Wealthy athletes are easy to scam. Really easy. Not all athletes know how to handle a fortune. Wealthy athletes are good at playing sports, not managing their millions. We financial types who know how to do sexy stuff like add (er, ten key and use spreadsheets) have a duty to protect the investor –- even the ridiculously wealthy and athletic ones who are just begging to be ripped off. In the interest of being a helpful financial type, I’ve developed a list of tips for pro athletes to help them from falling prey to scammers.
A jet is not a viable financial investment Scottie Pippen, Michael Jordan’s love-a-Bull side kick a’la 1995, recently testified in court against his former financial advisor. Robert Lunn, a former managing director at Lehman Brothers, took out loans worth $3 million in Pippen’s name. On Friday, a court convicted Lunn of bank fraud. Pippen won an earlier $11.8 million civil judgment against Lunn for investing Pippen’s fortune in dubious investments, including an airplane that cost more than $5 million. Pippen never even got to fly in the plane because he missed a critical inspection, and the plane was grounded. He sued his attorney for missing the inspection and won a $2 million settlement in 2010. A $5 million jet is a pretty wasteful investment however you look at it but especially if you don't even get to fly the thing.
Check your credit score three times a year IT’S FREE. Sometimes free as in they need your credit card and will charge you once a month for a BS credit monitoring service but if you're a big wealthy athlete, you can probably afford this. Like Scottie Pippen’s shady financial advisor, Kareem Abdul-Jabbar’s financial advisor, Tom Collins, took out nearly $9 million in loans without Kareem’s knowledge. He also invested the basketball star’s cash in things like heavy weight jump ropes, real estate, and a jazz music label. Abdul-Jabbar –- who should have been paying better attention to his credit report — sued Collins, and the case settled out of court.
Never wire anything to anyone in exchange for an ownership stake in anything Really, how dumb are you guys? NFL Hall of Famer Warren Moon lost $200,000 after his agent wired a scammer cash in exchange for floor seats to the Miami Heat and a 5% stake in the team. Naturally, the tickets and ownership paperwork never arrived.
An inflatable furniture raft is probably not a real thing Detroit Tiger Torii Hunter invested $70,000 cash to fund a one-of-a-kind, sure-fire invention –- an inflatable furniture raft. People who bought the inflatable raft could pump up the raft so that a couch would float and stay dry in a flood. This might have been good if it came in the dELiA*s catalog and the year was 1995, otherwise you should be skeptical (protip to athletes: you pay your CPA to be that). Alas, the raft thing was a scam. The scammer called back later to ask for an additional $500,000, but Hunter refused. As it turns out, Torii Hunter was a man before his time. He fell for the scam in 2009. Five years later, the city of Detroit flooded, and we the people of Detroit could have used those inflatable rafts to paddle ourselves and our crappy flood-damaged couches the hell out of town. All the aged dELiA*s girls, now in their 30s, safely escaped on their blowup armchairs, no doubt.
Hopefully with these quick tips, pro athletes with millions of dollars to burn can avoid getting completely ripped off. I mean, they won't but hey, we tried.