Investors: More than $50M lost in alleged scheme
Investors are saying they lost more than $50 million in a Ponzi
scheme allegedly orchestrated by David Salinas, the Houston
financial adviser with close ties to college basketball who
committed suicide last year.
A report filed by the court-appointed receiver in the Securities
and Exchange Commission’s suit against Salinas’ estate said 130
people or entities have filed 259 claims seeking $51 million for
their losses, most the result of investing in what are now being
described as bogus corporate bonds.
Steven Harr’s report, filed Tuesday, said the $51 million figure
likely is an overstated amount because the claims haven’t been
vetted for accuracy. That process could take as long as a year to
The report doesn’t include names, but at least eight current and
former college basketball coaches are known to have lost millions
as a result of investing with Salinas, who also directed a
well-known AAU program for high school players. They include Texas
Tech’s Billy Gillispie, Baylor’s Scott Drew, former Arizona coach
Lute Olson and former Utah coach Ray Giacoletti, now an assistant
A foundation that endows athletic scholarships at the University
of Houston also has seen more than 40 percent of its listed assets
wiped out because of investments with Salinas, who held a prominent
role in the organization.
The SEC sued Salinas’ estate last August, two weeks after he
shot himself to death at his suburban home. The suit alleges that
he and an associate, Brian Bjork, bilked more than 100 investors
out of $39 million by selling corporate bonds that didn’t exist. It
also contends that the pair raised another $13 million for two
private funds and used $3.4 million to make improper loans to
Harr’s report doesn’t address the total value of Salinas’
potential assets, although it said nearly $12 million of an
available $13 million in death benefits have been collected from
life insurance policies. The funds have been invested in
certificates of deposit, the report said.
Salinas transferred some death benefits to acquaintances just
weeks before his suicide, according to the report.
The report details 20 loans valued at more than $15 million, but
nearly half are unsecured and have gone largely unpaid. None of the
recipients are identified because of what the receiver called
The report said Harr has found approximately 60 bank accounts
tied to Salinas and has initiated a forensic accounting. However,
that process has been slow because of the large number of accounts
and the policies of the financial institutions, the report
The attorney for Olson, who has filed a lawsuit claiming he lost
more than $1 million as a result of post-retirement investments in
the allegedly phony bond scheme, said the lack of details in Harr’s
report is cause for concern.
Failing to disclose the identities of those who received the
loans makes it more difficult for victims looking for ways to
recoup their losses, said the attorney, Michael Aguirre of San
”When you are the victim of a fraud, you expect the people
investigating it to err on the side of more disclosure, not less,”
Aguirre said he has been asked by the receiver to drop his suit,
but he hasn’t done so. That’s because he believes the proceeding
can play an important role in identifying third parties who could
be made liable for the alleged fraud, he said.
”This is the first case I’ve seen where people are being asked
to wait in abeyance while the time runs out on the statute of
limitations and they are being prohibited from exercising their
constitutional rights,” Aguirre said.
Neither Harr nor his attorney, Sameer Karim, responded to
requests for comment from The Associated Press.