Denver Broncos quarterback Mark Sanchez and other professional athletes were scammed out of millions of dollars by an investment adviser who gained their trust by stressing his Christian faith and claiming to be a certified public accountant, a newly unsealed federal lawsuit charges.
Sanchez, San Francisco Giants pitcher Jake Peavy and Roy Oswalt, a retired pitcher who starred with the Houston Astros and other teams, were among those defrauded in the alleged scheme, according to the civil lawsuit filed in Texas by the Securities and Exchange Commission.
The three were clients of investment adviser, Ash Narayan, managing partner of the California office of Texas-based RGT Capital Management. A legal brief in the case said Narayan “stressed his Christian faith, his interest in charity, and his success advising other similar clients,” along with falsely saying he was a CPA.
“Regrettably, these relationships were built on lies,” the filing charged.
The SEC lawsuit accused Narayan of siphoning millions of dollars from accounts he managed for the athletes and investing the money in The Ticket Reserve, a struggling online sports and entertainment ticketing business formed to help fans reserve face-value seats for sports events for which teams had not yet been determined.
Narayan, who was the ticketing business’ chief fundraiser, a member of the company’s board of directors and owner of more than 3 million of the firm’s shares, channeled more than $ 33 million of clients’ money to the business from 2010-2016, usually without receiving consent, the lawsuit charges.
The ticketing business needed the cash infusions from Narayan’s unsuspecting clients to remain in operation, the lawsuit charged. In a May 26, 2014 email to Narayan, Richard Harmon, CEO of the Ticket Exchange, allegedly wrote: “To be sure our revenue sucks. Our balance sheet is a disaster.”
In exchange for the transactions, Narayan received nearly $ 2 million in hidden compensation from the ticketing business, with most of the money directly traceable to funds stolen from his client, the lawsuit charged.
Harmon and other officials of the ticketing business were charged with knowingly or recklessly taking steps to conceal Narayan’s compensation. They alternately characterized the payments as directors’ fees or as loans, a designation that enabled the investment adviser to avoid reporting the payments as taxable income, the lawsuit charged.
The Ticket Reserve also made Ponzi scheme-like payments to existing investors using money from new investors, the lawsuit charged. After being fired from his investment firm and losing access to his former clients’ accounts, Narayan allegedly began redirecting the sham fees he received back to The Ticket Exchange.
File photo taken in June 2016 shows San Francisco Giants pitcher Jake Peavy during a game against the Tampa Bay Rays. (Photo: Brian Blanco, Getty Images)
The SEC obtained a May 24 emergency court order freezing the assets of Narayan, Harmon and John Kaptrosky, the ticketing company’s chief operating officer. The order similarly froze assets of The Ticket Reserve. Chief U.S. District Court Judge Barbara Lynn in Dallas appointed a receiver to gather, take possession and preserve the company’s assets.
Defense attorney Howard Privette said Narayn worked cooperatively with SEC investigators and was disappointed by the court action. “Mr. Narayan has always sought to act in his clients' best interests. Accordingly, he will continue to work with the SEC to ensure that this matter is resolved in the most favorable manner for those clients,” Privette said in a statement.
Jason Lewis, the defense lawyer for Harmon and Kaptrosky, did not immediately respond to phone messages seeking comment.
“We alleged that Narayan exploited athletes and other clients who trusted him to manage their finances,” said Shamoil Shipchandler, director of the SEC’s Forth Worth office in Texas. “He fraudulently funneled their savings into a money-losing business and his own pocket.”
Although the athletes told Narayan they wanted to pursue conservative investments, he secretly diverted their money to the ticketing business the SEC lawsuit characterized as “very risky and inconsistent.”
Oswalt agreed in 2010 to invest no more than $ 300,000 in The Ticket Reserve. However, Narayan directed more than $ 7 million of the pitcher’s money to the business without Oswalt’s knowledge or consent, the lawsuit alleged.
Sanchez, who formerly starred with the New York Jets, agreed to invest just $ 100,000 in the business. But Narayan allegedly channeled more than $ 7 million of the quarterback’s money to The Ticket Reserve.
File photo taken in 2012 shows Roy Oswalt pitching for the Texas Rangers in a baseball game against Minnesota Twins in Arlington, Texas. (Photo: LM Otero, AP)
Peavy never authorized investments in the ticketing business and never knew of its existence until Feb. 2016. A court filing shows it was then that Oswalt phoned and told Peavy Narayan had been fired amid discoveries of unauthorized client investments.
Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc
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