According to the SEC and confirmed by Duncan’s suit, the basketball star never consented to pay Banks a portion of the interest payments, and Banks never disclosed that he received the origination fee.
The SEC also alleges that Banks further deceived Duncan into signing a personal guarantee on a bank line of credit for the company by only sending the signature pages of a personal guarantee and subordination agreement, and then falsely representing the terms of the agreement contained in the other pages. This allowed Banks to allegedly pocket a guarantee fee that should have been paid to Duncan in exchange for providing the guarantee.
Duncan’s lawsuit alleges that Banks forged his signatures on the Gameday loan documents.
Banks’ behavior was not revealed until March 2013, when Duncan’s divorce attorney began to inquire into the Gameday investment, according to the SEC.
When confronted about the misappropriation, Banks allegedly agreed to pay of the amount that was diverted. Instead of paying the money himself, Banks allegedly instructed that the funds be paid from unspecified amounts owed to him from Gameday.
According to the SEC, none of Duncan’s money has been returned to date.
The SEC seeks disgorgement plus interest of any ill-gotten gains, civil penalties and a bar from serving as officer or director of any issuer of registered securities.
Each criminal wire fraud charge carries up to 20 years in prison.