Even when you request a low-risk, conservative investment, an investment adviser can lead you down the wrong path. And even those with the time, money, and ability to provide oversight can be taken for a ride.
That was the case for NFL quarterback Mark Sanchez, MLB pitcher Jake Peavy, and former MLB pitcher Roy Oswalt. All three invested money with Ash Narayan, formerly of RGT Capital Management.
In a federal lawsuit filed by the Securities and Exchange Commission, unsealed documents showed that these athletes were allegedly cheated out of millions dollars in a scam similar to a Ponzi scheme.
Despite requests that their money be placed in a low-risk investment, Narayan allegedly ignored those requests and invested their money in The Ticket Reserve, Inc., (TTR) where he served on the board and was its primary fundraiser.
Unfortunately, TTR was in financial distress and its longevity was considered shaky. Looking to improve the company’s financial standing, Narayan allegedly, for example, forged documents to funnel more than $7 million of Sanchez’s money into the struggling business when in fact was only authorized to invest $100,000.
At one point, Peavy had $15 million invested in TTR without his authorization. Oswalt had 80-percent of his salary designated for investment with Narayan.
A court order has frozen the assets of Narayan, as well as two other top-ranking officers with TTR. The defense lawyer for Narayan said his client was disappointed with the court’s order and is working with the SEC to resolve the matter.
As you can imagine, there are a several players, companies, denials, and documents involved in this case, and USA Today has an excellent overview of the case. You can find it here.
This case raises several important issues for current or potential investors.
First, make sure the person with whom you are investing is in fact licensed. In fact, Narayan held himself out as a CPA to boost his credibility with his athlete-clients—but he was never actually a licensed CPA.
Second, be wary of an investment broker who claims he identifies with your personal beliefs. Narayan forged a relationship of trust with at least one of his clients based on his self-proclaimed Christian faith and interest in charity.
Third, vet your investment broker. Ask whether he has any conflicts of interest and whether he handles similar investments to those you are looking to make.
If you have any questions about investments you have made or think you might be a victim of a fraudulent investment scheme, please call The Harris Firm, P.C., at 214-956-7474.
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