SEC Charges Investment Advisory Firm’s Former President With Stealing Client Monies, Including $300,000 from Mike Tyson

The Securities and Exchange Commission is charging the former president of SFX Financial Advisory Management Enterprises with stealing client funds. The regulator’s Enforcement Division contends that Brian J. Ourand abused his discretionary authority over several clients’ accounts. He allegedly stole about $670,000 over five years by writing himself checks and putting through wire transfers.

The investment advisory firm is owned by Live Nation Entertainment and provides financial management and advisory services to high net worth individuals. SFX has a specialized focus in working with former and current professional athletes. Ex-boxing champion Mike Tyson was an SFX client at one time.

He and his wife sued SFX, Live Nation, and Ourand in 2013 on the grounds of unjust enrichment, fraud, and breach of fiduciary duty. The Tysons accused them of misappropriating over $300,000 and costing him millions more in possible future earnings. They sought over $5 million.

In its order instituting administrative and cease-and-desist proceedings, the SEC said that Ourand served as relationship manager to a number of clients. He was in charge of bank accounts and paid their bills. He also purportedly had unauthorized access to their credit card accounts. Ourand provided investment advice and had discretionary authority to trade in client brokerage accounts.

In 2011 a firm client complained about not being able to use one of his own credit card. SFX conducted a probe and found that Ourand had misappropriated assets. The investment advisor terminated his employment and reported him to the authorities.

The SEC also has filed separate charges against SFX and chief compliance officer Eugene S. Mason. The regulator contends that they did not implement procedures and policies to prevent the misappropriation of client monies. Mason is accused of not overseeing client accounts or their cash flows.

The investment adviser and Mason settled with the Commission by agreeing to pay $150,000 and $25,000 in penalties, respectively.

Securities Fraud and Professional Athletes
Those seeking to commit securities fraud and make money illegally may target ex- and current professional athletes. As they start to amass their wealth at a young age, many pro athletes are inexperienced and uneducated when it comes to financing and need help to manage their money. This can make them vulnerable to financial advisers who are negligent or seeking to steal funds. Over the years, The SSEK Partners Group has represented many athletes and celebrities who have lost millions of dollars because their money was improperly handled.

However, there are also former professional athletes who have gone on to abuse their celebrity/hero status by masterminding securities scams to bilk fans and others. Some commit fraud because they are no longer making the kind of money they used to when they were playing their sport. They need a way to sustain their lifestyle and pay their bills.

Last week, ex-NFL cornerback player William D. Allen and an associate were arrested and charged with securities fraud. Allen had played pro football for the New England Patriots, the Miami Dolphins, and the New York Giants.

Investors they solicited were supposed to make loans to professional athletes, and some loans were issued. But, according to federal prosecutors, Allen and Susan Daub used their firm Capital Financial Partners to steal funds from clients. Through their alleged Ponzi scam, they purportedly stole millions of dollars from investors, using the cash to pay for other business ventures and their own spending.

In April, the SEC filed civil charges against Allen and Daub. The regulator accused them of raising $32 million from at least 40 investors over the past few years.

And there have been other athletes who have gotten into trouble with securities regulators. Willie Gault, the wide receiver that helped the Chicago Bears win a Super Bowl, is just one other example. He was charged with securities fraud in 2012 for his alleged involvement in a pump-and-dump scam.

It should also be noted, however, that there have been numerous professional athletes who have gone on to have successful and reputable careers in the financial industry.

Read the SEC Order Against SFX and Mason (PDF)

Read the SEC Order Against Ourand (PDF)

Mike Tyson sues financial advisory firm for $5 million, Los Angeles Times, February 21, 2013