Investment firm founder charged with trying to defraud NBA union
NEW YORK (Reuters) - The founder and managing director of Prim Capital Corporation has been charged with attempting to defraud the National Basketball Association players' union out of $3 million with a bogus contract, federal prosecutors in Manhattan said.
A complaint unsealed on Thursday charges Ohio-based Prim Capital founder Joseph Lombardo, 72, with attempted wire fraud, attempted mail fraud and obstruction of justice.
Carolyn Kaufman, 72, who served as president of Prim's advisory services component, was charged with obstructing justice.
From 2001 until 2013, Prim Capital served as the primary outside investment advisory firm handling the investments and finances for the New York-based National Basketball Players Association, the union representing NBA players.
Prim, described on its website as a boutique investment banking firm, managed up to $250 million of the NBPA's assets, reviewed individual players' investments and conducted financial seminars for players, federal prosecutors said.
Prim was asked to turn over copies of its agreements with the NBPA in 2012 as part of a probe by the U.S. Department of Labor into potential criminal activity at the union, according to the complaint.
In response it produced an agreement showing the firm's fees were $350,000 per year.
Several months later, the firm produced another contract listing the firm's annual fee at $602,000 for a five-year term, prosecutors said.
But an investigation showed that a signature from former NBPA general counsel, Gary Hall, on the contract had been forged months after his death, prosecutors said. Another signature on the contract was allegedly forged as well, according to the prosecutor's office.
Lombardo and Kaufman are charged with trying to thwart a grand jury investigation and giving false testimony.
"As alleged, Joseph Lombardo faked the signature of a dead man as part of manufacturing a multi-million dollar contract out of whole cloth that, had it been enforced, would have caused significant losses for basketball players who entrusted him with their savings," U.S. attorney Preet Bharara said in a statement. "And together with his partner in crime, Carolyn Kaufman, he allegedly lied about it to a federal grand jury."
Lombardo and Kaufman were arrested at their residences in Ohio on Thursday, and will make their initial appearances in Manhattan federal court on May 2, according to the Manhattan prosecutor's office.
Lombardo faces up to 20 years on each fraud charge. He and Kaufman face up to 20 years on the obstruction of justice charge.
A lawyer who represented Lombardo and Kaufman during a court hearing in Ohio was not immediately available for comment Thursday evening. Prim Capital and the NBPA did not immediately return requests for comment.
(Reporting by Jessica Dye; editing by Xavier Briand)