U.S. regulators sued former New York Giants cornerback Will Allen over claims he helped run a Ponzi scheme that promised investors profits from loans to professional athletes.
From July 2012 through February 2015, Mr. Allen and his partner used cash from some clients to fill a $7 million shortfall in payments to other investors, the Securities and Exchange Commission said in a complaint unsealed Monday in Boston federal court. The court froze assets associated with the alleged scheme, and the SEC is seeking additional penalties.
(Related: 7 athletes who say their adviser duped them)
“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 Levenson, head of the SEC's regional office in Boston, said in a statement. “As in any Ponzi scheme, the appearance of a successful investment was only an illusion sustained by lies.”
Mr. Allen, 36, was drafted in the first round by the New York Giants in 2001 and played for the team until 2005 before joining the Miami Dolphins, according to statistics from the National Football League. Mr. Allen graduated from Syracuse University, where he still holds some of the school's defensive records.
(See also: NFL star Dwight Freeney sues BofA, adviser for $20 million)
Mr. Allen and his partner raised more than $31 million from investors to make the loans to athletes that they said would earn as much as 18% interest, the SEC said. The agency said they misled investors about the terms, circumstances and even the existence of some of the loans and then used some investor funds to pay personal expenses at casinos and nightclubs.
A woman working at one of Mr. Allen's companies, Simplified Health Solutions, said he wasn't available to comment.
