Washington Wizards versus New Jersey Nets October 31, 2009 at Verizon Center in Washington, D.C. Terrence Williams guards DeShawn Stevenson. Photo credit: Creative Commons

NBA vets arrests for insurance fraud show issues in money management

5 mins read

Legal woes serve as a reminder about the lack of financial literacy among Black and Brown professional athletes.

The sports industry reeled when 19 people were charged with conspiracy to commit health care fraud and wire fraud by the Department of Justice. Out of those, 18 are former NBA ball players ranging from former Boston Celtics NBA Champion Glen “Big Baby” Davis to six time defense All-Star Tony Allen. Included in the arrests is Desiree Allen, the wife of former Memphis Grizzlies player, Anthony Allen who himself was also charged.  

According to the NBA, they, along with the National Basketball Players Association, provide benefit plans to athletes through the NBA Players’ Health and Welfare Benefit Plan. The insurance supports athletes’ health and well-being throughout their playing careers and over the course of their lives. Because of the lifelong healthcare package, “[that] makes these allegations particularly disheartening,” said the NBA in a statement

In brief, ex-players joined forces to defraud the NBA supplemental coverage plan by billing the plan for services never received. The nature of the medical claims ranged from chiropractic treatments to root canals to teeth crowns. According to the allegations, fraudulent reimbursement claims totaling $3.9 million between 2017 and 2020 were filed. Out of that, about $2.5 million were garnered by the players. 

In their investigation, the Department of Justice claims that Terrence Williams, who played for the New Jersey Nets, “orchestrated the scheme to defraud.” Williams charged defendants with fake invoices from a chiropractic office in California and “a dentist affiliated with dental offices in Beverly Hills, California, and from a doctor at a Wellness Office in Washington State.” 

Currently, 16 of the 18 players are in federal custody. Former point guard and Boston Celtic team member, Sebastian Telfair pleaded not guilty and was ordered released on a $250,000 bond.

. . . . .

Surprisingly, incidents like this are not isolated in the league or in professional sports. In 2019, ten former NFL players were charged with defrauding the Gene Upshaw NFL Player Health Reimbursement Account Plan for $3.9 million; ironically, the same amount as the recent NBA players.

The Department of Justice said that NFL veterans submitted “false and fraudulent claims to the Plan for expensive medical equipment – typically between $40,000 and $50,000 for each claim – that was never purchased or received.” Expensive equipment included “hyperbaric oxygen chambers, cryotherapy machines, [and] ultrasound machines.”

In this case, the ringleader was said to be Robert McCune, who played for most of his career with the Washington Redskins as a linebacker. McCune pleaded guilty “to conspiracy to commit wire fraud and health care fraud, 13 counts of health care fraud, 11 counts of wire fraud, and three counts of aggravated identity theft.” He will be sentenced on November 19 of this year.

Even top pro-athletes show signs of funny money schemes. Last week, the Mississippi State Auditor’s Office demanded that Hall of Famer, Brett Favre, pay back money sent to him through improper payouts. Favre, who played from 1992 to 2010, as a quarterback mostly for the Greenbay Packers, was awarded $1.1 million of Temporary Assistance for Needy Families funds under former human services agency head John Davis.

The money was given to Favre for his work with the Mississippi Community Education Center which included speaking engagements. The botched issuance was caught in a state audit that revealed the improprieties in a May 2020 report. Although Favre agreed to return the illegal money spent, he has coughed up $500,000 to date. With interest, the tab he still carries is still a handsome fee. Now, he must pay $828,000 in 30 days or face a lawsuit.

. . . . .

While most professional NBA and NFL athletes sign contracts that are more than the average worker in the US, an estimated 60 percent of former NBA players run out of money within the first five years of retirement.

Today, most NBA pro-athletes have million dollar contracts. But, there is a huge gap between the least paid and those earning the highest salaries. Right now, Stephen Curry, Golden State Warriors’ point guard makes $45,780,966 million per year in comparison to the ten least paid players. Out of the roster of 469 players, the lowest contracts are $925,258. 

Despite this, the stats of players going broke is damning. A 2015 study on bankruptcies for NFL players showed that although NFL players will earn more than an average college student in their entire lifetime, their short-lived careers followed by issues of injury and poor financial decisions places them at high-risk for financial failure.

“Listen, it takes a long time to go broke buying Ferraris,” said Darius Miles, who is among the players who submitted fraudulent medical claims. The former Los Angeles Clippers player filed for bankruptcy in 2016. “What makes you go broke are shady business deals. They’ll make the money disappear real quick,” he continued

Most of the pro-ball players in the NFL and NBA are African American, and from low wealth communities, which makes their dealings with financial decisions risky too due to the history of their access to wealth. Moreover, a Charles Schwab study concluded that African-American and Latino parents felt more equipped to discuss sex education than saving and investing with their children. 

For the retired NBA ballers going from rags to riches exposed this unfamiliarity. The killer is hiring the wrong advisers and putting too much trust into them according to Los Angeles Lakers mogul and Dream Team member Magic Johnson

Clinton Portis, one of the NFL players facing 10 years in jail for his involvement in the NFL health care fraud of 2019, filed for bankruptcy shortly after retirement. During his tenure in the pro-ball league he said that he was scammed by financial advisors Jeff Rubin and Jinesh Brahmbhatt of Jade Private Wealth Management.

“You’ll say to a player, ‘How are you doing?’ A lot of the time they’ll respond, ‘I have no idea.’” All the bills are paid by someone else, and none of the statements go to [the athlete],” said Director of Apex Wealth Management in Doylestown, Pennsylvania Bob Young.

Life happens

Undoubtedly, divorce and child support are contributing factors in the financial chaos among athletes. Financial services firm Rothstein Kass reported that 80 percent of athletes are concerned about unjust lawsuits and divorce proceedings.

Los Angeles Clippers small forward and shooting guard, Ruben Patterson who has also been connected with false medical reimbursement claims can certainly attest to this. In 2019 he fell under financial fire for falling behind in child support payments. 

“[Ruben Patterson] is facing up to 18 months in #prison for missing two years of #childsupport payments for his 19 year old #daughter. When you do the math, he paid approximately $120,000 a year or $1,920.000 over the course of 16 years,” said author and advocate for child support reform Kenny Rockman. 

Additionally, Patterson recently shelled out $400,000 as part of a civil settlement due to engaging in sexual relations with with his children’s nanny in 2001.

While financial stressors is an issue after pro-athlete life, the Justice Department stands firm on “uncovering health care fraud scams that harm both the industry and the consumers of their services.” According to the agency, “The health care industry loses tens of billions of dollars a year to fraud.”

Players charged include: Terrence Williams, Alan Anderson, Anthony Allen, Desiree Allen, Shannon Brown, William Bynum, Ronald Glen Davis, Christopher Douglas-Roberts, a/k/a “Supreme Bey,” Melvin Ely, Jamario Moon, Darius Miles, Milton Palacio, Ruben Patterson, Eddie Robinson, Gregory Smith, Sebastian Telfair, Charles Watson Jr., Antoine Wright, and Anthony Wroten.

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