"The biggest regret is trusting people with my money," Portis says. "You shouldn't. Go to a bank."
The Complication Begins
Clinton Portis, the former Redskin All-Pro running back, was the subject of an alarming story by Sports Illustrated reporter Brian Burnsed that almost ended in murder. The story examined the financial fallout floating in the wake of the alleged frauds by financial advisors Jeff Rubin, Jinesh Brahmbatt, and Fuad Ahmed, who according to the story, claimed at least $11 million of Portis’ money.
Speaking of these advisors, Portis said, “They come impressive. The complication begins because you don’t understand it. You don’t know what they’re saying, but you just get involved.”
Wolves of Wall Street
Two of these advisors, Jinesh Brahmbatt and Fuad Ahmed, were once employed at Stratton Oakmont, the financial firm depicted in The Wolf of Wall Street, which was expelled from the financial industry for an “extensive and serious regulatory history, and an obvious disregard for all rules of fair practice,” including fraud, market manipulation, and sales practices abuses.
As I detailed in my Resources section, you can conduct background checks (via FINRA and the SEC) on your potential or current financial advisors to view their regulatory history and the regulatory history of all the firms these have worked at. In my experience at FINRA, particularly with all the penny stock firms I examined, the places an advisor worked at tells you a lot about what kind of advisor he is, particularly when it’s a firm with a long regulatory history.
If you view the BrokerCheck links attached for Brahmbatt and Ahmed, the two of them collectively had 23 regulatory disclosures that included 13 customer disputes alleging fraud, unsuitability, failure to conduct proper due diligence, negligence, etc.
Let’s not forget about Jeff Rubin’s regulatory history. He settled three disputes for a total of $130,000 with customers who claimed damages of $6.5 million (in 2013, 2011, and 2004). The customers alleged, among many things, fraud, forged signatures, misappropriation of funds, unsuitable investments, material misrepresentations, and breach of contract.
Ultimately, Ahmed was barred for running a ponzi scheme (which Portis invested in), Brahmbatt was barred for failing to testify in Ahmed’s case, and Jeff Rubin was barred for unsuitable recommendations (which Portis invested in).
If Portis had known these advisors’ regulatory history, would he have handed them millions and millions of dollars?
Instead, the end result for Portis was the “hucksters he deemed most responsible ignored his calls. None were bound for jail. Their coffers were dry. A lawsuit seemed pointless.”
Don't Know What You Got Till It's Gone
What can someone in the sports and entertainment world learn from this tragic story of a man who earned $43 million in his career and then filed for bankruptcy with $150 remaining in his bank account?
1. Understand the red flags of your own lifestyle that can lead to fraud and bankruptcy:
- Excessive spending on houses and cars;
- Large entourages of people looking for a handout who provided no financial benefit to Portis;
- Failure to pay taxes to the IRS;
- Failure to conduct due diligence on financial advisors and investments;
- Gambling debts; and
- Child support with multiple women and children.
Edgerrin “Edge” James, another NFL All-Pro running back who earned $70 million and played for the Indianapolis Colts, said that Portis was too generous, too willing to put his credit card when the bill came and align himself with people who would let him.
“I spent more time in the public eye than I did getting to know who I was,” Portis said. “I’m just now learning me.”
This type of lifestyle creates a chaotic atmosphere for your money and can lead to fraud because your spending attracts people with bad intentions. If you are spending millions on houses and cars and your entourage, what are the odds you will identify your trusted advisors stealing money?
2. Understand you have to control and review your finances and investments when others are managing your money:
- One of Portis’ suits against Jeff Rubin alleged that his company opened an account for Portis using his forged signature that gave power of attorney to Rubin’s employees. Then Rubin’s company made withdrawals of more than $3.1 million from his account.
Portis' situation was so out of control that he did not even notice $3.1 million missing from his accounts. Portis also claims that a financial advisor took a $500,000 loan against Portis’ mother’s home (that Portis originally paid for in all cash) in Portis’ name without his knowledge.
3. If you do not have control over your finances and understand what is going on in your accounts, you are at a heightened risk of fraud. You have to understand this risk and determine what level of risk you are comfortable with.
- Jinesh Brahmbatt steered Portis to invest with Fuad Ahmed who then defrauded Portis of millions.
Both of these individuals worked at Stratton Oakmont in 1994. This connection alone should have raised questions by Portis, not to mention the many questions you should ask anyone who is directing you to invest with a specific person:
- How do you know this person?
- Have you worked with this person before?
- Do you and this person have any other ownerships or affiliations together?
- Are you being compensated for referring me to this advisor/investment? How much?
- How is your compensation being paid? Cash, check, wire?
- Will your compensation be documented in any way?
- Do you own this investment in any way?
4. You should ensure that your best interests – not the interests of the person referring you or his friend – are the heart of every financial recommendation and referral by your advisors and business managers.
- Portis’ investments with these advisors were private investments that present a number of additional risks.
These advisors were not asking Portis to invest in blue chip stocks like WalMart or Google. They were asking him to invest in private investments that carry a ton of additional risks and fees. These were investments whose risks were likely unknown to Portis. If you cannot understand the investment and/or the terms of the investment, ask yourself if it makes sense to invest in something you cannot understand.
Burnsed’s story shows a charitable man who got swallowed by a lifestyle of sex, fame, and money, and lost sight of what was important. When he lost sight of that, his advisors took him for millions, and he ended up bankrupt.
Keep sight of and control of your finances.
If this is beyond your control, please contact BrightLights for a free consultation.