Several prominent athletes, including a newly-minted gold medalist member of the U.S. Olympic Soccer Team, have sued their former financial advisor and his employer, SunTrust Bank ("SunTrust"), alleging that they were unwitting investors in several Ponzi schemes that ultimately resulted in millions of dollars of losses. Several National Football League players, including St. Louis Rams quarterback A.J. Feeley and his wife, U.S. Olympic soccer team player Heather Mitts, were listed as plaintiffs in a lawsuit against Suntrust and financial advisor William Crafton, Jr. In the suit, the plaintiffs alleged that, rather than make conservative investments, Crafton invested the plaintiffs' funds into several high-risk investments, including at least one Ponzi scheme, that resulted in a loss of millions of dollars.
According to the complaint, Crafton began soliciting his NFL clients while he was a registered investment advisor with CSI Capital Management ("CSI") in 2003. Playing to the short and uncertain nature of the career of a professional athlete, Crafton represented that he would employ a very conservative and low-risk strategy with the principal strategy of conserving underlying principal. Beginning with Brandon Whitting, a member of the Philadelphia Eagles football team, Crafton began signing up various NFL players, including Brent Celek, Kevin Curtis, and Whitting's roomate, A.J. Feeley. Additionally, Feeley's wife, recent U.S. Olympic soccer gold medalist team member Heather Mitts, also became a client. All told, the complaint alleges that Crafton ultimately provided financial advisory services to at least 20 other professional athletes, whom Crafton referred to as his "roster".
Reassured by Crafton's promises that he would only invest in low-risk conservative investments, the plaintiffs ultimately entrusted nearly $8 million with Crafton. However, contrary to these promises, Crafton instead placed client funds into several high-risk and illiquid investments with whom he had either close personal or business relationships. For example, Crafton invested plaintiffs in Westmoore Capital, a firm with which one of Crafton's brokers maintained a personal relationship with the principal. Westmoore was later shut down in June 2010 after being accused of operating a $53 million Ponzi scheme. Additionally, Crafton invested in "Mar Vista", a high-risk venture in which Crafton, unbeknownst to plaintiffs, served as a partner. This investment also resulted in a nearly-complete loss of principal.
Crafton moved around between several financial advisor firms before selling his "roster" to SunTrust in December 2009 and agreeing to serve as the head of SunTrust's San Diego office. When the Westmoore scheme was unearthed in August 2010, SunTrust began notifying clients that those investments were essentially worthless. However, Crafton and his team disputed this in communications with his clients, claiming that SunTrust was trying to fire him and poach away his "roster". Ultimately, by early 2011, Crafton was no longer employed with SunTrust.
In the complaint, the plaintiffs charge Suntrust, Crafton, and Crafton's previous employers with multiple violations of federal securities laws. Additionally, it is also alleged that SunTrust negligently hired Crafton and failed to adequately supervise him. Plaintiffs are requesting a jury trial, and seek compensatory and punitive damages, as well as fees, pre-judgment interest, and costs.
A copy of the complaint is here.