Professional athletes and coaches are often prime targets of investment promoters, some of whom purport to be their trusted friends and advisers. Unfortunately, the investments these “advisers” sell sometimes turn out to be something entirely different from what they were represented to be, resulting in hundreds of thousands, even millions, of dollars in losses, according to Andy Katz’s ESPN.com article entitled “Source: No NCAA plans for fraud inquiry.”
Katz’s article relates another chapter of a common story that we have seen play out again and again. In this case, a Houston financial planner named David Salinas began cultivating friendships with college basketball coaches in 1988. He helped schools with financing and fundraising, and provided advice to a growing network of coaches about their contracts and personal investments.
According to the article, “Salinas had a wide net of clients, from basketball and football coaches to university endowments to churches in the Houston-area and was heavily involved with the University of Houston and Rice University.” His clients were from “everywhere, all across the country, from the Midwest to beyond. There is old Houston oil money, church money, it goes coast to coast in all walks of life. His clients had tremendous diversity.”
The coaches received regular statements from Salinas that looked “normal.” “He was someone who you built a relationship with, who you trusted with your money,” said one coach.
But apparently those statements were fraudulent, as Salinas could not account to the Securities and Exchange Commission for millions of dollars of investors’ money. “The SEC’s red flag when investigating Salinas was that he couldn’t produce documentation to prove the existence of the bonds detailed on investors’ statements.”
On July 17, 2011, Salinas was discovered dead in his home, an apparent suicide. Many of these coaches reportedly spent the five-day break during the NCAA’s July evaluation period trying to determine how much money they lost.
Sometimes, the trusted adviser is a fellow professional coach or athlete, as related in John Barr’s ESPN.com article entitled “Jim Donnan accused in Ponzi scheme.” Donnan was a former offensive coordinator for the Sooners (1985-1989), and Georgia Bulldogs head coach (1996-2000).
Donnan reportedly became an officer (disputed) and a pitchman for a company called GLC Ltd., which was purportedly in the business of liquidating and reselling consumer products. Investors such as Donnan and his wife, and other high-profile coaches Barry Switzer, Frank Beamer, Dennis Franchione and Tommy Tuberville, put nearly $82 million into GLC, but less than $12 million was spent on products and $13 million is unaccounted for.
At least some of the coaches apparently agree with Donnan’s attorney that he did not know GLC was a ponzi scheme. “Jim was the recruiter. I think Jim was a little like the rest of us. He thought it was going to be a good deal and it just went bad,” Tuberville was quoted as saying. Beamer reportedly seconded: “I just refuse to believe that Jim knew what it was when it started. Knowing Jim over the years I don’t think he’d get his friends into something like that.”
However, Donnan, his wife and his children have been sued over the GLC debacle. The lawsuit alleges that Donnan and family members fraudulently received more than $14.5 million from GLC in “approximately 293 transfers to James and Mary Donnan or their immediate family members,” including a million dollar home for their children, according to the article.
Investor attorney J. Boyd Page, the senior partner of Atlanta-based Page Perry, said: “These are indeed sad situations. Over the years we have seen many highly paid athletes and coaches be victimized by friends and trusted advisers. They spend so much time dedicated to their professional activities that they don’t have the time to thoroughly investigate their investments. Instead, they rely on trusted friends and advisers who unfortunately sometimes abuse that trust. Fortunately, in many cases, the law does provide a remedy for such abuses.”
Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 45 occasions. Page Perry’s attorneys have extensive experience in representing high-profile investors in cases involving breach of a relationship of trust and confidence. For further information, please contact us.