The founder and managing director of Ohio-based Prim Capital Corporation
has been charged with attempting to defraud the National Basketball Association
players’ union out of $3 million.
According to a federal complaint unsealed last week, Prim Capital Corporation
(“Prim”) was the primary outside advisory firm for the National
Basketball Players Association (NBPA) from 2001 until 2013. As such, Prim
managed $250 million in investments for the union, reviewed investments
for individual players, and conducted financial seminars for the players.
The company was founded and managed by Joseph Lombardo, of Gates Mill.
In 2012, an investigation into the union prompted federal investigators
to ask Prim for copies of all of the company’s agreements with the
NBPA. According to prosecutors, Prim turned over a single agreement, dated
2005, that specified a fee of $350,000 per year and was renewable on an
annual basis upon both parties’ agreement. Several months later,
Prim produced another contract, dated 2011, which specified a fee of $602,000
per year for a period of five years. Allegedly, the contract also specified
that it could not be canceled by the NBPA for any reason.
The complaint alleges that the 2011 contract was a fake.
According to prosecutors, Joseph Lombardo used a previously obtained signature
stamp to forge the signature of deceased former NBPA General Counsel Gary
Hall and authenticate the document.
Lombardo also allegedly lied to the grand jury during the investigation
and instructed the company’s president of advisory services, Carolyn
Kaufman, to do the same.
"As alleged, Joseph Lombardo faked the signature of a dead man as
part of manufacturing a multi-million dollar contract out of whole cloth
that, had it been enforced, would have caused significant losses for basketball
players who entrusted him with their savings," U.S. attorney Preet
Bharara said in a statement.
Lombardo has been charged with attempted wire fraud, attempted mail fraud,
and obstruction of justice. Kaufman also has been charged with obstruction.
If convicted, Lombardo could face up to 20 years in prison for each count
of attempted fraud and up to 20 years in prison for obstruction. Kaufman
also faces a potential 20 years in prison, if convicted. Though the initial
appearances were before U.S. Magistrate Judge Gregory White in Cleveland,
the case is being transferred to Manhattan. For additional information on the
Prim Capital case in Cleveland and Manhattan, click here.