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Sept. 12 — The former investment adviser to a retired San Antonio Spurs basketball player is facing criminal and civil allegations that he fraudulently induced him to invest millions in sportswear company Gameday Entertainment LLC ( United States v. Banks, IV, W.D. Tex., No. 5:16-cr-00618, indictment filed 9/8/16 ; SEC v. Banks, IV, N.D. Ga., No. 1:16-cv-03399, complaint filed9/9/16 ).
Charles A. Banks, chairman of Gameday, was criminally charged by the U.S. with two counts of wire fraud. If convicted, Banks faces a maximum penalty of 20 years in prison for each count.
Neither the indictment nor the related Securities and Exchange Commission's complaint identify the Spurs player by name. The indictment refers to him as “T.D.” A Bloomberg BNA review of the Spurs roster for the last 10 years shows only one player with those initials, Tim Duncan, who retired in July 2016. Neither the SEC nor the Justice Department would confirm his identity.
The civil suit was filed in the U.S. District Court for the Northern District of Georgia where Banks resides. The indictment was filed in the U.S. District Court for the Western District of Texas.
Gameday was formed in 2010, but needed additional capital to operate and expand. Banks allegedly told “T.D.” that the company intended to offer two investors the chance to participate in a $15 million mezzanine debt and equity offering of the company. The funds were allegedly intended to support Gameday's business operations and pay off its existing bank debt.
In 2012, T.D. loaned Gameday $7.5 million and was to receive monthly interest payments and a security interest in all of the company's assets, the indictment and SEC complaint said.
According to the SEC, Banks knew that his representations were false and that there were no other investors involved. Additionally, Banks never told Duncan that he would receive a $225,000 fee for securing an investor, the agency said.
Banks also allegedly deceived T.D. into signing a guarantee agreement that substantially increased his risk in the investment. The move allowed Banks to divert another $180,000 in a “guarantee fee,” the SEC said.
The commission is seeking permanent injunctive relief, disgorgement plus prejudgment interest, civil monetary penalties and an officer/director bar.
Banks is represented by John E. Murphy of San Antonio, Tex. in the criminal matter, who couldn't be immediately reached for comment. Defense counsel for the civil proceeding is unknown.
To contact the reporter on this story: Antoinette Gartrell in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Yin Wilczek at email@example.com
To view the complaint, visit: http://www.bloomberglaw.com/public/document/United_States_Securities_and_Exchange_Commission_v_Banks_Docket_N.
To view the criminal indictment, visit: http://www.bloomberglaw.com/public/document/USA_v_Banks_Docket_No_516cr00618_WD_Tex_Sept_08_2016_Court_Docket
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