Chicago-based Stoltmann Law Offices has represented professional athletes who’ve suffered damages from dealing with financial and investment advisors who recommended fraudulent investments. Professional athletes are often swindled by financial advisors who prey upon wealthy sports heroes who don’t have the time or expertise to scrutinize investments. It’s a perennial story that never seems to die. Often the investments are complex and involve multiple layers of deceit. One such investment involves 15 current or former NFL players. The players invested in a “now-defunct company that funded a separate business targeting Texans with troubled credit ratings who needed quick cash and would put up their cars as collateral on title loans averaging $1,000,” according to ESPN.com.
Not only were these loans bad investments, they fleeced those under financial stress seeking credit. “Because of fees and interest in excess of 300%, borrowers would agree to pay hundreds of additional dollars to repay the loans. The so-called auto title loans are legal in Texas but prohibited in many states because they prey on people who lack access to traditional banking sources.” ESPN noted.
Longtime NFL financial adviser Joseph “Joey” Feste was behind the loans, who claimed in court filings that the venture owed investors some $40 million. At the heart of the investments’ appeal was a promise of high returns in the form of promissory notes for the athletes, although those receiving the title loans were gouged on fees and interest rates. Notes with unusually high returns are usually troublesome for investors and often fraudulent. ESPN noted that “the players and other Feste clients were typically paid a return of between 9% and 20% on their investments that funded the title loans, the documents say. At the other end of the arrangement were borrowers who signed up for loans stacked with fees and charges, some with annual percentage rates in excess of 300%.” Feste orchestrated all sides of these deals, including founding the various companies, including Storehouse Lending LLC and KLC Auto Title Loan, that issued these high interest loans to desperate people.