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Stanford scandal ensnares Yankees' Damon, Nady

Discussion in 'All Other Sports' started by BFISA, Feb 22, 2009.

  1. BFISA

    BFISA Well-Known Member

    Nov 16, 2005
    Stanford scandal ensnares Yankees' Damon, Nady

    TAMPA - Johnny Damon, earning $13 million this season, cannot pay his bills.

    Xavier Nady, earning $6.55 million, cannot purchase an apartment in New York.

    The Stanford Financial Group scandal extends to Major League Baseball.

    The issues facing Damon and Nady — both New York Yankees outfielders and both clients of agent Scott Boras — stem from the alleged $8 billion fraud scheme involving billionaire financier Robert Allen Stanford.

    Damon, 35, and Nady, 30, told FOXSports.com on Friday morning that their finances are frozen because of money they have with a Stanford company.

    On Monday, the Securities and Exchange Commission froze all assets of three entities — Stanford International Bank, Stanford Group Co., and Stanford Capital Management — all managed by Robert Allen Stanford. Those were the only three entities whose assets were frozen, according to the SEC filing.

    "I can't pay bills right now," Damon said at the Yankees' spring training facility in Tampa. "That started on Tuesday. I had to pay a trainer for working out during the offseason. I told him, 'Just hold on for a little bit and hopefully all this stuff gets resolved.'"

    Nady faces similar concerns.

    "I'm affected in some ways. I have the same (advisor) as Johnny," Nady said. "He said I didn't have money with Stanford (investments). But all my credit card accounts are frozen right now because of that situation. I'm trying to get an apartment in New York. I can't put a credit card down to hold it."

    Boras said his clients have no reason to worry about losing money.

    "Our personal-management auditors have looked into the financial elements of it," Boras said. "None of our clients is in any financial jeopardy."

    Both Damon and Nady said they were told by their financial advisors that the matter could be resolved within a few days. Damon said he was told that his money was insured by a bank in New York, which Boras identified as the Bank of New York.

    First baseman Mark Teixeira, another Boras client who is a member of the Yankees, said he did not have money with Stanford. Third baseman Alex Rodriguez, who also is represented by Boras, was not available for comment.

    Damon, Nady and other Boras clients use Personal Management Consultants, a division of the Scott Boras Corporation, to monitor their assets.

    Players pay PMC a percentage of their earnings on top of the commission they pay Boras. The company employs CPAs who check investments, audit teams, do tax work, and perform other services.

    "I talked to PMC, talked to guys at Stanford Financial Group," Damon said. "The first thing they kept saying was, 'You should be OK.' I was like, 'Not should be OK.' They clarified it that yeah, I've got nothing to worry about. But unfortunately, the money is frozen."

    PMC does not make actual investments, Boras said.

    "We have no link to Stanford, no financial connection to any investment company with any of our clients," Boras said. "We do not invest our clients' money and receive no compensation for it, unlike other agencies."

    On Thursday, The New York Post reported that IMG, a sports management agency, quietly agreed to steer clients looking for investment advice to Stanford Financial Group, potentially exposing them to millions of dollars in losses resulting from the financial firm's alleged fraud.

    According to the report, which cited three sources with knowledge of the situation, IMG and Stanford have a quid-pro-quo agreement under which Stanford Financial pays IMG a low- to mid-seven-figure consulting fee in exchange for IMG advising its clients to have their money managed by Stanford.

    IMG has denied the quid-pro-quo charges.

    The SEC alleges that Stanford ran an $8 billion fraud that involved luring customers into buying certificates of deposit that carried "improbable and unsubstantiated high interest rates." Stanford's operation claimed the CDs were backed by the U.S. Federal Deposit Insurance Corp.

    "I have not gotten into the CDs," Damon said. "But I will tell you one thing: When I did see the CDs that were that high, I thought, 'Why don't I just do that?' It's a good thing I didn't."

    Still, both Damon and Nady said they were uneasy about the state of their finances.

    "I hope we're all safe," Nady said. "You're concerned because of things that have happened these last few months. To get that kind of news is never good news. You've got to hope you're OK."

    Asked if the situation makes him nervous, Damon responded candidly.

    "It does," he replied. "I'm not sure if the banks we owe mortgages would understand our money's frozen, start putting penalties on stuff. The whole financial world is all messed up right now. Hopefully they will go on a case-by-case basis. I'm not sure the mortgage is going to be paid this month. But hopefully it's only a couple of days."


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