Money Players
How some of the NFL's biggest stars got taken for millions
Not long after he was selected in the first round of the National Football League player draft--a development that would soon make him a millionaire--Simeon Rice met Donald Dayton Lukens, a smooth-talking investment adviser from Southern California. Fancy cars, a $2 million hillside mansion, and a client list that turned heads--Lukens had it all, and he made a lasting first impression on the kid who grew up on the mean streets of Chicago's South Side. In that first meeting, in the spring of 1996, Rice says, Lukens promised the young man untold riches. He also offered him a $100,000 loan at 1 percent interest. Then he sealed the deal: "As we left the office," Rice says, "Lukens handed me an envelope with several thousand dollars of cash inside."
Now, nearly six years later, and $2.4 million poorer, Rice, a marquee defensive end for the Tampa Bay Buccaneers, wishes he had never met Don Lukens. He's not alone. At least 13 other current or former NFL players, including Hall of Fame running back Eric Dickerson, paid a hefty price for allowing Lukens to manage their money. His empire collapsed last year under a crush of debts, the result of lousy investments and a fast-paced, free-spending lifestyle, which included heavy gambling at Las Vegas blackjack tables. Lukens filed for bankruptcy in California, listing $47 million in debts and less than $1 million in assets. The FBI now is investigating him, and the Securities and Exchange Commission, in a civil complaint, has accused him of defrauding investors, sports figures, and others of perhaps $25 million.
Unfortunately, the Lukens case isn't unusual. U.S. News examined more than 20 investment deals involving current and former NFL players and found a veritable who's who of victims. In exclusive interviews with the magazine, the players described how they were allegedly defrauded. The schemes varied, but two stand out. One involves Lukens. The other snared Buffalo Bills cornerback Antoine Winfield. He says he was bilked of $1.35 million by a close friend and financial adviser. The Winfield and Lukens episodes illuminate the sometimes tawdry world of player recruitment. Some other examples:
U.S. News has learned that FBI agents and the SEC are investigating whether former all-pro running back Robert Smith was defrauded of more than $1 million. The SEC has questioned an Ohio man, Von C. Cummings, about his handling of Smith's money, which
Cummings says was invested in a hedge fund. In an interview, Cummings maintains that he did nothing wrong and says Smith didn't lose any money. Smith, who retired from the Minnesota Vikings after the 2000 season, could not be reached for comment.
In January last year, Marion Darnell Jones and James E. Brown were indicted by a federal grand jury in South Carolina on 56 counts, including fraud and money laundering. At least three NFL players, including Washington Redskins Pro Bowl running back Stephen Davis, were allegedly defrauded, according to federal investigators. Davis lost about $200,000. Brown later pleaded guilty to one count of fraud and has agreed to testify against Jones, who has pleaded not guilty and is scheduled to go on trial later this year.
In Irvine, Calif., Luigi DiFonzo lured football players and others into his investment firm, DFJ Italia, claiming that he was an Italian count. In fact, he was a two-time felon. At an NFL Hall of Fame dinner in Canton, Ohio, in 1999, a company official bragged that DFJ was "the first choice [of] professional athletes for banking and investments." Several former players, including Dickerson, invested and lost money in DFJ, which collapsed under a mountain of debt in March 2000. "He targeted the NFL players as potential investors," says FBI agent Evan Rae, "and in the end, it was a scam." DiFonzo committed suicide in August 2000.
In some cases, former players use their friendships to bilk their old teammates. Former tight end Terry Orr was sentenced to 14 months in prison last August for defrauding a Georgia businessman and three former Washington Redskin teammates, including Art Monk, one of the greatest wide receivers in NFL history. Each of the players invested $50,000 in Orr's failed shoe company. Prosecutors say Orr diverted most of the money to pay personal debts.
