Former NFL cornerback Will Allen and a business associate allegedly ran a $US31 million Ponzi scheme through a company that provided loans to professional athletes, according to a complaint filed by the SEC.
On Tuesday the SEC announced that it was bringing fraud charges against Hill, Susan C. Daub, and their firm Capital Financial Partners.
“Allen and Daub told investors that they could profit by funding the loans and receiving interest of up to 18 per cent paid by the athletes. The complaint alleges that from July 2012 through February 2015, the defendants paid approximately $US20 million to investors while receiving a little more than $US13 million in loan repayments from athletes,” the SEC said in a statement. “To fill the nearly $US7 million gap, Allen and Daub used money from some investors to pay other investors, the hallmark of a Ponzi scheme.”
The company raised $US31.7 million from more than 40 investors, the SEC says.
The SEC complaint, which can be read in full below, alleges that Hill and Daub took $US7 million in investments intended to be used in athlete loans and used it for “personal expenses and unrelated business ventures.”
Those expenses allegedly included “charges at casinos, pawn shops, jewellers, grocery stores, cigar shops, and clothing retailers.”
“In other words, they used money from some investors to pay other investors, while at the same time funelling millions of dollars of investor money to themselves — the hallmarks ofa Ponzi scheme,” the SEC said in the complaint.
Allen and Daub could not immediately be reached for comment.
Allen was drafted in the first round by the New York Giants in 2011. He played 12 seasons in the NFL.
Here’s the full complaint:
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