Neither Kevin Garnett nor Tim Duncan should not be strangers to any NBA basketball fan. They had long careers and made a great deal of money. They each made one key mistake and it was off the court. They had the misfortune to meet Charles A. Banks IV. Finger Pointing Still Adds Up to Fraud.
Banks was financial adviser to both men. He looks like one of those preppy types who ran Wall Street, striped tie and all. He turned out to be no different than a common fraudster for whom the word “ethics” meant nothing. On April 3, 2017, where he plead guilty to defrauding Tim Duncan more than $7 million in an investment scheme.
On that date, Banks reached a partial settlement with the U.S. Securities and Exchange Commission, the SEC. The feds sued Banks on behalf of Duncan over allegations of securities fraud.
First Go-Around
At his sentencing, Banks was essentially being barred from acting as a securities adviser. He cannot be a director or operate any SEC-registered entity. In 2012, Banks convinced Duncan to invest in a company called Gameday Entertainment LLC, a startup for which Banks served as chairman. At that time Banks had left a legitimate firm and apparently started his own firm. Banks then offered Duncan opportunities to invest in several ventures including wineries, cosmetics, hotels, and sports merchandise. Banks promised Duncan a solid, 12 percent return. Duncan gave Banks $7.5 million for Gameday believing there were several investors. In fact, Duncan was the only one.
Of the $7.5 that Duncan invested, Banks received a $225,000 “fee.” Banks also diverted up to 20 percent of Duncan’s monthly returns to his own account. It yielded him $15,000 each month for about two years. There were other deals just as shady, such as lines of credit should Gameday have gotten into financial trouble.
Gameday went out of business in January 2018. Duncan lost his $7.5 million and he’s liable for another $6 million in loan guarantees. By the way, at the sentencing, they said that the tall, good-looking preppy broke down and cried like a baby as he was sentenced last year to four years in federal prison. That was just the start of Banks’ problems.
Enter Kevin Garnett
Kevin Garnett was another client of Charles Banks. Garnett has just filed a lawsuit that has far-reaching legal and ethical implications. Charles Banks apparently worked closely with an accounting firm named Michael Wertheim and Welenken CPAs.
Banks and Garnett shared several business interests in which Banks helped manage however it was Garnett who lost $77 million. That’s a lot of money. In the lawsuit filed by Garnett’s lawyers, they contend the accounting firm, “possessed actual knowledge that Banks was helping himself to millions of dollars of Garnett’s money and did nothing about it.”
Obviously, the accounting firm is angry at these allegations and will fight the lawsuit. There are no surprises there. Garnett had filed the suit because the accountants did nothing when $77 million was being drained from the account.
You have to feel bad for Kevin Garnett because he and his legal team feel that Michael Wertheim, a principal of the CPAs firm “possessed actual knowledge” that Charles Banks, was committing fraud. Even worse, while the money was draining away, it is the contention of Garnett’s team that the CPA firm purposely did not apprise Garnett of the loses. They feel that:
“Banks intentionally … looted Garnett of his earnings and assets for many years, including the many years that Welenken and Wertheim provided accounting services to Garnett and his business interests.”
But who is Charles Banks IV?
When Banks was sentenced and reduced to tears, it is said that more than 100 people in the courtroom were commiserating with him, as though he was the victim. However, not everyone was so moved. According to Financial Planning magazine (June 29, 2017):
“Wendy Kowalk, Duncan’s financial consultant who first uncovered evidence of Banks’ fraud in 2013 while helping him prepare for a divorce, seemed unmoved by Banks’ courtroom expressions of remorse. As she has for years, she says still fighting to obtain records pertaining to the status of Duncan’s many investments with Banks, to little avail.”
Men of the wealth of Duncan and Garnett are often surrounded by a cadre of advisors. Some are good, some are bad, and some are unethical and greedy.
Ethics does not care about tearful courtroom confessions after the fact. It has yet to be proven that Banks and the CPA firm were complicit in this theft of funds. In fact, the bigger issue isn’t about Garnett or Duncan at all, but of how advisors are ethically screened and made to live up to expectations. Finger Pointing Still Adds Up to Fraud.
