Investing.com -- The Securities and Exchange Commission announced on Tuesday that it has sought an order to freeze the assets of former NFL cornerback Will Allen and a business partner in connection with their alleged operation of a $31 million Ponzi scheme.
The SEC's complaint filed against Allen and Susan Daub, a financial professional formerly of Acton, Mass. was unsealed in Federal Court on Monday in Boston. The SEC alleges that Allen and Daub secured funding from investors to make loans to a wide array of professional athletes who were short on cash. The duo allegedly told investors they could receive up to 18% on the loans paid out to the athletes.
During a period beginning on July, 2012 until February, 2015, Allen and Daub allegedly paid out $20 million to their investors while they received approximately $13 million in loan repayments from the athletes. In total, the two advanced approximately $18 million from the professional athletes while receiving approximately $31 million from a group of up to 40 investors.
"The defendants sold investors on the idea of lending money to pro athletes, but we allege that's not where a large portion of the investors' money went. As in any Ponzi scheme, the appearance of a successful investment was only an illusion sustained by lies," said Paul G. Levenson, Director of the SEC's Boston Regional Office.
Allen and Daub allegedly misled the investors about the terms and circumstances of the loans to use some of the funds to repay debts at "casinos and nightclubs, or to fund other business ventures," according to the SEC complaint.
Allen, 36, was selected by the New York Giants with the No. 22 pick in the first round of the 2001 NFL Draft. Allen recorded eight interceptions with the Giants in five seasons before signing a four-year, $12 million contract with the Dolphins in 2006. The 12-year NFL veteran started 49 games with Miami (2006-2011) before signing a one-year contract with the Patriots in March, 2012.
Allen has not appeared in an NFL regular season game since he was placed on injured reserve by New England before the start of the 2012 regular season.
The SEC is seeking a court order to require Allen and Daub to return their alleged gains with interest and to pay civil penalties.
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