The idea professional athletes will spend their riches away is no longer the biggest fear, now it is being stolen!
National investment fraud lawfirm KlaymanToskes reports Tampa Bay Buccaneers quarterback Baker Mayfield has filed a $12 million lawsuit against his father’s investment firm, Camwood Capital Management Group, alleging misappropriation of funds and breach of a settlement agreement.
Attorney Lawrence Klayman, the managing partner of the firm, confirms, “Our firm has seen a rise in the number of professional athletes that fall victim to financial fraud. Individuals like Mayfield have become targets because of their high net-worths and dedication to the game, leaving their assets to be managed by those they trust. Unfortunately, not all financial advisors act in the best interest of their customers.”
In Money Vehicle we discuss the role of a ‘Fiduciary’ who has a legal obligation to put your best interest first. Confusing because anyone who touches your money should be held to this standard, but there is another standard known as the ‘suitability standard’ where the clients best interest is not always a priority.
The law firm previously announced the filing of another FINRA arbitration claim on behalf of a former NFL player’s family member, who is seeking up to $1 million in recovery for investment losses caused by Morgan Stanley and barred broker Darryl M. Cohen who was in the business 24 years! The filing comes after Cohen’s arrest in March 2023, for his role in a $13 million scheme to defraud professional athletes.
Baker Mayfield’s case is the latest example of financial advisor misconduct targeting professional athletes. According to Mayfield’s lawsuit, Camwood Capital and its subsidiaries failed to honor a settlement agreement to repay millions, refinance existing loans, and provide access to financial records. The funds, transferred without Mayfield’s authorization, were allegedly used for operating expenses and payroll obligations at Camwood subsidiaries, leaving Mayfield with no equity or stake in the companies.
Professional athletes often fall victim to financial misconduct due to their high-profile status, limited financial knowledge causing a reliance on advisors, and limited time to manage personal finances – you must focus on winning games after all. According to the findings of a 2021 study conducted by Ernst & Young LLP, from 2004 to 2018, professional athletes alleged nearly $600 million in fraud-related losses.
Common financial crimes targeting pro-athletes include:
- Misappropriation of Funds: Advisors may siphon money from accounts for unauthorized purposes, such as personal expenses or unrelated business operations.
- Unauthorized Investments: Brokers may place clients into high-risk or illiquid investments for personal gain, misrepresenting their suitability – remember not a fiduciary.
- Failure to Disclose Conflicts of Interest: Advisors may steer athletes toward investments where they hold a personal stake, without disclosing potential conflicts of interest, made possible under the suitability standard.
With NIL athletes making millions today, you can be sure they are on the horizon for schemers and scammers. Prevent fraud by learning to speak the language of money, using tools like Brokercheck by FINRA, and never authorize others to have authority over where your money is going without your approval.
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