These guys are targets. And I know that even with my lil bit of money, I have been approached by people who want me to "invest". I can't imagine how much NFL players get suckered into bogus agreements.

Money management is a complex system and it is best to just live a simple, easy life. Most wealthy people keep a low profile.

http://www.forbes.com/sites/agoodman/2013/06/27/the-ponzi-scheme-youve-never-heard-of-that-cost-nfl-nba-players-millions/

Despite the media attention paid to the most debilitating and largest financial fraud in U.S. history (the Ponzi scheme orchestrated by Bernie Madoff that led to his 2008 arrest) the Ponzi remains a favorite crime of many who work with money.

In 2009, before the dust had even settled on the Madoff case, a Washington, DC investment firm allegedly started its own Ponzi scheme, a scheme that would eventually cost dozens of professional athletes millions of dollars.

The case became public earlier this year when, on April 10, 2013, regulators accused Success Trade Securities (STS) of fraud. STS is an online trading company based in Washington, DC. The Financial Industry Regulatory Authority (FINRA) ordered the CEO and president, Fuad Ahmed, to stop raising money, accusing him of misrepresenting and outright misleading investors, mostly professional basketball and football players. The complaint by FINRA alleges that, beginning in March 2009, Fuad swindled more than $18 million from nearly five-dozen clients by misrepresenting or omitting key facts about investments.

The new NFL logo went into use at the 2008 draft.

The FINRA report alleges that Fuad used the proceeds from the promissory notes sold to investors to pay interest on notes issued to previous investors, the classic Ponzi scheme. Additionally, he used the funds to pay personal expenses (including the lease on his Range Rover) and provided $82-thousand in interest free loans to his brother.

Though not specifically named in the complaint, many of the 58-clients are known to be current or former NFL and NBA players represented by Jinesh “Hodge” Brahmbhatt, who was a Registered Player Financial Advisor with the National Football League Players Association (NFLPA). His company, Jade Wealth Management, based in McLean, Virginia and established in 2008, accrued high profile investors such as Victor Cruz, Vernon Davis, Jared Odrick, and Brandon Knight. FINRA’s report alleges that Jade investment managers recommended athletes to STS; some introductions to STS were made directly by Brahmbhatt, himself. In return, since March of 2009, STS is alleged to have made at least $1.25 million in payments to Jade.

Though he admits that more than 30 of his clients purchased more than $12 million worth of fraudulent notes from STS, Brahmbhatt says he wasn’t involved in STS’s scheme, maintaining his innocence and ignorance. “We don’t have books,” he told Yahoo! Sports, in April. “People say, ‘Man, you’re stupid. You should have looked at last two or three years of income statements.’ But you know what? We didn’t. You know why we didn’t? Because he never missed a damn payment, and we never really thought about it.”

Despite Brahmbhatt’s claims, STS’s ties to Jade remain questionable; there are a number of red flags, including…

1) Jade is indicated as a “Division of Success Trade Securities” on a monthly report (obtained from Jared Odrick’s attorney, Jeff Sonn of Sonn & Erez, co-firm: Aaron Resnick).

2) Three of the STS representatives who sold the allegedly fraudulent notes to investors were registered with Jade.

3) Jade’s offices were listed in the same suite as an STS branch (now closed) in McLean, Virginia.

At one time Jade boasted more than 70 NFL players and counted former stars such as running back Clinton Portis and defensive end Adewale Ogunleye among the ranks of its clients. Also listed among these clients is Miami Dolphins defensive end Jared Odrick, currently the only player who has filed a FINRA arbitration claim against STS, Ahmed and Brahmbhatt. Other players including Indiana Pacers forward Sam Young are expected to follow shortly. Odrick’s attorneys allege that Ahmed and Brahmbhatt not only offered a three-year 12.5% STI note, but also a three-year 10% CFP Group note.

According to the NFLPA, Brahmbhatt failed to provide information requested to determine what role, if any, he played in the alleged activities. This was a violation of his obligations under the NFLPA Player Financial Advisors’ Regulations. The NFLPA has, as a result, revoked Brahmbhatt’s registration in its financial advisor program.

The fallout from FINRA’s ongoing investigation should serve as a cautionary tale for everyone, not just professional athletes.

Attorney Jeff Sonn, representing Odrick in his case against STS and Jade believes,“the single largest problem for athletes is losing money in private placement investments … that are not registered with the SEC.” Sonn says it is incumbent upon an athlete, any individual, to understand and do the research necessary to protect his/her investments.

Like a patient who gets a second opinion from a doctor, or the person who reads Consumer Reports before purchasing a big ticket item, such as a new car, individuals should not waive their due diligence when determining how to invest their money.

Create a “checks and balance” system by having multiple advisors who are not affiliated with each other, including investment advisors, accountants and attorneys.

Ultimately, it’s up to each individual to make his/her own decision about investments. By creating a valued team of advisors, an individual can design an intricate web of oversight thereby protecting him/herself from being caught in a web of fraud.

Andrew Goodman is the Chief Investment Officer at CIC Wealth

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