professional athletes, it is in their best interests to seek out sound financial and legal advice. The attorneys at Vernon Litigation Group have devoted their careers to represent investors who have encountered rogue or deceptive financial advisors and unreliable investments. The Vernon Litigation Group is focused on helping investors who have been swindled or deceived by all sorts of financial affairs.
The attorneys at the Vernon Litigation Group understand that athletes have particular needs, and they can assist athletes who have been taken advantage of by pursuing recovery of funds in arbitration and litigation.
The attorneys at the Vernon Litigation Group have represented former and current professional athletes in court, arbitration, and pre-suit negotiations
If you’re an athlete, you are being pitched a significant investment or feel that you have been the victim of a fraudulent investment scheme, contact the Vernon Litigation Group at firstname.lastname@example.org or call (239) 649-5390 to speak with an attorney regarding your situation.