How Do the Scams Work?

Last night I watched a segment of American Greed from years ago that explored the role of predatory money managers in professional sports. The segment presented the story of a money manager, Peggy Ann Fulford, who duped athletes including NBA Hall of Famer Dennis Rodman, former NFL player Ricky Williams and other athletes out of millions of dollars. In 2018, Fulford pleaded guilty to one count of interstate transportation of stolen property and was sentenced to 10 years in prison and ordered to pay $5.8 million in restitution to her victims. She was released early in 2023. 

Here is how the scams worked.

• Fulford posed as a wealthy financial advisor and money manager, falsely claiming to have Harvard degrees and a successful Wall Street career.
• She convinced the athletes, including Rodman, Williams, Travis Best, and Lex Hilliard, to let her manage their finances.
• Instead of using their money to pay bills, file taxes, or make investments, she used it to fund her own luxurious lifestyle.

Predatory practices of money managers have been around for some time. Here are some of them discussed by Fordham University's publication, The Fordham Intellectual Property, Media & Entertainment Law Journal.

• Mike Tyson, the former heavyweight boxing champion, sued his financial advisor for allegedly embezzling over $300,000 and giving him bad financial advice, ultimately contributing to Tyson’s bankruptcy in 2003.
• Tim Duncan, the retired NBA star, sued his former financial advisor for over $20 million, alleging that the advisor had defrauded him through a series of investments and misrepresentations.  Duncan agreed to accept $7.5 million to settle his lawsuit.
• Kareem Abdul-Jabbar, the NBA legend, sued his financial advisor for $55 million, claiming that the advisor had mishandled his finances and led him to lose millions of dollars in investments.

Experience of Kareem Abdul-Jabbar

Abdul-Jabbar’s story is a cautionary tale for professional athletes, and possibly collegiate athletes who can now receive financial support from outsiders and monies from their use of name, image and licensing (NIL).

Abdul-Jabbar put his trust in a business manager that ultimately did not have his best interest at heart. According to a Sports Illustrated report, Abdul-Jabbar was the victim of mismanagement by his business manager, Tom Collins. As a result, Abdul-Jabbar filed a lawsuit for about $59 million.

Between 1984 and 1985, Collins arranged several partnerships among all his clients. Based on court documents from the original suit, one of the investments was in Heavyrope, a weighted jump rope produced in Michigan. For this, Collins put $230,000 of Abdul-Jabbar’s money into the brand, leading the NBA legend to believe he would have ownership rights in the company.

Although the business relationship started well, Collins began to ghost Abdul-Jabbar about his finances and investment deals after some time together.

Due to this lack of communication, Abdul-Jabbar ordered an independent audit and found that he was responsible for a $9 million debt from a bad real estate deal in 1984. Sports Illustrated reported that he was also liable for about $1.6 million from other investments. Abdul-Jabbar contended that Collins made these financial decisions without fully engaging him on the associated risks.

There were additional financial scams which led to the $59 million bilking of Abdul-Jabbar. He tried to recover the monies, and probably did to some extent, but the agreement is sealed.

Additional Scams

There were other athletes who were the victims of scammers. According to ESPN, Former San Francisco Giants pitcher Jake Peavy, former NFL quarterback Mark Sanchez and other athletes were cheated out of more than $30 million by Ash Narayan, an investment adviser who "secretly [siphoned]" money from their accounts using forged or unauthorized signatures, federal authorities said in 2016.

Federal authorities charged a former Morgan Stanley adviser, Darryl Cohen, with three different counts of fraud in 2023 after he allegedly defrauded NBA players Jrue Holiday, Chandler Parsons and Courtney Lee out of $5 million. In a statement to ESPN, an attorney representing Cohen said, "Mr. Cohen has pleaded not guilty and continues to vigorously fight these allegations.

