Three pro athletes, including Denver Broncos quarterback and USC alumnus Mark Sanchez, lost tens of millions of dollars in an investment scheme run by an Orange County money manager, according to a civil fraud case filed by the federal Securities and Exchange Commission.
Sanchez, San Francisco Giants pitcher Jake Peavy and former Houston Astros hurler Roy Oswalt were clients of wealth manager Ash Narayan, who is accused of siphoning more than $33 million of his clients’ money to a struggling sports-ticketing company he was invested in.
The SEC filed suit against Narayan last month in federal court in Dallas, headquarters of RGT Capital Management. Narayan worked at the firm’s Irvine office until being fired this year, the agency said. The suit was unsealed Tuesday.
Narayan’s lawyer, Howard M. Privette, said in a statement that his client has “worked cooperatively with the SEC from day 1 on this matter” and was disappointed that the SEC chose to file suit.
“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,” Privette said.
Narayan built relationships with Sanchez, Peavy and Oswalt by appealing to their shared Christian faith and interest in charitable work, according to the lawsuit. Sanchez and Narayan attended the same California church, the agency said.
The SEC accused Narayan of directing the $33 million to Ticket Reserve, an online marketplace for sports tickets, from 2010 to early this year. The funds came from “77 client investments,” but the vast majority – about $30 million – came from Sanchez, Peavy and Oswalt, according to court filings.
Oswalt and Sanchez had agreed to make six-figure investments in Ticket Reserve, but Narayan instead invested more than $7 million on behalf of each player, according to the lawsuit. Narayan invested $15 million on Peavy’s behalf, though the SEC said the pitcher did not authorize an investment in Ticket Reserve.
According to the suit, Peavy did not find out about Ticket Reserve until early this year when Oswalt called him with the news that Narayan had been fired from RGT for making inappropriate investments. The firm, which manages about $4.4 billion in client assets, terminated Narayan in February.
“RGT concluded that there was evidence showing that Mr. Narayan had breached his fiduciary duties to RGT and violated RGT’s policies, practices and procedures,” the company said in a March regulatory filing.
Narayan allegedly transferred funds to Ticket Reserve without clients’ knowledge or consent, using forged or unauthorized signatures.
According to the complaint, Narayan received nearly $2 million in finder’s fees for steering investors to the firm but did not disclose those payments to clients. He also did not tell clients he was an investor and board member of Ticket Reserve, the lawsuit said.
The company lost more than $14 million from 2012 to 2015; it was kept afloat only by Narayan’s injections of investor money, the SEC alleged. Also named as defendants in the case are Ticket Reserve executives Richard Harmon and John Kaptrosky.
The SEC said Tuesday that it had obtained an order freezing the assets of Narayan, Harmon and Kaptrosky, and had appointed a receiver to oversee Ticket Reserve. The agency’s lawsuit is seeking to recover any ill-gotten gains.
On Wednesday, the NFL Players Assn. suspended Narayan’s registration in the Financial Advisor Registration Program, established to provide NFL players access to qualified financial advisors and provide an “additional layer of protection” from poor financial advice and fraud, according to the association’s website.
In May, RGT sued Narayan, Harmon, Kaptrosky and Herbert L. Rudoy, who is also on Ticket Reserve’s board of directors, accusing them of breaching fiduciary duties to Ticket Reserve and gross mismanagement of the company’s financial affairs.
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4:41 p.m.: This article was updated with the decision to suspend Narayan from the NFL Players Assn.’s financial advisor program.
This article was originally published at 8:24 p.m. on June 21.