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SEC Alleges Sports Agent Black Defrauded Pro Athletes
Washington, Feb. 25 (Bloomberg) -- The Securities and Exchange Commission accused sports agent William ``Tank' Black of fraudulently causing two dozen athletes, including professional basketball player Vince Carter and pro football player Fred Taylor, to lose at least $13.5 million.
Black, 42, also is under criminal investigation by the U.S. attorney's office in Gainesville, Florida, Black's spokesman said.
He plans to contest the SEC lawsuit.
``The allegations contained in the SEC's complaint are false and do not reflect actual events,' Black, of Columbia, South Carolina, said in a statement. ``We will respond vigorously with the facts at the appropriate time.'
The SEC suit, filed in federal court in Tampa, Florida, alleges that Black sold the athletes stock that was to be given to them for free, reaped undisclosed fees and commissions, and siphoned clients' investment returns to himself.
Black also encouraged the athletes to invest in a fraudulent offshore scheme in which new customers' deposits were used to pay the returns of early investors in a so-called Ponzi scheme, the SEC said.
``People who come into money need to be careful about what they do with it because they're very vulnerable to people with investment schemes,' said SEC associate enforcement director Thomas Newkirk. ``A million dollars with honey draws a lot of flies.'
Court Order
The SEC obtained a court order freezing the assets of Black and his sports management firm, Professional Management Inc. of Columbia, South Carolina, and requiring them to account for their proceeds. Also sued was the firm's general counsel, James A. Franklin, 32, who couldn't be reached for comment. They were charged with theft, failure to disclose fees, and failure to register as an investment adviser.
The SEC alleged that Black and Franklin pocketed at least $5.5 million of about $14.1 million invested by the athletes. The agents also failed to adequately research a Cayman Islands investment scheme before recommending that their clients make investments that led to at least $8 million in losses, the suit contended. The athletes did recover several million dollars of their investments, according to the SEC.
One alleged scheme involved a public company, BAOA Inc., an operator of telemarketing call centers that was selling a board game aimed at African-Americans. The San Diego-based company agreed to give shares to the athletes through Black in return for their endorsements' of the board game. Black allegedly received free shares then sold them to his clients for a total of $1.2 million, according to the affidavit.
Black had been president of the company, whose initials stand for Black Americans of Achievement. It isn't accused of any wrongdoing.
Black is a registered agent for professional football and basketball players. He represents them in contract negotiations and provides financial advisory and investment services, the suit said.
NFL and NBA Players
Among the athletes allegedly defrauded was Carter, a Toronto Raptors forward who won the dunk contest at the National Basketball Association all-star game last weekend and was rookie of the year last year.
Also allegedly defrauded were Taylor, a running back for the National Football League's Jacksonville Jaguars; Ike Hilliard, a wide receiver for the NFL's New York Giants; Germane Crowell, a wide receiver for the Detroit Lions; and Tampa Bay Buccaneers receivers Jacquez Green and Reidel Anthony.
Carter's mother, Michelle Carter-Robinson, said today that Vince would continue to use Black as his agent.
``He will be staying. End of conversation,' Carter-Robinson said in a telephone interview.
Taylor incurred about $2.6 million in losses, the most of any of the athletes, the SEC said.
Leading Draft Choice
A first-round draft choice from the University of Florida, Taylor agreed to give his $3.4 million signing Jaguars' signing bonus to Black after the agent promised him a $600,000 return on a Cayman Islands investment, SEC enforcement attorney Michael Fuchs said in an affidavit filed as part of the SEC complaint.
The running back said Black decided how much to invest and where to invest it. The Jaguars player testified that he asked Black about getting his investment funds back and was told that Black no longer had access to the money. Black said he intended to repay clients by selling a travel agency he co-owns, the affidavit contends.
``Some players contacted during this investigation said they had not owned a checking account or made an investment' before hiring Black, the SEC affidavit said.
Hilliard, of the New York Giants, told investigators that Black told him to ``just play ball' while the agent would ``take care of everything else.' The wide receiver had $1.1 million in a mutual fund retirement portfolio that Black liquidated and invested in a fraudulent scheme, the SEC alleged.
Recruiting Practices Probed
Green, of the Tampa Bay Buccaneers, testified that he never authorized Black to invest in the Cayman Islands scheme. Black invested $460,000 of Green's money in the scheme, according to the affidavit.
Black told investigators he doesn't give investment advice, the affidavit contends. He also gave investigators ``what appear to be false documents' intended to support this claim, the SEC alleged.
During the SEC inquiry, Black's employee Franklin invoked his constitutional rights against self-incrimination, according to the affidavit.
Black's client-recruiting practices have been under investigation by the NFL Players Association, the University of Florida, and the Southeastern Conference. He has filed a grievance against the players union.
The fraudulent Cayman Islands scheme was masterminded by Michael Gause of Fort Lauderdale, Florida, and Richard Homa of Atlanta, the SEC alleged. They fraudulently raised $314 million from at least 500 investors by falsely saying the money would fund car title-loan companies, the agency said. Gause also faces criminal charges from the U.S. attorney's office in New York.
The SEC has been investigating sports agents' fee arrangements for several years.
Feb/25/2000 17:14
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