ATLANTA (June 27, 2006) -- The National Football League and its players union are on the hook for the $20 million that seven current and former players lost in an alleged fraud scheme because the union endorsed the services of an investment firm even though its manager had liens against him, a lawsuit says.
In the lawsuit filed against the NFL and NFL Players Association on June 23 in U.S. District Court in Atlanta, the players say the defendants are jointly liable for their losses from investing with hedge fund manager Kirk Wright.
The lawsuit says the union recommended Wright through registration in a union investment program even though Wright and his partner, Nelson "Keith" Bond, had active state and federal tax liens against them.
The players also say the union failed to ensure that Wright was properly insured as required by the program, and failed to notify the plaintiffs about those matters.
NFL spokesman Greg Aiello said the league believes the allegations in the lawsuit are unfounded and have no merit.
"We will review the matter with our attorneys and look forward to responding as directed," Aiello said.
He added that only one of the players, Blaine Bishop, asked for a background check, and only for Bond, and that a database reviewed by the league's security department found no record of any liens or relevant information.
A spokesman for the players union, Carl Francis, said he had no comment on the lawsuit.
"We're kind of looking into it right now," Francis said. "We don't have all the facts. Once we do, we will address it."
In May, Wright was arrested in Miami Beach on federal fraud charges. He also faces a lawsuit filed by the Securities and Exchange Commission against him and his company, International Management Associates.
Among the clients deceived by Wright, authorities said, are former Denver Broncos players Steve Atwater, Ray Crockett, Al Smith and Bishop, as well as former longtime Philadelphia Eagles player Clyde Simmons.
The five players are plaintiffs in the lawsuit against the NFL and players union, along with Marco Coleman, who has played with six teams including the Broncos, and Carlos Emmons, who currently plays for the New York Giants.
The players are asking in the suit for compensatory and punitive damages as well as an injunction to insure that the NFL and its players union have adequate practices in place for performing background checks and protecting players from fraud by registered financial advisers.
According to authorities, Wright and his company collected as much as $185 million from at least 500 investors since 1997 and misled some of them to believe the value of those investments was increasing using false statements and documents. As recently as Jan. 25, the firm reported $166.6 million in assets spread across five hedge funds it manages and advises. That money is now missing, according to the SEC.
AP NEWS
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