(CN) - An Ohio man and woman forged a contract to try to defraud the NBA Players Association of $3 million, federal prosecutors said.
The United States unsealed a three-count complaint against Joseph Lombardo and Carolyn Kaufman, in Manhattan Federal Court. They are the only named defendants.
In the complaint, a Labor Department agent also accuses Lombardo, owner of Prim Capital Corporation, and Kaufman, its president, of obstructing a federal grand jury investigation of the contract.
Lombardo is accused of forging the signature of former NBPA general counsel Gary Hall after Hall died. He allegedly did it through a signature stamp.
Prim was the primary outside investment firm entrusted with the NBPA's investments and finances from 2011 until 2013, according to the complaint. Prim helped the NBA players manage $250 million in assets, reviewed investments of individual NBA players and conducted financial seminars for the players.
The Labor Department served Prim with a subpoena in May 2012, seeking copies of all agreements between Prim and the NBPA.
Prim responded by producing a copy of a 2005 contract in which Prim's annual fee for services was $350,000, the complaint states.
The contract was the only one Prim produced, and contained the signatures of the NBPA executive director, treasurer and Lombardo, the government says.
In January this year Prim produced another contract, signed in 2011, after learning that a law firm's review of the NBPA was about to be made public, prosecutors say. In this contract, Prim's fee is listed as $602,000 a year for five years, for a total of $3.01 million, with a provision that it cannot be canceled for any reason.
That contract appears to have been signed by Lombardo, Hall and another NBA employee, the government says.
But the labor investigator wrote in the complaint that he believes the 2011 contract, along with Hall's signature, was manufactured months after Hall's death.
"Upon examination of the purported 2011 contract, several factors indicated that the signature for Gary Hall, the former general counsel of the NBPA, may be fraudulent," the complaint states. "First, there was a significant delay between the purported execution date of the contract and the date on which it was ultimately disclosed. The contract was purportedly signed on March 2, 2011. Gary Hall passed away on or about May 16, 2011. Prim, however, did not produce the contract to the law firm or to DOL until January of 2013. Second, I have spoken with employees of the finance department of the NBPA, and none were aware of the existence of the purported 2011 contract during the time when Mr. Hall was alive; indeed none had seen it until Prim produced it in 2013. Third, I have reviewed Gary Hall's actual signature on several documents he executed in his capacity as general counsel for the NBPA. The signature on the purported 2011 contract bears no resemblance to the authentic Gary Hall signatures I have reviewed."
The complaint also accuses Lombardo and Kaufman of giving false testimony to a federal grand jury.
Kaufman allegedly testified that she had not spoken to anyone about her testimony, but the government claims that several phone calls recorded before her testimony showed that she and Lombardo did talk about it.
In one call, Lombardo allegedly told Kaufman how to answer the grand jury's questions. In other calls, Lombardo allegedly told other people to provide false information to the grand jury.
"As alleged, Joseph Lombardo faked the signature of a dead man as part of manufacturing a multimillion-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," Manhattan 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. Now they will both have to answer to the justice system they allegedly tried to obstruct."
Lombardo, 72, of Gates Mills, Ohio, is charged with attempted wire fraud, attempted mail fraud and obstruction of justice. He faces up to 20 years in prison and up to $250,000 in fines or twice the gross gain or loss of the offense on each fraud charge and up to 20 years in prison and a $250,000 fine on the obstruction charge.
Kaufman, 72, of Hudson, Ohio, is charged with obstruction of justice. She faces up to 20 years in prison and up to a $250,000 fine.
Lombardo and Kaufman were arrested at their Ohio homes and are scheduled to appear in Manhattan Federal Court on May 2.
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