By Jessica Dye
NEW YORK, April 25 (Reuters) – The founder and managing
director of Prim Capital Corporation has been charged with
attempting to defraud the National Basketball Association
players’ union out of $3 million with a bogus contract, federal
prosecutors in Manhattan said.
A complaint unsealed on Thursday charges Ohio-based Prim
Capital founder Joseph Lombardo, 72, with attempted wire fraud,
attempted mail fraud and obstruction of justice.
Carolyn Kaufman, 72, who served as president of Prim’s
advisory services component, was charged with obstructing
justice.
From 2001 until 2013, Prim Capital served as the primary
outside investment advisory firm handling the investments and
finances for the New York-based National Basketball Players
Association, the union representing NBA players.
Prim, described on its website as a boutique investment
banking firm, managed up to $250 million of the NBPA’s assets,
reviewed individual players’ investments and conducted financial
seminars for players, federal prosecutors said.
Prim was asked to turn over copies of its agreements with
the NBPA in 2012 as part of a probe by the U.S. Department of
Labor into potential criminal activity at the union, according
to the complaint.
In response it produced an agreement showing the firm’s fees
were $350,000 per year.
Several months later, the firm produced another contract
listing the firm’s annual fee at $602,000 for a five-year term,
prosecutors said.
But an investigation showed that a signature from former
NBPA general counsel, Gary Hall, on the contract had been forged
months after his death, prosecutors said. Another signature on
the contract was allegedly forged as well, according to the
prosecutor’s office.
Lombardo and Kaufman are charged with trying to thwart a
grand jury investigation and giving false testimony.
“As alleged, Joseph Lombardo faked the signature of a dead
man as part of manufacturing a multi-million dollar contract out
of whole cloth that, had it been enforced, would have caused
significant losses for basketball players who entrusted him with
their savings,” U.S. attorney Preet Bharara said in a statement.
“And together with his partner in crime, Carolyn Kaufman, he
allegedly lied about it to a federal grand jury.”
Lombardo and Kaufman were arrested at their residences in
Ohio on Thursday, and will make their initial appearances in
Manhattan federal court on May 2, according to the Manhattan
prosecutor’s office.
Lombardo faces up to 20 years on each fraud charge. He and
Kaufman face up to 20 years on the obstruction of justice
charge.
A lawyer who represented Lombardo and Kaufman during a court
hearing in Ohio was not immediately available for comment
Thursday evening. Prim Capital and the NBPA did not immediately
return requests for comment.
(Reporting by Jessica Dye; editing by Xavier Briand)
