Former NFL cornerback Will Allen and a business partner are accused of operating a Ponzi scheme that defrauded investors and failed to provide millions of dollars in loans to other professional athletes.
The Securities and Exchange Commission said in a civil complaint filed Tuesday in Boston that a loan company run by Allen and Susan Daub raised more than $31 million from investors in 2012 but distributed only $18 million in loans. Allen, 36, and Daub, 54, also used more than $7 million of investor capital "to pay personal expenses or to fund other business ventures" that included excursions at casinos and nightclubs, the suit said.
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Their company, Capital Financial Partners, made loans ranging from $10,000 to $5.6 million to players in the NBA, NFL, NHL and MLB.
"The defendants sold investors on the idea of lending money to pro athletes, but we allege that’s not where a large portion of the investors’ money went," Paul G. Levenson, director of the SEC’s Boston office, said in a statement. "As in any Ponzi scheme, the appearance of a successful investment was only an illusion sustained by lies."
The SEC did not name those who invested in and borrowed from Allen, but it did say the biggest borrower is an NHL player who filed bankruptcy in October.
Blue Jackets defenseman Jack Johnson filed for Chapter 11 bankruptcy in October, claiming assets of less than $50,000 and debts of more than $10 million. Capital Financial loaned $3.4 million to Johnson but told investors the loan was for $5.65 million, according to the SEC.
Allen retired from the NFL in 2012 after playing 10 seasons with the Giants and Dolphins. He should not be confused with Steelers safety Will Allen, 32, who is still playing in the NFL.
