Hockey Star Claims His Agent Reamed Him

LOS ANGELES (CN) - NHL star Jack Johnson III sued his business manager and real estate broker, claiming they duped his mother into taking out loans that used his $30 million player contract as security.

Johnson sued National Mortgage Resources (NMR), its owner Steve Miller, and CYA Sports Management on Monday in Superior Court.

Johnson, a defenseman, played for five seasons with the Los Angeles Kings, then was traded to the Columbus Blue Jackets in 2012, where he is an alternate captain. He played for Team USA at the 2010 Olympics in Vancouver.

"This case arises from a course of egregious, unethical and wrongful conduct by defendant CYA, who served as Johnson's business manager, and defendant NMR and its principal, defendant Miller, who acted as real estate broker and co-lender in a systematic, deliberate and predatory lending scheme - both individually and collaboratively - to line their own pockets the expense of Johnson," the 33-page complaint states.

Johnson claims that Miller "preyed" upon him and his mother when Miller found out they had little experience in financial planning.

"Beginning in or about early 2011 and through 2013, unbeknownst to Johnson, NMR and Miller brokered a series of unconventional loans to Johnson's mother, Kristina Johnson, making Johnson the obligor and using his $30.5 million NHL player contract as security. Plain and simple, defendants entered into these extraordinarily onerous loans without taking any reasonable steps to ensure that Johnson was personally aware of the transactions, that he authorized them, or that he would benefit from them. Johnson knew nothing about these loans and personally received no monies," the complaint states.

Johnson says Miller disguised the fraudulent loans as business loans so Miller and NMR could issue them "using a special purpose power of attorney," and hid their true nature from Johnson by giving his mother only a signature page for him to sign.

This special power of attorney delegated all of Johnson's financial decisions to his mother "with respect to the purchase of a luxury home for his parents" near Johnson's new home in Manhattan Beach, according to the complaint.

As soon as Miller got this special purpose power of attorney, Johnson says, Miller used it to make a lien against Johnson's contract and take out a $1,552,500 loan.

Johnson claims the loan and its modifications are "unlawful and hastily drafted instruments designed for no other purpose but to cause Johnson to default and to accrue incredibly high interest, late fees and other charges, positioning NMR and Miller to convert Johnson's player contract, cash, and other property, including the Stratford property, to defendants' benefit either through a private sale or foreclosure auction."

The loan was additionally flawed because it did not include an amortization schedule and did not disclose the true amount of interest, or "that there is a balloon payment due at maturity," the complaint states.

To make matters worse, Johnson says, Miller persuaded his mom to execute a deed of trust against his Manhattan Beach house that gave Miller the right to sell the house if she defaults on the loan.

Then in February 2013, Miller modified the note to include a new $220,000 loan to CYA, whom Johnson had hired as his business manager, "without any authority or documentation," the complaint states.

In April this year, Miller and NMS foreclosed on Johnson's house without giving him notice and interfered with his attempts to sell the property to a third-party buyer, "threatening to prevent the transaction from closing and inflating the monies that they claim are due and owing," the complaint states.

Johnson says he has paid Miller and NMS $1,535,031 since the note was executed, and claims Miller used his "exorbitant" interest rates and other charges to apply only $559,638.13 to the principal.

Miller also sent Johnson a demand form for more than $1.76 million on July 3 and another form demanding $1,736,895.93 on July 14, along with a note stating that a $25,101.29 late fee would be assessed if Johnson did not pay up by July 10, the complaint states.

Four days later, Johnson says, Miller sent him another demand for $1,594,828.64 "without any explanation."

Miller refuses to let Johnson see all of the loan documents and will not give him a complete accounting of all the money Johnson supposedly owes Miller, though Johnson has demanded the information several times, according to the complaint.

Of the documents that Johnson did get to see, he says, many were "created not in the usual course of business, but instead manufactured by NMR and Miller only when requested by counsel for Johnson."

Johnson claims that Miller is not actually a licensed real estate broker, because his license was suspended in 2002 "for violating various laws in hiring an unlicensed sales person to solicit and negotiate loans for various real property transactions in California."

Johnson seeks an accounting and $1.72 million in damages and punitive damages for nine causes of action, including breach of fiduciary duty, breach of contract, and breach of faith.

He also wants a declaration that the notes and deeds of trust executed by the defendants are invalid, an injunction preventing them from foreclosing on and selling his Manhattan Beach house, and disgorgement of all the payments he made on the allegedly fraudulent loans.

He is represented by Eliot L. Teitelbaum with Koorenny & Teitelbaum.

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