Texas adviser used former NFL players to promote scheme, the SEC charges

An investment adviser has been charged with defrauding investors in a scheme that used former National Football League players to promote offerings in an insurance company.

The Securities and Exchange Commission last month claimed that Kurt Barton and his company, Triton Financial LLC, raised more than $8.4 million from about 90 investors by selling units in an affiliate, Triton Insurance. The firm told investors that their money would be used to purchase an insurance company.

Instead, the proceeds were used to pay day-to-day expenses at Triton and its affiliates, the SEC charged in a complaint filed Dec. 22 in the U.S. District Court for the Western District of Texas.

In a release the same day, the state claimed that Mr. Barton and Austin-based Triton had submitted “inaccurate and altered documents” to the Texas State Securities Board’s Inspections and Compliance division.

PLAYERS NOT CHARGED

The SEC complaint indicated that Triton used ex-NFL players to promote its investment offerings. The regulator did not name the players in the complaint, nor did it charge any players with wrongdoing.

Triton was the subject of a Sports Illustrated article in March that prompted the securities board to examine the firm’s business. The story stated that Triton used former NFL quarterbacks Chris Weinke, Ty and Koy Detmer, and Jeff Blake to promote Triton Insurance. In 2000 and 1990, respectively, Mr. Weinke and Ty Detmer won college football’s Heisman Trophy, whose trust Triton co-sponsors.

Triton in June also sponsored a PGA Champions Tour event in Austin formerly known as the FedEx Kinko’s Classic. According to published reports, however, the tour had to spend an unspecified amount of money to salvage the tournament, the Triton Financial Classic, after Triton failed to provide its full share of the sponsorship, estimated to be $1.5 million.

The seven-year-old tournament was dropped from the Champions Tour’s 2010 schedule last fall after Triton Financial executives contacted the tour and said they likely would not be able to sponsor the tournament this year.

Although Triton’s website, tritonfinancial.com, is peppered with sports clichés and references to “elite” clients, it has pitched financial planning services to a more modest clientele.

Triton as of an Oct. 29 ADV filing oversaw $7.1 million in assets in 319 accounts, more than half of which (51% to 75%) were those of individuals who couldn’t be categorized as “high net worth.” Triton, which offered advisory services on a non-discretionary basis to between 101 and 250 clients in its last fiscal year, said high-net-worth individuals represented between 11% and 25% of its clientele, supplemented by a smattering of pension plans, trusts and charitable organizations.

Mr. Barton, however, pitched investments in real estate development and other partnerships broadly across his client base, accepting investments as low as $2,500, according to an ADV supplement he signed Dec. 17. It stated that 42% of the firm’s clients invested that much or more in a partnership that created the Triton Athletic Center, an 11-acre development in San Antonio valued at $15.9 million. The Triton Insurance fund singled out by the SEC accepted minimum investments of $10,000 and attracted 20% of the firm’s clients.

Mr. Barton, who began his career selling retirement plans for New York Life Insurance Co., appears to be somewhat of a one-man band at Triton. He lists himself as chairman, chief executive and chief compliance officer, and owns 75% or more of the firm. Triton has between 11 and 50 employees, between one and five of whom offer clients advice or are registered as brokers, according to the ADV filings.

“We achieve nothing on our own,” Triton’s website says on its Management Team page, which lists Mr. Barton as its only member. “Each client victory takes countless players.” Triton’s fees are fixed and asset-based, and it also accepts referral fees from unnamed third-party investment advisers as part of its financial planning and wrap account services. It recommends Fidelity Brokerage Services LLC to clients for trade executions.

Neither the Heisman Trophy Trust nor the PGA Tour Inc. endorses or provides testimonials for Triton or any of its products, the firm states under legal notices on its website.

Sports Illustrated reported that Mr. Blake, who played for a number of NFL teams during his career, sent an e-mail to 102 retired NFL Players — including Pro Football Hall of Fame running back Eric Dickerson — touting Triton and its investment returns.

‘FACADE OF LEGITIMACY’

“By associating with former football stars, they were able to build a facade of legitimacy and gain investor trust,” said Rose Romero, director of the SEC’s Fort Worth, Texas, regional office.

Ty Detmer took a job last month as head football coach at St. Andrew’s Episcopal School in Austin. According to published reports, he resigned in September after two years at Triton Financial, where he was chief of athlete services. After he left, Mr. Weinke was promoted to that position — only to leave a few weeks later, according to published reports.

The commission charged Mr. Barton with securities fraud and seeks permanent injunctions, disgorgement of illegal gains and financial penalties. Mr. Barton, who did not admit or deny the SEC’s allegations, consented to permanent injunctions against future securities fraud violations.

Joe Turner, an attorney representing the Austin-based adviser, said Mr. Barton voluntarily consented to the appointment of a receiver. “He intends to work closely with the receiver in an effort to ensure that the investors, many of whom are friends and relatives, do not lose their money,” Mr. Turner wrote in an e-mail.

Calls to Triton were met by repeated busy signals.

E-mail Sara Hansard at [email protected]. or Jed Horowitz at [email protected].