Ernst & Young Report

Ernst & Young recently released a report titled Athletes Targeted by Fraud which stated pro athletes lost $334 million to fraud from 2014 - 2017 and another $160 million in fraud-related losses the prior eleven years. Missing are the countless frauds against athletes that have not been identified or publicly reported, making the true cost of fraud hard to figure, particularly because the four major sports (NFL, NBA, NHL, and MLB) pay out approximately $13 billion in salaries per year.

Ernst & Young also detailed some of the most common types of fraud against athletes:

• The athletes’ advisors used their access to make unauthorized and overly risky investments on the athletes’ behalf, while also enriching themselves.
• The athletes’ advisors or family members used their access to the athletes’ bank accounts or power of attorney to make unauthorized withdrawals.
• Misappropriated earnings. Designees did not properly distribute the athletes’ earnings, and instead kept and used them for themselves.
• Advisors misled athletes with false or misleading financial information, such as inaccurate historical investment returns and fake statements.
• Trusted advisors make recommendations to athletes based on an undisclosed conflict of interest, such as ventures in which the advisor has an investment or receives a kickback for investment.

The majority of professional athletes put 100% blind faith in their financial advisors and business managers with no oversight despite the fact that 89% of fraudsters are first-time offenders and 97% attempt to cover-up the fraud.

Suggestions for Better Monitoring of Athlete Finances and Avoiding Fraudulent Advisors

David Byrne, who has 14 years in financial crimes & Anti-Money Laundering (AML) and as Financial Industry Regulatory Authority (FINRA) Director, posted the following suggestions for better monitoring of athletes’ finances and avoiding fraudulent financial advisors on LinkedIn on May 30, 2019.

To protect themselves from financial fraud, professional athletes should consider the following measures:

• Thoroughly vet financial advisors: Athletes should conduct comprehensive background checks on potential financial advisors, including verifying their certifications, checking for any past disciplinary actions, and seeking references from other clients.^[16]
• Maintain active involvement in financial decisions and establish consistent audits: Athletes should not blindly trust their financial advisors but should stay informed about their investments and financial decisions, regularly reviewing account statements and asking questions to ensure they understand their financial situation. They should also leverage the resources of their players’ unions to conduct regular audits on their accounts.^[17]
• Establish a team of trusted professionals: Athletes should consider assembling a team of financial professionals, such as accountants, attorneys, and investment advisors, who can provide a system of checks and balances and help prevent fraudulent activity.^[18]
• Utilize financial education resources: Athletes should take advantage of financial education resources and workshops designed for professional athletes to help them better understand financial management and identify potential red flags.^[19]

The Importance of Vigilance as Professional Athlete Salaries Increase

As professional athletes’ salaries continue to rise, the potential for financial fraud also increases. Moreover, college athletes can now make deals with the funds they receive. The likelihood is the unscrupulous money managers will come out of the woodwork and develop game plans to target athletes for financial gain, such as those discussed in this blog. Vulnerable athletes should review their relationship with, and monies spent by, their money managers to ensure they are all legitimate

With more money at stake, unscrupulous individuals may be more motivated to target athletes for financial gain. As a result, it is more important than ever for athletes to take a proactive approach to monitoring their finances and protecting themselves from potential fraud.

The increasing number of indictments of individuals charged with defrauding professional athletes serves as a reminder of the need for increased vigilance in managing athlete finances. By thoroughly vetting financial advisors and being involved in financial decisions, athletes can better protect themselves from potential fraud.

Professional athletes have worked hard for many years to accomplish their goals. They are increasingly approached by scrupulous money managers at an early and earlier age. This is why they need financial and business advice sooner, rather than later, to ward off the fraudsters.

Posted by Dr. Steven Mintz, aka Ethics Sage, on June 16, 2025. Steve is the author of Beyond Happiness and Meaning: Transforming Your Life Through Ethical Behavior, which is available on Amazon. Learn more about his activities at: https://www.stevenmintzethics.com/ and signing up for the newsletter.