Gates Mill Financial Advisor Charged with Attempting to Defraud the NBPA
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.