SunTrust Banks Inc. (STI) was accused of negligence and fraud in a lawsuit filed by U.S. Olympic soccer team player Heather Mitts and three National Football League players over allegedly risky investments.
SunTrust failed to supervise a financial adviser who invested clients’ assets in high-risk investments, some of which were Ponzi schemes, lawyers for Mitts said in the complaint, which also lists as plaintiffs football players Adam Joshua Feeley of the St. Louis Rams, Brent Celek of the Philadelphia Eagles and Kevin Curtis, who played for both teams. The athletes invested more than $7.5 million with William Crafton Jr., a former financial adviser affiliated with SunTrust.
“Plaintiffs funds were contributed to various known Ponzi schemes, including the Westmoore Fund, the value of which is essentially zero and the actual fund is in receivership,” lawyers for Mitts said in the complaint filed today in federal court in Philadelphia.
Crafton, who became a money manager for the players in 2006, sold his roster of clients to SunTrust in 2009 for about $2.7 million and became head of the bank’s San Diego office, according to the complaint. He allegedly invested players’ money in the Westmoore Fund, part of a multi-million dollar securities fraud, lawyers for Mitts said in the complaint.
The U.S. Securities and Exchange Commission sued Westmoore Management LLC and its Chief Executive Officer Matthew Jennings in June 2010 over claims it operated an undisclosed Ponzi-like scheme raising more than $53 million.
Crafton, who represents about 20 other professional athletes, had inside information about the liquidity and security of the Westmoore fund and was friends and shared commissions with Jennings, according to the complaint.
Crafton didn’t immediately return a phone message seeking comment on the complaint left for him at SCG Management LLC in San Diego.
SunTrust failed to tell Mitts and the other plaintiffs until late August 2010 that their investments were “essentially worthless,” according to the complaint. The bank continued assuring the athletes their investments were safe until it announced in a Feb. 17, 2011, letter that Crafton was “no longer employed” by SunTrust, according to the complaint.
Michael McCoy, a spokesman for SunTrust, said the company declined to comment on pending litigation.
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