Miami Investment & Fraud Attorneys
305.372.9700
1 SE 3rd Ave # 1200
SunTrust International Center
Miami, Florida 33131

Devon Still and Other Athletes Lose Millions in Investment

Cincinatti Bengals defensive tackle Devon Still, Washington Wizards Drew Gooden, former Pro Bowl running back Thomas Jones, former nose tackle Brandon McKinney, and Chicago Bears cornerback Timothy Jennings are among the investors that lost money investing in promissory notes in a Virginia company, CFP Group, Inc. (“CFP Group”).

CFP Group was described to the players as a fire protection company specializing in fire protection engineering, construction, maintenance, inspection and repair of fire alarm and fire suppression systems for the U.S. Government.  The athletes were told that CFP Group performed work on behalf of the General Services Administration (GSA), the U.S. Veterans Administration (VA), the U.S. Air Force and the Army Corps of Engineers.

The promissory notes paid double-digit interest rates to the athletes.  Most of the promissory notes were sold to the athletes by the now-banned financial advisor Jinesh “Hodge” Brahmbhatt.  Brambhatt also sold many athletes promissory notes of Success Trade, Inc., which turned out to be a Ponzi scheme.

According to public legal records, Thomas Jones obtained a $700,000 judgment against CFP Group; Drew Gooden obtained a $484,093 judgment; Tim Jennings obtained a $430,590 judgment; Brandon McKinney obtained a $305,930 judgment; and Devon Still obtained a $111,933 judgment.  It is highly unlikely that any player will be able to collect on their judgments.

As with many investments gone bad, there were red flags that the financial advisor selling the promissory notes should have caught.  For example, CFP Group allegedly told investors that its profit margin was near 30%.  A phone call by this office to a competitor of CFP Group revealed that the actual profit margin of the industry is closer to three percent, making CFP Group’s claim of 30% highly unlikely.  A profit margin of 30% seems large on its face for a highly competitive industry.

Another example is that CFP Group should have been able to borrow money from banks and factoring companies at very low rates against its government contracts.  Many factoring companies are willing to loan against government receivables at a rate near the risk-free rate.  It would not make sense for CFP Group to pay double-digit interest rates to athletes, when it could go to a bank or factoring company for loans.

Also, in 2009, CFP Group agreed to pay the United States Department of Justice $150,000 to settle claims that it used false statements to obtain a contract from the Department of Veterans Affairs.  This should have been concerning to the financial advisor selling the notes.  In addition,  CFP Group never filed a Form D with the SEC, which is required when raising money through a private placement.

Also, CFP Group had state and federal tax liens for unpaid taxes, going back to 2011.  On December 1, 2011, a state tax lien in the amount of $71,358 was entered against CFP Group.  On June 20, 2012, a federal tax lien in the amount of $10,436 was entered against CFP Group.

All of the red flags could have been easily uncovered.  At a minimum, the financial advisor selling the notes was grossly negligent in recommending that the players invest in the promissory notes.

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