In January of 2010, SunTrust Banks, the big financial institution in Atlanta, proudly announced that it would open a San Diego branch for its Sports and Entertainment Specialty Group, which manages finances for athletes and entertainers. The office would be headed by San Diegans Bill C. (Billy) Crafton, Jr., and Todd LaRocca, who already handled finances for a long list of professional athletes, including several well known to Padres and Chargers fans.
The bank had bought Crafton’s business for $2.7 million and LaRocca’s for about $3 million.
Only six months after the office opened, the Securities and Exchange Commission charged that a string of interrelated Anaheim Hills real estate operations — all with the name Westmoore — amounted to a Ponzi-like scheme and “corporate shell game” that had bilked investors of more than $50 million. The Westmoore entities, headed by one Matthew (Matt) Jennings, were taken over by a receiver.
Unfortunately, Crafton had put the athletes’ money — in some cases, a high percentage of it — in Westmoore-related investments.
In late 2010, SunTrust told the athlete-clients about the Securities and Exchange Commission action and noted that Westmoore-related investments were essentially worthless. Then, according to a lawsuit, Crafton and his associates began a telephone and email campaign, telling the athlete-clients that nothing was wrong, their money was safe, and SunTrust was bad-mouthing Crafton.
Before 2010 was out, SunTrust had jettisoned Crafton, according to a lawsuit. In April of 2012, the National Football League Players Association sent its first-ever warning to certified athlete agents, stating that the “[National Football League] Players Association Security Department in cooperation with law enforcement is investigating multiple alleged investment fraud claims involving NFL players.” The memo said that the persons “central to all complaints have been identified as Bill C. Crafton, Jr., [also known as] Billy Crafton, and Matthew Jennings.” The memo noted that Crafton put football clients in the Westmoore companies, which had been shut down for operating as a Ponzi-like scheme by the Securities and Exchange Commission.
Shortly, lawsuits began piling up, alleging that Crafton had stuffed these now-worthless Westmoore investments into athletes’ portfolios.
The heart of the cases — many of which are currently arbitrations — is that Crafton and his associates exploited their close associations with Jennings and Westmoore entities. Crafton allegedly put the athletes, who wanted conservative portfolios, into high-risk, illiquid, and unsuitable Westmoore investments that were often essentially Ponzi schemes. One Crafton employee was also a broker for Westmoore, charged suits. Crafton allegedly had a financial interest in or undisclosed relationship with these ratty investments. The athletes were kept in the dark about developments, including the fact that their money was disappearing, according to the suits and arbitrations.
Actions against Crafton, SunTrust, and others were filed in Philadelphia, Cleveland, Austin, Fresno, and San Diego. Plaintiffs were well-known current and former athletes such as professional baseball pitchers Cole Hamels and Heath Bell (former Padre); footballers A.J. Feeley, Kevin Curtis, Freddy Keiaho, Patrick Surtain, Brad Kassell, Matt McCoy (a San Diego State grad), Aaron Shea (former Charger), and Brent Celek; basketballer Jason Terry; and retired Olympic, college, and professional soccer player Heather Mitts, Feeley’s wife.
In September of this year, Crafton and a money management firm he once headed, Martin Kelly Capital Management, filed for Chapter 7 (liquidation) bankruptcy in San Diego bankruptcy court. The filing shows that Crafton owes back state and federal taxes. He lists a “possible contingent claim” based on pending Securities and Exchange Commission litigation.
Crafton lists assets of $231,000 and possible liabilities of $22.4 million — almost ten times assets. Among those possible liabilities are the pending lawsuits and arbitrations with the athletes. For example, Aaron Shea and his wife could be owed $1.6 million, pitcher Cole Hamels $779,000, and Brooklyn Nets basketball player Jason Terry $2.5 million.
Lawyers representing athletes believe that Crafton filed for liquidation so the legal actions could be stayed, but one attorney is trying to go ahead with his client’s claim and another is closely watching what happens.
Crafton’s lawyer, James Grady of the San Diego office of Gordon & Rees, says it is his firm’s policy not to comment on litigation matters. Jeffrey Cawdrey of Gordon & Rees is handling the Crafton bankruptcies.
A spokesman for SunTrust says that athlete monetary losses, if there were any, occurred years before the bank had the accounts. “While it’s unfortunate that some of these investors lost money before becoming our clients, SunTrust plans to vigorously defend itself because SunTrust had absolutely nothing to do with the alleged misconduct.”
September brought more charges: former Major League pitcher Jaret Wright, who played for the Padres (among a number of teams), filed suit against Todd LaRocca, managing director of SunTrust’s San Diego office, as well as against SunTrust, San Francisco law firm Taylor & Faust, and others. The suit charges that Wright lost $7.5 million as LaRocca put the pitcher’s money in risky and illiquid investments.
According to the suit, LaRocca, who lives in Rancho Santa Fe, placed Wright in “Ponzi schemes or other fraudulent investments run, managed, controlled, operated and/or created by individuals with whom LaRocca had a personal relationship, a vested interest and kickback agreements.” The suit mentions Matt Jennings as a friend of LaRocca.
LaRocca did not respond to my email. But Leland Faust, president of the law firm Taylor & Faust, another defendant, which gave tax advice to LaRocca’s clients, strongly denounced the action. The Wright lawsuit consists of “lie upon lie upon lie; there is no substance to it,” says Faust. “LaRocca met Jennings but never invested with him. LaRocca never put a nickel into Westmoore, to my knowledge.”
I asked him to have LaRocca call or email me and confirm that statement. I still didn’t hear from LaRocca, although SunTrust says its clients handled by LaRocca never put money in Westmoore. In any case, Faust said that Wright actually made money during the period in which the Taylor & Faust law firm was giving tax advice to LaRocca’s clients. “The suit is meritless,” says Faust.
The spokesman for SunTrust says Wright’s portfolio “was prudently managed by SunTrust and was profitable. We intend to vigorously defend this claim.”