HOUSTON (CBS/AP) — San Francisco Giants pitcher Jake Peavy and other professional athletes have lost million of dollars in a Ponzi-like scheme run by their investment adviser, according to federal documents made public Tuesday.
According to newly-unsealed court filings by the Securities and Exchange Commission, Peavy and other athletes including Denver Broncos quarterback Mark Sanchez and retired Houston Astros pitcher Roy Oswalt were victims of a Southern California investment advisor named Ash Narayan.
The SEC claims Narayan made $33 million in unauthorized transfers of the athletes’ money to a struggling online sports and entertainment ticket business on whose board he served. Narayan pocketed $2 million in fees, the SEC lawsuit states.
On Tuesday, the SEC said it had obtained a court order freezing Narayan assets.
In the SEC documents, Peavy said he was introduced to Narayan by a teammate early in his career and signed on with him sometime in 2004. At the time, Peavy was in the process of negotiating his first Major League contract.
“My agent received my paychecks, paid bills for my family and me, and sent a stipend to my personal bank account,” Peavy said in the statement. “My agent transferred all remaining funds to a brokerage account to be invested at Narayan’s direction.”
Peavy said his understanding was that those investments be made into “conservative, low-risk investments.”
Peavy said Narayan told him he was on track to the Giants pitcher’s goal “… of having $20 million set aside for my retirement from professional sports,” Peavy said in the statement. Narayan was allegedly instead diverting money into an online ticket company named The Ticket Reserve Inc.
Peavy told the SEC that Narayan had “invested approximately $15 million of my funds in TTR without my authorization.”
The SEC documents also allege that Narayan took a bank loan out using Peavy’s name in April. The outstanding balance of the loan, the documents show, is $500,000.
“To date,” Peavy said in the SEC document. “I have yet to receive a return of any of my funds used to invest in TTR.”
Narayan’s attorney, Howard M. Privette, emailed the following statement to KPIX 5: “Mr. Narayan has worked cooperatively with the SEC from Day 1 on this matter, and is disappointed that the SEC chose to bring this action. Mr. Narayan has always sought to act in his clients’ best interests. Accordingly, he will continue to work with the SEC to ensure that this matter is resolved in the most favorable manner for those clients.”
Peavy is currently in the final year of his contract with the Giants. The deal will pay him an estimated $15 million this year. During his 15-year career, Peavy has a 150-123 record and is currently 2-6 this year with San Francisco.
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