In the past several weeks, you may have seen headlines for Kyle Orton fraud or Denny Neagle fraud. In both cases, pro athletes, or former pro athletes, had given considerable amounts of their money to financial advisers who allegedly mishandled the money and lost it in questionable investments.
In December, Kansas City Chiefs quarterback Kyle Orton and 20 other NFL players sued a Chicago law firm for more than $10 million after the firm allegedly gave bad financial advice, reports the USA TODAY.
In their lawsuit, the NFL players say that the law firm Chuhak & Tecson advised the athletes to invest in producers and sellers of gas generated at landfills. Sounds complicated, huh? These are not your typical stocks and bonds, and the players were supposed to benefit from some tax breaks. Unfortunately, they didn't qualify for the breaks.
In a separate case, retired baseball All-Star Denny Neagle sued his former Northbrook-based financial adviser in a similar lawsuit. Neagle says that he handed over his assets and financial decision-making decisions to William Leavitt of Leavitt Capital Management. Thinking that his money was in safe hands, Neagle was later surprised to learn that most of his money was lost in risky "alternative investments" like hedge funds and private equity funds, reports the Chicago Sun-Times.
The commonalities between the two cases are obvious, and the lesson learned extends beyond the investments of professional athletes.
Financial advisers exist to provide investment expertise to laypeople, whether they are professional athletes or everyday workers. Generally, advisers will listen to the needs of a particular client and provide investment options that best meet these needs.
When financial advisers veer from this and seek riskier investments -- perhaps to receive a larger commission -- they violate their fiduciary duty and may be engaging in fraud.
The alleged Denny Neagle fraud and Kyle Orton fraud may have caused the pro athletes millions of dollars. However, everyday people relying on financial advisers should be wary and hire trusted advisers to ensure their savings are also not lost in fraudulent schemes.
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- Denny Neagle Says Adviser Rolled Him (Courthouse News Service)
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- Willie Gault Fraud? Former Bear Caught in SEC Investigation (FindLaw's Chicago Personal Injury Law Blog)