Investment adviser pleads guilty to trying to defraud NBA union

Thu Nov 14, 2013 8:13pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Nate Raymond

NEW YORK (Reuters) - The founder of an Ohio firm that provided investment advice to the National Basketball Association players' union pleaded guilty on Thursday to a $3 million fraud scheme and lying to a grand jury.

Joseph Lombardo, 72, a founder and managing director of Cleveland-based Prim Capital Corporation, pleaded guilty to charges of mail fraud and conspiracy to obstruct justice in the U.S. District Court in Manhattan.

The plea followed the April arrest of Lombardo and Carolyn Kaufman, who served as president of Prim's advisory services component.

"Joseph Lombardo engaged in an elaborate fraud involving the creation of a fake contract with the professional basketball players who had entrusted him to manage their union's assets. He then lied to a federal grand jury about his illegal actions and told others to do the same," said U.S. Attorney Preet Bharara, based in New York.

Prim Capital had served from 2001 to 2013 as the primary outside investment adviser dealing with investments and finances for the New York-based National Basketball Players Association, which represents NBA players.

The firm managed up to $250 million of the NBPA's assets and reviewed players' investments and ran financial seminars for them, prosecutors said.

Prosecutors previously said that in May 2012, as part of a probe by the U.S. Department of Labor, Prim was asked to hand over copies of all of its agreements with the NBPA.

In response, Prim provided a 2005 contract showing its fees were $350,000 a year. Months later, after learning a law firm's review of the union was going to be made public, Prim produced another contract showing its annual fees over five years as $602,000.   Continued...