Here's Scott Boras' comment back in February when it was revealed that several baseball players were among the clients of suspected fraudster Robert Allen Stanford:
"The broker dealers the players have chosen have advised our personal management auditors the players are not in jeopardy of losing money."
Here's the news from yesterday:
The lawyer trying to recover the money from R. Allen Stanford's purported Ponzi scheme wants seven current and former Major League Baseball stars who had invested with the accused swindler to turn over millions of dollars, mostly of the players' own money.
Ralph S. Janvey, whom the Securities and Exchange Commission appointed as the "receiver" in the case, wants to take $9.5 million from the players, an amount that mostly consists of their initial investments, so that the athletes' money can be split up among all of Mr. Stanford's purported victims.
"The fact that the [ballplayers] are innocent investors and committed no wrongdoing does not entitle them to retain proceeds received from the fraudulent" scheme, lawyers for Mr. Janvey wrote in a filing last week with the U.S. District Court in Dallas.
Oops.
The players who, if the motion is granted, stand to lose millions include Greg Maddux, Johnny Damon, J.D. Drew, Andruw Jones, Carlos Pena, and Jay Bell.
The question I asked back in February and for which I'd still like an answer is whether Scott Boras -- who makes a big deal about how he's a full-service representative -- steered these guys to Stanford. Maybe someone in a position to should ask him.
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Someone should look into whether Boras received any compensation for referring the players to invest with Stanford; if so, he should be held responsible for the players loses.
Craig,
Do you think the Stanford prosecutors will be as diligent looking at the
"steerers" as they've been in the Bernie Madoff investigation?
Is there any reason their money being taken away other than that they'd invested a lot of it? I don't understand.
So ... how come their money is being redistributed to other victims? I mean, by their own logic, just because those other victims are innocent and committed no wrongdoing does not entitle them to keep their money.
What am I missing?
You aren't missing anything, actually. The concept that Janvey is proposing is that everyone involved with Stanford should be equally screwed. He wants all the money that Stanford used in his scheme including the return of original investments to go into one big pot and redistributed on the basis of the percentage recovered. Example: Anyone and everyone who got any check from Stanford sends it back. That gets added to whatever assets Janvey can find buried in Bermuda and Stanford's personal accounts and assets. When the court decides it has found every cent it can, they add up all the original investments, and if it equals the original investments, great, everyone gets a check for his/her investment and is made whole. That's not likely to happen, though. It'll be some percentage. So if the court finds 75% of the money and you invested $100,000, you get a check for $75,000. (That's simplistic, but that's the concept.) The baseball players (and others who have received checks) would receive the same percentage as the rest of the swindled investors. Whether or not this will fly depends on a number of things and I'm not a lawyer.
I can tell you from occupational experience that this type of plan didn't work for other types of investment malfeasance. If you were a client who got your money out before the "run on the bank"- good for you. I never heard of potential victims having to make restitution to the whole group, but the case is high profile, so ya never know. Ponzi investment schemes by crooked managers are not new. It's the magnitude and clientele that's now getting the publicity/interest.
And to comment on another question about prosecutors and "steerers" or brokers, hard to say what anyone will do, but investments and securities (and Brokers) are regulated by the States in addition to the Feds. Every State has the opportunity to investigate whether its laws were broken in the procurement of an investment contract. I'm not sure much would happen because it probably falls under the category of "private placement" but high profile "consumer protection" is very popular at election time.