Given its huge salaries and signing bonuses, the NFL is fertile ground for financial flimflams. Next year, 1,800 players will share in $2.5 billion in salaries and bonuses, never mind the millions more that some will make in endorsements. "We tell these young men they are walking around with bull's-eyes on their chests," says Lawrence Sweeney, the chief investigator for NFL security.
Increasingly often, con artists are hitting their mark. In the past three years alone, according to the National Football League Players Association, at least 78 players have been defrauded of $42 million. Gene Upshaw, the no-nonsense executive director of the union and a Hall of Fame lineman, says that's just "the tip of the iceberg." In an interview, he added, "There are many cases out there where players are too embarrassed to report the fraud."
Tired of the scams, Upshaw and player representatives brought in a former federal prosecutor, Kenneth Ballen, to devise a program for regulating financial advisers. That program is being launched this week, spurred largely by the sensational case of William "Tank" Black, convicted in a Gainesville, Fla., courtroom last week of defrauding 12 current and former NFL players and others. Under the new program, the players union will conduct background checks on advisers, looking for criminal records or other problems. The union will also require advisers who register in the program to be licensed and qualified by state and federal regulatory agencies (Page 36).
Some players are victims of their own greed or the implausible schemes of others. Brian Simmons of the Cincinnati Bengals lost $100,000 he invested with Linda Frykholm, a former Illinois schoolteacher. She promised some 200 investors a 300 percent return, within seven days, on a scam she called the United Nation Trade Honduras Project. In all, she raised nearly $15 million but used that money to finance a lavish lifestyle. She took trips to Switzerland, paid for private schools for two children, and bought two $2 million lakefront homes in Wisconsin. Last year, she began serving a 12-year prison term for fraud.
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.
In interviews, current and former NFL players say that Lukens was a chameleon, a man who could change his personality to meet the moment. "He was whatever he needed to be," says D'Marco Farr, 30, a former star defensive tackle with the St. Louis Rams.
Farr, who estimates he lost $200,000, recalls telling Lukens that he was a Christian. Soon, he says, they were talking about the Bible. Yet, he says, when he went on a trip to Las Vegas in 1996 with Lukens and several other players to watch a professional fight, he looked on as Lukens "gambled his ass off," wagering about $150,000 at a blackjack table. During that same trip, Farr says, Lukens brought the players up to his room, where "three or four women were sitting on a couch." He concluded they were prostitutes and told Lukens he was offended. "What is all this?" he recalls asking Lukens. "This ain't too Christian."
Farr says he got hooked after his initial $200,000 investment began turning fat--and fast--profits. It was, he says, "like a pusher feeding a drug user--the first one is free." Once, he says, Lukens even persuaded him to invest in a tree farm he hadn't seen. The investment failed.
Farr and Tampa Bay's Rice say they wanted to detail their experiences in the hope that their stories will help other players avoid their mistakes. Both men say they had no idea what they were getting into when they allowed Lukens to invest their money. Farr sued Lukens to get back some money; Rice obtained an arbitration judgment for $2.4 million against Lukens but hasn't been repaid.
Their stories show how financial advisers press to get their hooks into suddenly wealthy players. Rice, now 27, was an all-American at the University of Illinois and the third player selected in the 1996 draft by the Arizona Cardinals. Looking back, Rice says, his first impression of Lukens was that of a humble, father-type figure. In a statement given to the SEC, and in an extensive interview with U.S. News, he says he was at a publicity event in Orlando when he first learned of Lukens. Rice says a Lukens "runner"--an aide who recruits athletes--arranged to meet with him and urged him to visit with Lukens at his Global Sports offices in California.
Rice flew first class to Los Angeles, courtesy of Lukens. The next day, he was picked up in a limousine and driven to Lukens's offices. Lukens, he says, told him of some of his famous clients; his office was decorated with photographs of pro athletes and Hollywood celebrities.
Rice says he was especially impressed when Lukens said his clients included entertainer Bill Cosby and retired NFL running back Dickerson. Rice says he emphasized that his biggest concern was preserving capital so that he would be financially secure after his playing days were finished. Lukens, he says, told him he recommended only low-risk ventures for his clients and, Rice says, "personally guaranteed each investment."
