Financial Advisor Accused of Defrauding Professional Athletes
The Securities and Exchange Commission (SEC) has made allegations that a Pittsburgh-based financial advisor victimized several professional athletes. Blazer Capital Management, founded by Louis Martin (Marty) Blazer III, marketed itself as a financial services advisory firm that specialized in handling the needs of high net worth, high profile, individuals. However, the SEC alleges that Blazer was instead using athlete money to invest in personal movie projects. According to the complaint, Blazer took nearly $2.5 million from the accounts of five different investor clients. The money, which was used to fund his movie projects, was allegedly withdrawn without any client authorization. Further, one client even explicitly stated that he did not want to be an investor in the project; but Blazer allegedly withdrew money from that client’s account anyway. When the client discovered the situation, and confronted the firm, Mr. Blazer allegedly resolved the issue by unlawfully using funds from another client’s account to cover the gap. That type of activity strongly resembles the characteristics of a Ponzi scheme. Also noteworthy is the fact that this is not the first time Blazer Capital has faced allegations of defrauding athlete investors. In 2011, Blazer was hit with a lawsuit from former NFL running back Kevan Barlow. Mr. Barlow, who had been a client from 2001-2010, accused the firm of ‘misappropriating funds’ and sought $4 million in compensatory damages. Eventually the case was settled out of court. The Pittsburgh Tribune has reported that Blazer also faced legal issues for unpaid loans involving former NBA and NFL players who had ties to the Pittsburgh area.
The Investment Advisers Act
The Investment Advisers Act provides investors with protection against the fraudulent activity of Registered Investment Advisors (RIAs). Specifically, Section 206 prohibits:
- The use of any device, tactic, or scheme meant to defraud clients or potential clients; and
- The engagement in any transaction which deceives or defrauds any current or future client.
This section of the Act provides general protections against financial advisor fraud. Registered Investment Advisors have legal obligations to their clients; when they fall short of those obligations, client accounts feel the brunt of the damage. Investment Advisors may be held accountable for their fraud and negligence. The case of Blazer Capital Management provides another prominent example of the risks facing professional athletes and other high net worth individuals. We all want to believe that our financial representatives have our best interests at heart, but all too often, that is simply not the case.
Professional athletes and other high net worth individuals often rely on the services of financial advisors. A lot of faith is put into the hands of these financial professionals. Advisors have a legal responsibility to invest client money in an honest, careful and competent manner. Unfortunately, all too often, financial advisors fail to live up to their legal duties. Further, high profile individuals like athletes are also frequently targeted for investment fraud.
Need Legal Assistance?
At Carlson & Associates, P.A., our experienced attorneys have handled hundreds of investment fraud cases. We have represented defrauded athletes throughout South Florida. If you believe that you were defrauded by a financial advisor, please contact our Miami office today to schedule an initial legal consultation.