How some of the NFL's biggest stars got taken for millions
Trace Armstrong, the players union president and a 13-year NFL veteran, says players should know that "there are some very sophisticated scams out there." The schemes often involve real-estate and securities fraud. Some scam artists use foreign currency trading or some other offshore scheme to separate the players from their cash. Other swindlers use Ponzi schemes--robbing Peter to pay Paul. All have this in common: the promise of fat profits. Milt Ahlerich, a former top FBI official and the NFL's vice president of security, says his staff will check out a financial adviser, if asked by a player. In many cases, however, he says, the players just don't ask.
In some cases, they do. All-pro cornerback Ryan McNeil, who plays for the San Diego Chargers, recalls turning to NFL security to check out a real-estate deal that came across his desk two years ago. Based on their inquiry, he says, he rejected the deal. "The guys need to utilize NFL security background checks," he says, "and take a more assertive role in determining their futures."
The SEC complaint, filed in a Los Angeles federal court last November 1, offers this revealing glimpse of Donald Lukens's financial operations: "Lukens seduced some people into investing by displaying the trappings of his own wealth--his mansion, expensive cars, and luxurious offices adorned with pictures of Lukens posing with athletes and other celebrities." Lukens, the complaint said, packaged and sold investment opportunities in several real-estate projects, claiming the mortgage-backed securities were "safe" and "secure." In some cases, he promised guaranteed profits "for life."
In reality, the SEC charged, Lukens duped perhaps more than 200 people, many of them unsophisticated investors who lapped up his good-guy act. The SEC says he lied to investors about the high risks of his projects, inflated the value of real estate, took undisclosed commissions, and diverted investment funds, in some cases "making payments toward his substantial personal debt and paying earlier investors in Ponzi-like fashion." His victims included professional athletes, "his pastor, fellow parishioners at his local church, retirees, and the disabled," according to Michael Fuchs, the chief SEC investigator in the case.
In a response filed in court, Lukens denied the SEC charges. Efforts to reach him for comment were unsuccessful. His bankruptcy lawyer said he would relay U.S. News's request for an interview.
Lukens operated out of a 17th-floor suite of posh offices in Oxnard, Calif. His principal businesses were Community Group Funding, a mortgage broker, and Global Sports and Entertainment, which the SEC called an unregistered investment advisory firm that catered to athletes and other wealthy investors. People who know him describe the 50-year-old Lukens as fit, a natty dresser, "professional," and very "cunning."
The SEC calls Lukens a con man. The agency described how he portrayed a schoolteacher friend to investors as "a wealthy real-estate developer." A lot of prominent players lost money with Lukens. His bankruptcy case lists the following creditors, among others: Dickerson, now a Monday Night Football sideline reporter, $1.835 million; Sean Gilbert of the Carolina Panthers, $350,000; Steve Atwater, former all-pro safety from the Denver Broncos, $1.2 million; and Shannon Sharpe, a Pro Bowl tight end with the Baltimore Ravens, $300,000.