More developments in financial saga of Columbus defenseman Jack Johnson — details have emerged that Johnson was used to as a pawn to drum up investment money in an alleged Ponzi scheme operated, in part, by former NFL player Will Allen.
More, from the Palm Beach Post:
Allen, 36, and Susan Daub, 54, ran Capital Financial Partners, which made loans to ranging from $10,000 to $5.6 million to players in the NBA, NFL, NHL and Major League Baseball.
They raised $31 million from investors but loaned only $18 million to athletes — and spent some of their investors’ money at casinos and nightclubs, the SEC said.
“The defendants sold investors on the idea of lending money to pro athletes, but we allege that’s not where a large portion of the investors’ money went,” Paul G. Levenson, director of the SEC’s Boston office, said in a statement. “As in any Ponzi scheme, the appearance of a successful investment was only an illusion sustained by lies.”
While the SEC didn’t name any of Allen’s borrowers, it did say the largest one is an NHL player that filed bankruptcy in October — that appears to be Johnson, who last October filed while claiming assets of less than $50,000 and debts of more than $10 million.
Allen filed a lawsuit against Johnson last year and referenced the Blue Jackets rearguard during a deposition in Palm Beach County, also per the Post:
Allen said he first loaned $250,000 to Johnson and charged his standard origination fee of 3 percent, or $7,500.
“I don’t remember him making any payments at all,” Allen said in the deposition.
Even so, Allen agreed to make a larger loan of $1.4 million to Johnson at a one-month interest rate of 12 percent — even though the financially troubled Johnson’s credit score had plunged 100 points.
“I kind of started, to be honest, feeling, not sorry, but like feeling like, you know, we can help him and we can make 12 percent,” Allen said. “I mean, why not, you know.”
The SEC also reported that Allen and Capital Financial loaned $3.4 million to Johnson, only to tell investors — 24 of them, per the New York Daily News — the loan was for $5.65 million.
Allen played for the Giants, Dolphins and Patriots over the course of his 11-year NFL career.