Lukens also offered the low-interest $100,000 loan to tide Rice over until he received his first contract. Then, he says, although he hadn't asked for the money, Lukens insisted he take an envelope of cash. That evening, he ate dinner with Lukens, his wife, and three daughters. Rice says he told Lukens he wasn't well informed about investments and "would rely on him to guide me until I learned about these matters."
Rice, who received a $6 million signing bonus on a four-year, $15 million contract, soon invested in several proposed apartment and condo development projects. The projects, however, never got off the ground. Rice lost his investment. He also lost $100,000 after investing in a Lukens scheme to market a video of highlights from the old television show The Newlywed Game. According to the SEC, Lukens raised $630,000 from 12 investors, promising a 20 percent profit within a year. Actually, Lukens invested only $100,000 in the scheme, diverting "at least some of the remaining $530,000," the SEC charged. Rice says he felt blindsided. "On a street level," Rice says, "you can see the [hustlers] coming." But "this is white collar--this is something you can't see. It is like a cancer; you don't know until it is there." The moral of the story is simple. "Like my father told me," he says, "trust very little that you see and nothing that you hear."
Some players were luckier, losing far less or choosing not to go with Lukens. According to Marvin Demoff, a prominent sports agent in Los Angeles, one of his clients wanted to invest with Lukens but reluctantly backed away after Demoff and the player's father strongly advised against it. He identified the client as Jonathan Ogden, now a star offensive tackle with the Baltimore Ravens. Demoff met with Lukens and didn't like what he saw. Another NFL client, despite Demoff's warnings, signed up with Lukens and lost $80,000, the agent says. Some players "don't have the experience to understand the difference between a true investment manager," Demoff says, "and a guy just trying to make a buck" off them.
The past year has been tough on Lukens. His lost his mansion and is separated from his wife. Last spring, he spent nearly a month in jail for bouncing $240,000 in checks at three Las Vegas casinos.
Antoine Winfield's story is one that should give every new NFL hotshot heartburn. Coming out of Ohio State University in 1999, he was rated the top defensive back in the nation, a small but tough player who ran the 40-yard dash in 4.4 seconds and delivered bone-crunching tackles. Selected in the first round of the NFL draft by the Buffalo Bills, he received a $3.5 million signing bonus. When Winfield decided to invest some of the money, he turned to a close friend, his agent and financial adviser, a man named Dunyasha Mon Yetts. Bad decision.
According to an SEC complaint filed in the U.S. District Court of Columbus, Ohio, in December, Yetts cheated Winfield out of $1.35 million. The agency says that Yetts repeatedly lied to the Buffalo cornerback, once telling him that he had generated more than $68,000 in profits for Winfield in less than four weeks of stock trading. The SEC described a simple scheme. Yetts, it says, took Winfield's money and put it into his own personal and business accounts. Yetts paid Winfield's bills, such as country club dues and credit card charges, and traded in securities accounts listed in the names of his companies. Once, "Yetts withdrew $130,000" from a money market fund, the SEC says, "and deposited those checks into his personal account."
The SEC accused Yetts of defrauding 13 other clients. He covered up his scheme, the agency said, by creating "sham letters and other documents" that led investors to believe he had transferred their funds to a money management company in California. Now 24, Winfield is suing Yetts, but his chances of recovering most of his losses seem slim: Yetts, who lives in suburban Columbus, filed for bankruptcy last July. "I kind of trusted him a lot," Winfield says. "We were real close; he seemed cool."
Cool he was. Like Winfield, Yetts, 31, was a star athlete at Ohio State, a 142-pound wrestler. He graduated in 1994 and met Winfield through another Ohio State football player in 1997, Winfield's sophomore year. In the interview with U.S. News, Winfield paints a picture of a close relationship fueled by cash and gifts.
