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

complete.

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

at Gonzaga.

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

affiliated parties.

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

”privacy concerns.”

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

said.

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

Diego.

”When you are the victim of a fraud, you expect the people

investigating it to err on the side of more disclosure, not less,”

he said.

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.