The man at the center of a new financial scandal that could involve some of the nation's top professional athletes said that he's running a legitimate investment business—despite a complaint from the Financial Industry Regulatory Authority.
That complaint alleges Fuad Ahmed, CEO of a Washington, DC-based firm called Success Trade Securities, failed to tell his investors what he would do with the money generated by selling promissory notes to 58 investors. FINRA said many of the investors, who contributed a total of more than $18 million, are current or former NFL and NBA players.
With investor money, FINRA says, Ahmed paid the lease on his Range Rover, made undocumented, interest-free loans to his brother, loaned himself funds to pay balances on his personal credit cards, and paid for personal travel and clothes. What's more, the complaint alleges that a series of firms operated by Ahmed used new investor money to pay returns for older investors. Some of the promissory notes, FINRA says, purported to offer annual interest rates ranging from 12 to 26 percent.
Despite the picture painted in the FINRA complaint of an investment fund running on fumes, Ahmed said he expects to be able to make all of his investors whole.
"This is a real company, it has real accounts, and it has real value," Ahmed said. "I have told FINRA what I'm doing and what efforts are underway to make the investors whole. We have been around since 1999 — it's a good brand name, and we survived the financial crisis as well," he said.
Ahmed said that a firm he owns uses a proprietary software program that he could sell to generate cash, and that he's been reaching out to his investors to reassure them that they will get their money back. "I am making the investors whole as quickly as possible," he said. "None of the investors has lost any money — they still have notes that are there."
Ahmed developed his long list of professional athlete investors through a relationship with another firm, Jade Private Wealth Management. That company has managed money for sports stars including Victor Cruz, a wider receiver for the New York Giants, Vernon Davis, a tight end for the San Francisco 49erc, and Clinton Portis, a former running back for the Washington Redskins. It's not clear, however which of Jade's clients invested in the notes offered by Success Trade. Representatives for the athletes declined to comment.
On its website, Jade Private Wealth Management describes itself as tailor-made to manage the everyday affairs of busy and highly paid professional athletes. The company offers to manage cash flow between college and an athlete's first professional paycheck, gives advice on disability and life insurance, and educates players on "how to handle the lifestyle and fame of being a professional athlete." The company even offers a service to transport an athlete's vehicles to a new city when he is traded to a new team.
"Jade Private Wealth Management understands that Professional Athletes are similar to corporate executives and entrepreneurs," the website says. "However, unlike the corporate executive and entrepreneur, the professional athlete is faced with a variety of financial issues which include a short playing career (on average), an unstable market for the athlete's services, and the desire to maintain the lifestyle to which the athlete has become accustomed during his or her peak playing years."
An attorney for Jade, Jacob Frenkel, said the firm did nothing wrong. "The majority of the investments recommended by Jade and its clients are the most conservative and traditional instruments available," Frenkel said. "To this day, Jade feels confident that the introductions and the investments that it made were and are in its clients' best interests."
The next step in FINRA's process will be a formal hearing, a date for which has not yet been scheduled. If the allegations in the complaint are upheld, Success Trade or Ahmed himself could be expelled from FINRA or barred from the securities business.