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SEC accuses ex NY Giants player of running Ponzi scheme

New York Giants’ cornerback Will Allen defends during a game against the Cleveland Browns in East Rutherford, N.J., Sept. 26, 2004.
Bernie Nunez | Getty Images
New York Giants’ cornerback Will Allen defends during a game against the Cleveland Browns in East Rutherford, N.J., Sept. 26, 2004.

The Securities and Exchange Commission announced fraud charges against former NFL player Will Allen and a business partner, accusing them of operating a $31 million Ponzi scheme.

In a complaint unsealed late Monday, the SEC claimed Allen, a former cornerback for the NY Giants, and his business partner, Susan Daub, claimed to make loans to professional athletes who were short of cash.

Allen and Daub raised $31.7 million from at least 40 investors but paid out only $18 million in loans to athletes through an business called Capital Financial, according to the SEC.

The two allegedly lured investors by claiming they could profit by fronting the loans and receiving interest of up to 18 percent paid by the athletes.

The SEC says the two paid out about $20 million to investors between 2012 and 2015, while receiving a little more than $13 million in repayments from athletes. The two allegedly used funds from investors to to fill the $7 million gap and pay other investors.

"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. As in any Ponzi scheme, the appearance of a successful investment was only an illusion sustained by lies," said Paul G. Levenson, director of the SEC's Boston regional office.

Allen and Daub allegedly misled investors about the terms, circumstances, and even the existence of some of the loans and used some investor funds to pay personal expenses such as charges at casinos and nightclubs, the complaint said.

The SEC is seeking a court order to force the defendants their any ill-gotten profits with interest and pay civil monetary penalties.

The complaint was filed in Boston on April 1, and the court has entered an asset freeze against the defendants.

The SEC said it had not heard from attorneys for Allen and Daub so far.