Will Allen, a former National Football League cornerback who played in the NFL between 201 and 2013 has been charged by the SEC along with a business associate of running a Ponzi scheme by which he is accused of raising more than 31 million dollars from investors whom he promised to pay interest rates of as high as 18% on loans that were to be used in turn for loans through his company Capital Financial Partners to professional athletes who needed cash. However, according to the SEC in its complaint, Allen and his business associate, Susan Daub diverted investors funds to their own personal use, did at least one phony loan and lied to investors about the company. In one instance, at least 24 investors paid more than 4 million dollars to fund a purported loan of 5.65 million dollars to an NHL player who went bankrupt, however Allen is accused of telling his investors that the loan was current. Capital Financial Partners paid its investors about 20 million dollars although it only received 13.2 million dollars in loan repayments from the athletes to whom the company had loaned money. To make up the deficit of funds coming in from the loans, Allen is accused of paying back investors with funds of other investors.
If it sounds too good to be true, it usually is. Promises of guaranteed returns of 18% should be a red flag that this is an investment that should be scrutinized carefully. Investing in someone who does not have much experience in business can also be a cause for concern as can investing without the backup of an experienced investment company to oversee the investment. In addition, no one should ever invest in anything that they do not firmly understand nor invest without carefully considering the business plan. This entire enterprise was one that reeked of risk.