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Saturday, May 25, 2024 | Back issues
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Boston Celtic Claims Adviser Rolled Him

PHILADELPHIA (CN) - Boston Celtics guard Jason Terry claims in court that his financial advisers cost him $2.4 million by putting his money into risky investments, some of which were Ponzi schemes.

Terry sued Suntrust Banks, Martin Kelly Capital Management, William C. Crafton Jr., Adam Fein, and CSI Capital Management, in Federal Court.

Terry claims in his 24-page complaint that he became involved with Crafton in 2006. At the time, Terry was a member of the Dallas Mavericks.

Terry says Crafton held himself out as a financial adviser and money manager with 20 years experience handling the income of several professional football, baseball and hockey players. Impressed by Crafton's alleged roster of clients, Terry says, he soon had him managing a substantial portion of his income and assets.

Terry says he told Crafton that he had a conservative investment philosophy, and wanted the adviser to follow it.

At the time these, Crafton was a principal, broker and partner in defendants CSI Capital Management and Martin Kelly Capital Management, Terry says.

Crafton also was registered as a financial adviser with nonparties American Express Financial Advisors, and IDS Life Insurance Co., according to the complaint.

Defendant Adam Fein was part of Crafton's "financial advisory team," Terry says.

Together the two men held themselves out as "'specializing' in the 'unique needs of ... athletes ... through complex decisions,'" according to the complaint.

In 2009, Crafton and Fein sold Martin Kelly Capital Management to Sun Trust for a reported $2.7 million.

"Defendants, in their position, each had a fiduciary duty to promptly inform and disseminate accurate and truthful information and to correct any misleading omissions of fact regarding the financial condition, performance, operations, financial statements, and investments that defendants made on plaintiff's behalf," the complaint states.

"Despite this affirmative duty placed upon each defendant, each knowingly and intentionally made, or participated in making or reviewed misleading statements and omissions of material fact in order to carry out investment transactions that were not in plaintiff's best interests and were not suitable given plaintiff's risk tolerance."

Terry says Crafton and Fein recommended he use a specific accountant to prepare and file his tax returns. Terry calls this a "tactical move to enhance and maintain their ultimate control over plaintiff's assets."

The complaint states: "Crafton specifically told plaintiff that plaintiff could, at any time, get out of the investments Crafton placed plaintiff in because he said very investment he placed plaintiff in was a very safe, liquid asset.

"However, contrary to his express representations, defendant Crafton placed plaintiff in high-risk, alternative investments, which were Ponzi schemes or other fraudulent investments run, managed, controlled, operated and/or created by individuals with whom Crafton had a personal relationship, business dealings or kickback agreements. These investments were unsuitable and illiquid and Crafton had some financial interest and undisclosed relationship with each investment that was never disclosed to plaintiff."

Terry claims the defendants changed investment strategies and concentrated his portfolio in "unsuitable, privately held, unsecured, illiquid securities."

"Crafton knowingly made false and material misrepresentations to plaintiff before the date Crafton placed plaintiff into certain high-risk, illiquid investments by stating he would take plaintiff's money and invest it in safe investments that would provide a steady stream of income to plaintiff throughout plaintiff's life," the complaint states.

But Terry claims the defendants "did not invest plaintiff's money in safe investments and did not provide high-quality wealth management services, but rather misappropriated his funds for Crafton's personal use; invested plaintiff's money in illiquid, high risk, alternative investments; invested plaintiff's money in Ponzi schemes run by his friends and colleagues and/or transferred and/or commingled plaintiff's money among other investors and athletes whom Crafton represented to prevent them from discovering Crafton's frauds, schemes and poor investment strategy as well as plaintiff's financial losses."

Terry claims he was unaware of any of this until November 2010, when he reviewed an investment account statement and noticed that one of his largest investments was listed as "pending litigation."

With that, he said, he knew that one and possibly more of his investments were essentially worthless.

Terry seeks disgorgement of management fees and ill-gotten gains and punitive damages for misrepresentation, mismanagement, fraud, omissions, concealment, negligence, lack of supervision, breach of fiduciary duty and other wrongful conduct.

He is represented by Andrew W. Smith with Smithbridge LLP in Philadelphia.

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