The Securities and Exchange Commission on Thursday
charged Cambridge Capital Group Advisors and two former executives with defrauding former professional football players who had joined a class-action lawsuit against the National Football League claiming they had concussion-related brain injuries.
Philip Timothy Howard and Don Warner Reinhard, former principals of the advisory firm, allegedly solicited $4.1 million from about 20 players to invest in private hedge funds managed by Cambridge, which is based in Tallahassee, Fla. About half the players rolled their NFL 401(k) accounts over to the funds.
Mr. Howard, who is also an attorney, represented some of the players in the concussion lawsuit.
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The duo made "false and misleading" statements to the investors about the funds, which paid settlement advances to former football players in connection with an NFL concussion lawsuit, according to the SEC.
The defendants misappropriated about $973,000 — more than 20% of investors' funds — to pay themselves fees and to cover costs associated with Mr. Howard's personal residential mortgages between 2015 and 2017, according to the SEC.
"We allege that Cambridge, Howard and Reinhard defrauded these particularly vulnerable investors, many of whom invested their retirement savings," said Eric I. Bustillo, director of the SEC's regional office in Miami. "Instead of investing all of the funds' assets as promised, Howard and Reinhard used a significant portion of investor money to line their own pockets."
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James Sallah, an attorney for Cambridge Capital Group Advisors, declined to comment on the allegations. Mark Hunter, an attorney representing Mr. Howard, didn't return a request for comment.
Mr. Reinhard, who is representing himself, is currently serving a sentence in federal prison after a 2017 arrest for aggravated child abuse, of which he was found guilty. In 2009, Mr. Reinhard was sentenced to 51 months in prison after pleading guilty to mortgage, tax and bankruptcy-related fraud charges. He was released from federal prison in July 2015.
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