Tuesday, April 21, 2015

Allen Can't Cover Ponzi Scheme

"Former Patriot charged in alleged Ponzi scheme; SEC links Will Allen to Ponzi scheme" by Beth Healy Globe Staff  April 07, 2015

William D. “Will” Allen was an NFL cornerback for more than a decade before joining the New England Patriots in March 2012. He played for the New York Giants and the Miami Dolphins and then signed on in Foxborough for $925,000 in what wound up being his last year of football.

By August 2012, Allen was on the injured reserve list. The Patriots say he never played a game for the team and was released the following spring. But in the meantime, he became involved in another kind of sports enterprise.

Allen started an investment business, Capital Financial Partners, to make loans to professional athletes. Federal securities regulators now call it a multimillion-dollar Ponzi scheme.

“The defendants sold investors on the idea of lending money to pro athletes, but we allege that’s not where a large portion of the investors’ money went,’’ said Paul G. Levenson, director of the Securities and Exchange Commission’s Boston office, in a statement. “As in any Ponzi scheme, the appearance of a successful investment was only an illusion sustained by lies.’’ 

I'm glad he's going after the big cases and where is the corruption.

Allen and an associate, Susan C. Daub, allegedly raised nearly $32 million through their Boston firm from at least 40 investors starting in July 2012, according to an SEC complaint filed last week in US District Court in Boston.

The pair allegedly made $18 million worth of loans, including one to Jack Johnson of the National Hockey League’s Columbus Blue Jackets, according to regulators and court records.

But they also took $7 million of investor money for themselves and used the funds to pay for charges at casinos, pawn shops, jewelers, and nightclubs, according to the regulators. The pair also allegedly used false documents to mislead investors about the terms, circumstances, and even the existence of some loans.

For instance, Allen and Daub allegedly persuaded 24 investors to contribute $4 million toward a purported $5.7 million loan to Johnson. But the loan to Johnson was actually much smaller, the SEC said.

In October, Johnson filed for bankruptcy protection, the latest in a long line of professional athletes to succumb to money problems despite their large salaries. Capital Financial filed a claim in the bankruptcy case for just $3.4 million.

Daub allegedly had reported to investors that Johnson was making monthly payments, but then told the bankruptcy court he made no payments at all.

Matthew L. Schwartz, a lawyer in Manhattan who was formerly lead prosecutor in the Bernard Madoff fraud for the US attorney’s office in the Southern District of New York, said Allen’s firm was not a “pure” Ponzi since it did make some loans. The Johnson bankruptcy may have helped regulators pursue the case before all the money was gone, he said.

“These things usually don’t come to light until the economy takes a turn and investors try to get their money out,’’ Schwartz said.

On their website, Allen and Daub stated they charged interest rates ranging from 9 percent to 18 percent, but regulators said the annual rate on some loans could exceed 100 percent.

Allen, 36, lives in Davie, Fla., according to the SEC and public records. He could not be reached for comment Tuesday. A spokesman for the Patriots also declined to comment.

Daub, 54, has been registered as a financial adviser in the past, the SEC said. Formerly of Acton, she now lives in Coral Springs, Fla., according to regulators and public records. She did not return a phone call placed to what appeared to be her home.

The two would attract investors by citing the company’s loans for particular players, according to the SEC complaint. One was supposed to be a $300,000 loan to a Major League Baseball player; another was $1.7 million for a professional football player. In both of those cases, the SEC alleged, the firm made no payments to those players, who were not identified in court records.

From July 2012 through February 2015, Capital Financial received approximately $13.2 million in repayments of real loans to athletes, according to the complaint. During the same period, the company allegedly paid out $20 million to investors, using money contributed by later participants to help cover the returns.

Public records indicate that Allen, a father and a native of Syracuse, N.Y., may have had financial troubles of his own before moving to the Boston area. He had numerous court judgments and tax liens against him in recent years. One was for $576,066 owed to a company called Pro Player Funding LLC. Another was for $20,000 owed to a Las Vegas casino.

The SEC on Tuesday said a federal judge had granted the agency’s request for a temporary restraining order against Allen and Daub and several entities they control, and to freeze their assets.



"Former New England Patriots player William D. “Will” Allen and an associate were arrested Friday in Florida, on charges of securities fraud in connection with an alleged scheme to make loans to professional athletes. Federal prosecutors alleged that Allen, 36, of Davie, Fla., and Susan Daub, 55, of Coral Springs, Fla., stole money from investors whom they solicited to put money into a pool for loans to athletes. Using their Massachusetts company, Capital Financial Partners, Allen and Daub allegedly ran a Ponzi scheme, using money from new investors to pay off earlier ones. While the company did make some loans to athletes, the complaint alleges that Allen and Daub diverted millions of investor dollars to themselves and other business ventures. A lawyer for Allen said he maintains his innocence. A lawyer in Boston for Daub said she plans to enter a plea of not guilty."

Also seeFormer Patriot Will Allen indicted for alleged Ponzi scheme

A little Daub'll do ya'!