Winfield says Yetts gave him money by losing on purpose in card games. "In college, we are broke, there's no money," he explains, "and if someone comes around and throws money in your face, you are going to take it." Winfield says he and Yetts went on trips to Las Vegas and the Bahamas, courtesy of Yetts. "He was giving me suits" valued at $1,500 and free Ohio State football tickets that, Winfield says, he sold. "He was giving cash," Winfield went on. "If we needed the money, he would pay the rent." Winfield says he realized his acceptance of the gifts violated NCAA rules. "We knew it was illegal," he says, adding: "If you got caught, you would be in trouble."
Given that relationship, it wasn't surprising then that Winfield fired his agent and retained Yetts in 1999. But by the end of the following year, Winfield says, he began to suspect that Yetts might be cheating him. At the time, he says, Yetts lost about $30,000 playing craps at Winfield's house in Buffalo. The large gambling loss made Winfield wonder if his money was being mishandled by Yetts. He says he took his concerns to the Buffalo Bills' management, which ran a background check on Yetts. It turned up negative information, including a lawsuit filed against Yetts by a former NFL player.
Winfield has cooperated with the SEC investigation. His closest friend, Ashanti Webb, who worked as a recruiter for Yetts, says he has provided information to NFL security, the FBI, and the SEC about Yetts. He says Yetts always dealt in cash. And he confirmed Winfield's account about the craps game, "when," he says, Yetts "went up there [to Buffalo] and lost all the money in that little crap game."
Yetts isn't talking, but in a deposition in Winfield's lawsuit he denied having defrauded Winfield. He said he had lent money to Winfield when he was in college. And he made it clear he loved to gamble, winning more than $200,000 in total in 1999 and 2000. Now, he says, he is struggling to pay his bills. According to his lawyer, Samuel Shamansky, Yetts also is under federal criminal investigation in a drug conspiracy case in Columbus. Shamanksy says he expects his client to be indicted in that matter.
Finally, the NFL Players Association has revoked his certification as an agent. In a letter obtained by U.S. News, the union cited his alleged mismanagement of Winfield's funds and the gifts of expensive suits and money that he gave to Winfield in 1998 "in an effort to induce Winfield into signing" with him.
Both the NFL and the union are reaching out to players, warning them of advisers pitching can't-miss deals. But, says union boss Upshaw, there are no quick fixes. "These sharks don't just disappear," he says. "They just move to another pool of water."
Big Losses
Some of the players who lost money investing with Lukens. He was accused by the SEC of concocting fraudulent schemes.
SIMEON RICE
Tampa Bay Buccaneers
$2.4 million
ERIC DICKERSON
Los Angeles Rams
$1.8 million
SEAN GILBERT
Carolina Panthers
$350,000
D'MARCO FARR
St. Louis Rams
$200,000
SHANNON SHARPE
Baltimore Ravens
$300,000
WILLIAM "TANK" BLACK. A jury in Gainesville, Fla., convicted Black last week of defrauding NFL players and others out of an estimated $14 million. The South Carolina sports agent could be sentenced to as much as 25 years in prison.
PLAYER CURRENT OR FORMER TEAM AMOUNT
Fred Taylor Jacksonville Jaguars $3.6 million
Robert Brooks Green Bay Packers $2.5 million
Ike Hilliard New York Giants $1.1 million
Germane Crowell Detroit Lions $500,000
Jacquez Green Tampa Bay Buccaneers $500,000
Rae Carruth Carolina Panthers $300,000
DUNYASHA MON YETTS. Winfield, a star Buffalo Bills cornerback, alleges that Yetts, his former friend and financial adviser, defrauded him out of part of his $3.5 million signing bonus. Yetts denies the allegations. The FBI is investigating.
PLAYER TEAM AMOUNT
Antoine Winfield Buffalo Bills $1.35 million
With Mark Madden and Carol Hook
This story appears in the February 11, 2002 print edition of U.S. News & World Report.