A financial advisory company has been charged by the Securities and Exchange Commission with defrauding former professional NFL players.
Former principals of Cambridge Capital Group Advisors, Don Warner Reinhard and Philip Timothy Howard, allegedly took over $4 million from around 20 retired NFL players to invest in private hedge funds managed by the Tallahassee, Florida-based company from October 2015 to March 2017.
Over 20% of the players’ funds were allegedly misused by the firm’s partners, the SEC said Thursday. Howard allegedly spent some of the funds on covering the cost of his personal residential mortgages.
The retired players first appeared in the offices of Howard and Reinhard in the hopes of joining the class-action lawsuit against the National Football League over concussion-related brain injuries. Some of the players have serious illnesses.
It was during this work when the financial advisors convinced the men to invest in their private funds.
To facilitate the process, half of the NFL players transferred their 401(k) savings accounts over to the company. One former player — Larry Webster, told Law 360 that Howard and Reinhard promised him they would multiply his retirement saving’s interests.
James Sallah, an attorney for Cambridge Capital Group Advisors, declined to comment. Reinhard himself is serving a prison sentence after being convicted for aggravated child assault in 2017.
The case serves as a good example of why one should vet their advisor before transacting with them. Reinhard had been banned by the SEC from working in the securities industry.
The NFL Players Association offers players access to financial experts who sign up for its Financial Advisors Registration Program.
Selected advisors must pay a fee of $2,500, have a minimum of eight years of licensed expertise and must be an accredited financial planner or a chartered financial analyst.
Nevertheless, individuals should take the time to review an advisor on the Financial Industry Regulatory Authority’s BrokerCheck website and the Securities and Exchange Commission’s investment advisor search site.
Athletes should additionally ensure advisors hold clients’ assets at a custodian.
“The advantage of keeping money at a custodian is that the custodian sends monthly statements to the client,” said Robert Pagliarini, a CFP and president of Pacifica Wealth Advisors in Irvine, California.
Players must also make sure that their financial advisors, accountants and attorneys are all serving in their best interest.
“Only hire accredited fiduciaries,” said Jordan Waxman, a certified financial planner and managing partner at HSW Advisors in New York. “Have a team of them.”