A former NFL player and his business partner have pled guilty to defrauding investors in a $31.7 million Ponzi scheme.
William “Will” Allen, a former cornerback for the New York Giants, Miami Dolphins and the New England Patriots from 2001 to 2012, pleaded guilty to four counts on a 23-count indictment in U.S. District Court for the District of Massachusetts last week.
On Monday, Allen’s business partner, Susan C. Daub, also pleaded guilty to four counts and admitted her role in the scheme, according to a release by the U.S. Securities and Exchange Commission, which has brought civil charges against both defendants.
According to the SEC, Allen and Daub used their Boston-based private lender, Capital Financial Partners, to advance approximately $18 million to athletes while raising $31.7 million from investors.
Investors were solicited with promised profits from the loans, which carried interest rates between 9 percent and 18 percent, according to the SEC, but were not informed that the firm had raised approximately $13.7 million more from investors than they had actually advanced to athletes.
Between July 2012 and February 2015, Capital Financial paid approximately $20 million back to its investors while receiving $13.2 million of loan repayments from athletes, according to the SEC.
The defendants allegedly paid approximately $6.8 million more to investors than their firm had generated through its lending business.
Daub and Allen allegedly misled their investors about the details and the existence of some of the loans, instead using more than $7 million of the investors’ funds to pay other investors or for personal expenses including charges at casinos and nightclubs.
In April 2015, the U.S. District Court responded to the SEC’s complaint by issuing an injunction freezing the defendants’ assets and restraining them from raising additional investor funds.
In response to the criminal charges, both Daub and Allen entered guilty pleas to two counts of wire fraud, one count of conspiracy and one count of money laundering.