Cautionary fraud tale for pro athletes with sudden wealth
RALEIGH, N.C. (AP) Worn out after an away game, a former NFL player was informed by a bank teller that suspicious withdrawals were siphoning away his money. Another was persuaded to try to rescue a losing investment with an additional $700,000. A third player spent years in court trying to claw back $500,000 from a misleading real estate project.
All three were clients of financial planner Michael Rowan, who was sentenced to prison on April 26 for stealing money from wealthy athletes. It’s a cautionary tale for the instant millionaires who now know where they’ll be playing professional football after the NFL draft but still figuring out how to manage their new wealth.
They want to avoid joining a long list of pros who have been steered into questionable investments, or have been swindled out of money by advisers. In the 1980s, Kareem Abdul-Jabbar accused a former business manager of mishandling millions. More recently, New Orleans Saints quarterback Drew Brees filed a lawsuit claiming a former teammate steered $160,000 of his money into a bogus investment.
”Athletes would typically focus on playing their sport and turn over their financial affairs to others,” said Matt Mitten, director of the National Sports Law Institute at Marquette University. ”And there have been all too many cases where athletes have lost a great deal of money.”
Top college athletes often rely on academic advisers, trainers and coaches to manage matters off the field – so it’s not unusual for them to put the same trust in financial advisers when they turn pro, said Tim Davis, a Wake Forest University law professor and co-author of ”The Business of Sports Agents.” Further, many athletes don’t have experience dealing with the amount of money they earn; not many people do. That opens the door for unscrupulous characters to get into their investments.
”You have people who are actively out there who are trying to get their business, often using family members or friends,” Davis said. ”You have folks out there who talk a very good game.”
While players unions in the major sports oversee agents who negotiate contracts, labor law doesn’t give unions the same ability to regulate financial advisers, Davis said. The NFL Players Association has a program for vetting financial advisers, but it’s voluntary. The leagues and the unions have increased education efforts.
NFLPA records indicate that Rowan was never registered with its financial advisers program, spokeswoman Kaitlin Murphy said in an email. The money manager received five years in prison for stealing nearly $3 million from clients at his sentencing the day before the NFL draft started.
To avoid rip-offs, lawyers and legal scholars advise players to do research and seek advice from their contract agents, who often work for established firms.
”Do your homework, do your research and find someone who’s got experience, who’s got integrity, and have them handle your affairs. Not somebody’s friend or someone you’ve met at the bar, or a family member,” said lawyer J.E. Cullens, who represented lineman Glenn Dorsey in a lawsuit against Rowan.
Dorsey’s case shows how advisers latch onto young players. Rowan presented himself as a caretaker of players’ newfound wealth while they dealt with grueling training and travel, and players who sued him said they viewed him as a trusted friend.
Dorsey hired Rowan before he was drafted in 2008 by Kansas City. A lawyer wrote that Dorsey gave Rowan access to manage his financial affairs because of a schedule that ”prevents him from closely monitoring his bank account.” But a bank branch employee informed Dorsey of suspicious withdrawals, and he eventually sued Rowan, who pleaded guilty late last year to moving clients’ money without permission into accounts he controlled.
His firm was also sued by NFL players Earnest Graham, Alex Brown and Craig Davis over questionable investments. Rowan declined to comment through his lawyer.
”We have seen so many of these cases with athletes who are very trusting of their financial advisers and maybe don’t do enough background research,” said lawyer Bradley Schlotterer, who represented Davis.
Rowan cultivated an image as a gregarious do-gooder. After graduating from Wake Forest University in 1994, he ran the Future Stars Football Camp in High Point for several years, mingling with young prospects and pros who served as speakers, according to a 1996 Greensboro News & Record article.
He worked as a financial adviser in Florida before registering Capital Management Group Wealth Advisers in 2005 in High Point, according to state records. Before legal problems surfaced, Rowan told the Triad Business Journal in 2007 that the Bible was a favorite read, and he always sought meetings with players’ parents to build trust.
”It’s not forever,” he said then, describing his sales pitch. ”We want to make sure the money that you make can last you a lifetime.”
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