November 20, 2016
Sports stars and money management: when things go wrong
College athletes still aren’t paid (other than receiving scholarships). But the role of agents and advisers is very important in helping players procure pro contracts and managing their money if and when they do.
Like other financial advisers, those who represent athletes can run afoul of tax authorities. In this post, let’s look at a specific case involving a businessman from North Carolina who recently pleaded guilty to filing a false tax return and committing wire fraud.
The businessman offered financial and wealth management services to National Football League players and other professional athletes. Federal prosecutors alleged that he targeted NFL players for a scheme in which he misappropriated funds from bank accounts belonging to his clients and did not report the funds when he filed his federal taxes.
The amount of the funds at issue was about $2.9 million. The businessman pleaded guilty to a count of wire fraud and to filing a false tax return for 2011 in connection with the scheme. The plea agreement requires him to pay restitution of more than $479,000 to the IRS.
Sentencing will not be until January of next year. The businessman faces prison time for each conviction, as well as monetary fines and penalties.
Finding financial advisers and managers you can trust to handle your money is often easier said than done. This is as true for professional athletes as it is for anyone.
Turning to a family member doesn’t necessarily solve the problem either. Just ask soccer star Lionel Messi, who trusted his father to manage his money and was charged with tax evasion in Spain.