Former Miami Dolphins cornerback Will Allen has been charged with nearly two dozen felony counts after federal investigators determined he and a business partner ran an elaborate Ponzi that involved pro athletes.
Allen and Susan Daub, a former bank executive, were formally indicted in a Massachusetts federal courtroom last week after their arrest in Fort Lauderdale in June.
Allen, whose lengthy NFL career included six years spent with the Dolphins, is accused of fleecing investors by convincing them to provide high-interest bridge loans to athletes. But instead, Allen and Daub used new monies to cover old debts, all the while diverting millions for themselves.
In all, more than $31 million were raised in the scheme, but only $18 million ever made it to the athletes, who needed short-term loans to stay afloat financially during the offseason, when they go unpaid.
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The allegations first came to light in early April, when the U.S. Securities and Exchange announced fraud charges against Allen, 36, and Daub, a financial professional formerly of Acton, Massachusetts, now living in Coral Springs. The SEC alleged that Allen and Daub misled their investors about the nature of their dealings, and used part of the money raised to pay personal expenses such as charges at casinos and nightclubs.
Federal prosecutors allege Allen and Daub would oversubscribe loans and even collect money for loans they never made.
In all, Allen faces one count of conspiracy to commit wire fraud, 12 counts of wire fraud, six counts of aggravated identity theft four counts of money laundering. All 23 counts are felonies.
Allen last played in the NFL in 2011; an injury ended his career the following season. The former first-round pick had 15 interceptions and five sacks in his career.
WHAT IS A PONZI SCHEME?
A fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors. This scam actually yields the promised returns to earlier investors, as long as there are more new investors. These schemes usually collapse on themselves when the new investments stop. The Ponzi scam is named after Charles Ponzi, a clerk in Boston who first orchestrated such a scheme in 1919.