Ippei Mizuhara’s allegation that he stole at least $16 million from his former employer, Los Angeles Dodgers superstar Shohei Ohtani, shocked the sports world, but the story of a celebrity swindling money from his inner circle is old news. is.
From Billy Joel to Alanis Morissette to athletes like Dennis Rodman and Mark Sanchez, there is a long list of celebrities and athletes who have lost effective control of their assets and been victimized by those they once trusted. I have a list.
Professional athletes claim they lost nearly $600 million to fraud between 2004 and 2019, according to a 2021 report from global accounting and consulting firm EY. The study also shows that cheating increases as athletes’ sponsorship income and salaries increase.
Chase Carlson, a Florida attorney who specializes in representing professional athletes, said, “There’s a group of people who are very young and have high incomes, which is very unique, and they have very high stakes in their careers.” “I’m focused. That’s why I have confidence in him at the end of the day.” There are also celebrities who have fallen victim to investment fraud and mismanagement. “You have to choose people you can trust, and unfortunately people take advantage of that trust.”
Mizuhara is known as Ohtani’s interpreter and worked closely with him during his six years in the major leagues. However, Mizuhara’s relationship with Ohtani went far beyond the clubhouse and included responsibilities such as driving his car, handling his day-to-day tasks, and managing certain business and personal matters outside of baseball. . Federal authorities said Mizuhara was Ohtani’s “de facto manager and assistant.”
According to an affidavit filed by federal authorities last week, Mizuhara stole millions of dollars from an account Otani helped open in 2018. Mizuhara is said to have used the money to cover gambling debts he had accumulated through an illegal bookbinding business in Southern California.
Otani said he never gave Mizuhara control of his accounts, but the affidavit says Mizuhara told Otani’s other advisors and accountants (none of whom spoke Japanese) that Otani He allegedly told them that he had been denied access to his account. Federal authorities also allege that Mizuhara falsely identified himself as Otani and “tricked” bank employees into authorizing wire transfers for illegal bookkeeping operations.
“There are financial advisors and executives who have been bad actors,” said Anthony Smalls, head of entertainment, sports and media at global accounting firm MGO. “But most of the time it turns out to be their trusted friend.” [and] The people most often found to be able to circumvent the approval process are family members. ”
Examples include:
- In 1989, Billy Joel sued his ex-manager Frank Weber (his ex-wife’s brother and godfather to his eldest daughter) for $90 million on charges including fraud and breach of fiduciary duty. Joel eventually settled out of court after Weber declared bankruptcy.
- In 2017, Alanis Morissette’s former business manager was sentenced to six years in federal prison for withdrawing $4.8 million from her account without her knowledge. Manager Jonathan Schwartz also embezzled nearly $2 million from two other customers, prosecutors said.
- Peggy Ann Fulford stole millions of dollars from NBA Hall of Famer Dennis Rodman, former NFL player Ricky Williams, and other athletes by pretending to be a Harvard-educated financial advisor. was deceived. In 2018, she 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 the victims. Ms Fulford was released early from her sentence in 2023.
- Federal authorities have indicted former Morgan Stanley consultant Darryl Cohen on three separate fraud charges for allegedly defrauding NBA players Jrue Holiday, Chandler Parsons and Courtney Lee of $5 million in 2023. His two counts of wire fraud each carry a maximum penalty of 20 years in prison, and the investment advisor fraud charge carries a maximum penalty of five years in prison. “Mr. Cohen has pleaded not guilty and continues to vigorously fight these charges. A trial is scheduled for February,” a lawyer representing Mr. Cohen said in a statement to ESPN.
- Former San Antonio Spurs star Tim Duncan has accused his former financial advisor of defrauding him out of more than $20 million. In 2018, a judge ordered Charles Banks IV to pay $7.5 million in restitution.
- Athletes including former San Francisco Giants pitcher Jake Peavy and former NFL quarterback Mark Sanchez were “secretly” defrauded out of more than $30 million by investment advisor Ashish Narayan. [siphoned]Federal authorities said in 2016 that money was taken from the accounts using forged or fraudulent signatures. Narayan pleaded guilty in 2019 to wire fraud and filing a false tax return, was sentenced to more than three years in federal prison, and was ordered to pay $18.8 million in restitution. .
Smalls said many athletes tend to divide responsibilities between different members of a team, which creates silos and, in turn, a lack of role transparency. Ideally, the assembled team should meet regularly with the athletes and entertainers to ensure a closed circle that allows for checks and balances, Smalls said.
“Of course, anything can happen in any scenario, but the possibility of six different disciplines colluding to cause some kind of fraud is one of those things where someone who can operate autonomously within their own silo can “And that area has no mechanism to contact another area,” he said.
Athena Konstantinou, director of international operations at the Sports Financial Literacy Academy, said most of these incidents boil down to a lack of financial literacy.
“If athletes are financially literate, they should know not to give their money to other people,” Constantinou said. “Because your advisors have a role to play in informing you about your options, but you make the final decision and you bear the consequences.”
Constantinou said the league and players’ association have a duty to provide financial education to players.
The NFL Players Association (NFLPA) requires agents and financial advisors to complete a list of educational and professional background checks and tests before registering with the organization.
Agents maintain NFLPA certification by paying annual fees, attending seminars, obtaining professional liability insurance from an approved carrier, and negotiating at least one player contract within three years . The NFLPA also has regulations and codes of conduct for player financial advisors.
The NBPA and MLBPA do not have certification requirements for financial advisors, but they do have regulations for player agents. The MLBPA also certifies Minor League Agents, Limited Certified Agents, and Expert Agent Advisors.
Former NFL player Zach Miller, who won a Super Bowl with the Seattle Seahawks in 2014, recalled signing his first contract and turning to a broker recommended by his father. Miller currently serves as a Certified Financial Planner and Private Wealth Advisor for AWM Capital, a wealth management family office. He said compulsory education sessions could be helpful, but engaging players about financial literacy may be difficult until they have some money management experience.
“It’s no different than what you do on the field in the NFL, winning one-on-ones, doing your assignments correctly, all those things, and you have to do it for the money,” Miller said. Told. “You need to know how much you pay in taxes. You need to know how much you saved in the year. Very few players even know how much money they actually spend each year. This is the most outrageous thing.”
Former professional baseball player Eric Averill says that in addition to his agent, athletes should have a certified financial planner, a tax accountant, an independent registered investment advisor group, and a personal attorney review every contract they sign. said it would be ideal. He is also the co-founder of AWM Capital.
But ultimately the onus is on athletes and celebrities to know their own cash flow, and a lack of knowledge about the money leaving their accounts is “unacceptable”, he said.
“This is your money and you own everything,” he said. “So you can hire a lot of people to do a lot of things, but you can’t shift responsibility for the bottom line of finances and withholding.”
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