Ex-financial adviser accused of running Ponzi scheme with pro athletes’ money
A former Pittsburgh financial adviser siphoned $2.35 million from the investment accounts of professional athletes to invest in movies, including a 2013 horror flick shot in the city, and replaced some of the misappropriated funds with “Ponzi-like payments” when he was discovered, securities regulators alleged Friday in announcing the settlement of civil fraud charges.
Louis Martin “Marty” Blazer III, founder of Blazer Capital Management in the South Side, was accused of swindling money from five clients, including at least two professional athletes, between 2010 and 2012, according to a complaint filed in Manhattan federal court by the Securities and Exchange Commission. The complaint did not name any of Blazer’s clients, and the SEC declined to disclose them.
Blazer, who is no longer a registered financial adviser and declined to name the clients, told the Tribune-Review that the incidents stemmed from “miscommunication that got out of control.”
“It did happen so long ago, and we’ve come to terms and settled the whole thing,” he said, adding that professional athletes can have “selective memory” about their financial decisions.
Blazer agreed to settle the charges without admitting or denying the allegations, the SEC said. The agency said the settlement requires court approval. The judge will determine financial penalties and monies that Blazer has to repay, the SEC said.
“We allege that Blazer grossly abused the trust placed in him by his clients and repeatedly took their money without authorization,” Andrew Calamari, director of the SEC’s New York regional office, said in a written statement.
The SEC alleged that Blazer, whose firm catered to athletes and other wealthy individuals, tried to persuade an unidentified professional athlete to invest in two movie projects for which Blazer was raising money. The athlete refused to invest, but Blazer forged documents to make it appear that he received authorization to move money from his client’s account six times in 2010, the complaint alleged.
Blazer invested the money in the movies “Mafia the Movie” and “Sibling,” the complaint alleged. “Sibling,” later renamed “A Resurrection,” was shot in Pittsburgh and released in 2013.
When the athlete discovered the unauthorized transfer in 2012, he demanded Blazer return the money. Blazer allegedly made unauthorized transfers of $650,000 from the accounts of another unidentified professional athlete to repay the first client in a “Ponzi-like” scheme, the SEC said.
Ponzi schemes are a type of financial fraud in which money raised from one investor is used to make payments to other investors.
Blazer has faced other legal cases linking him to professional athletes, including Kevan Barlow, a retired NFL running back and University of Pittsburgh standout.
Barlow alleged in 2011 that Blazer had “misappropriated, mismanaged, squandered, and/or stole millions (of dollars)” from him, according to a complaint with the Financial Industry Regulatory Authority, or FINRA, a private organization that regulates investment brokers.
The complaint alleged that Blazer declined to provide Barlow with comprehensive accounting of his finances or investments from 2001 to 2009. In 2010, Blazer informed Barlow that he had “slightly over $100,000,” despite having earned an estimated $13 million to $15 million between 2003 and 2006, the complaint said.
Barlow’s allegations, which sought compensatory damages in excess of $4 million and punitive damages of $12 million, was settled in 2012, records showed.
Barlow could not be reached. His attorney, David Strassburger, declined to comment, citing a confidentiality agreement in the settlement.
In a separate FINRA record from 2011 involving allegations that $4 million was misappropriated from a client’s account, Blazer blamed “a professional football player who over the same period of time withdrew money — I believe recklessly — and despite numerous warnings about his spending habits continued to deplete his accounts.”
New Jersey-based First Choice Bank sued Blazer in 2013 and 2014 for a series of unpaid loans for which Blazer signed as a guaranty, Allegheny County court records show. The loans, ranging from $10,000 to $50,000, were taken out in 2011 by athletes including former Pitt basketball standout DeJuan Blair, former Cleveland Browns wide receiver Greg Little and former NFL running back Anthony Allen.
An attorney for First Choice Bank who handled the cases did not return a call for comment. Bank officials could not be reached.
Blazer’s license as a financial adviser expired in 2012.