A professional athlete’s cash flow can be choppy. As an ex-NFL player, Will Allen knew about the cash flow problems. He also realized that fans could be lured into being lenders to professional athletes. It looks like Allen miscalculated the amount of investor interest against athletes looking for loans.
The Securities and Exchange Commission charged Mr. Allen with running a Ponzi scheme. According to the complaint, his firm paid $20 million to investors while only receiving $13 million in loan repayment proceeds. In all, Allen allegedly only made $18 million in loans while raising $31 million from investors.
Rumor has it that the SEC action is a fallout from the bankruptcy filing by NHL player Jack Johnson. The SEC complaint notes a purported $5.65 million loan to an NHL player, but filed only a $3.4 million loan in the bankruptcy filing. The SEC also claims that Allen and his firm lied to investors stating that the loan was still performing as expected. The firm also continued to make payouts to investors as if the loan was performing.
Sources:
- SEC Obtains Asset Freeze in Ponzi Scheme Involving Loans to Professional Athletes
- SEC complaint
- SEC Busts $33 Million Ponzi Scheme Touting Pro Athlete Loans by Jordan D. Maglich in Ponzi Tracker
- Did Ex-NFLer Will Allen’s Alleged Ponzi Scheme Prey On Jack Johnson? by Samer Kalaf in Deadspin