SEC Says Investment Advisory Firm Defrauded Former NFL Players

By:
Chris Gaetano
Published Date:
Aug 30, 2019
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The Securities and Exchange Commission (SEC) has charged a Florida-based investment advisory firm and its two principals with defrauding former NFL players—many of whom have concussion-related brain damage—of a total of $4.1 million in capital.

The firm, Cambridge Capital Group Advisors, is run by an attorney named Phillip Timothy Howard, who has also been representing 20 former NFL players in a class action lawsuit over brain injuries sustained over the course of their professional careers. In its complaint, the SEC said that Howard acknowledged that his clients' “brain function is not there, their body has been beat up from the NFL, they don’t have employment capacity, they don’t have credit, and they don’t have capital anymore.” This did not, however, stop him from partnering with Don Warner Reinhard, a former registered investment adviser previously barred by the SEC, to convince them to invest in securities in the form of limited partnership interests in two private investment funds for which Cambridge was the general partner and investment manager.

More than half the players invested in the funds using their retirement accounts.

Essentially, the two told the players that the investment money would go toward a wide range of securities purchases. In truth, however, whatever money the players received came from settlement advance loans to more than 70 of Howard’s NFL class-action clients. The SEC said the pair used the actual funds raised to buy real estate property in Florida and Massachusetts as well as to pay themselves fictitious "broker fees," overall misappropriating almost a million dollars of their clients' money.

Further, the SEC said that the company "filed disclosure statements with the Commission representing that in the past ten years no affiliate of Cambridge had pled guilty to a felony or been enjoined by a domestic court in connection with any investment-related activity," when in fact, Reinhard had pleaded guilty to a felony in 2009 connected with securities fraud.

“We allege that Cambridge, Howard and Reinhard defrauded these particularly vulnerable investors, many of whom invested their retirement savings,” said Eric I. Bustillo, director of the SEC’s Miami regional office. "Instead of investing all of the funds’ assets as promised, Howard and Reinhard used a significant portion of investor money to line their own pockets.”

The SEC’s complaint, filed in federal district court in the Northern District of Florida, charges Howard, Reinhard and Cambridge with violating the anti-fraud provisions of the federal securities laws, and seeks permanent injunctions, disgorgement of allegedly ill-gotten gains, prejudgment interest, and financial penalties.

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