The University of Miami athletes who reportedly scored large sums of cash and big gifts from convicted Ponzi schemer and UM booster Nevin Shapiro may wind up facing bankruptcy clawback suits seeking repayment.
That is, if they don't voluntarily come forward to repay the bankruptcy trustee overseeing Shapiro's now-defunct investment company, Capitol Investments USA, which is facing more than $100 million in claims from bilked investors.
Under bankruptcy law, the trustee can seek to collect payments, cash and gifts such as jewelry and cars that Shapiro says he lavished on dozens of UM players in recent years. Yahoo! Sports published a detailed investigative expose Tuesday in which Shapiro, after 100 hours of jailhouse interviews over the course of months, alleged he spent tens of thousands of dollars on UM players, in violation of NCAA rules.
Miami attorney Gary Freedman, who represents the bankruptcy trustee, told the Sun Sentinel on Wednesday that the trustee has an obligation under the law to go after assets that actually belong to the creditors of Capitol Investments.
"Certainly, we have reviewed the various reports regarding certain athletes receiving, cash, gifts, and other benefits from Mr. Shapiro. We believe many of those fall under the bankruptcy code," Freedman said. "We have an obligation to investigate and seek their recovery in adversary cases in bankruptcy court, where we feel it is warranted."
Freedman declined to say whether particular UM players may be subject to clawback suits.
Shapiro, 42, alleged in the Yahoo! Sports expose that he paid former UM defensive tackle Vince Wilfork – a Boynton Beach native – a $50,000 payment in 2007 during his junior year, and later gave two $50,000 Cadillac Escalades to Wilfork and his fiancée. Wilfork, who now plays for the New England Patriots, declined to comment on the allegations, according to The Boston Globe.
Shapiro – who is serving a 20-year prison sentence – said he provided hotel rooms, prostitutes, his multimillion-dollar Miami Beach mansions and yacht for UM players to use as they wished. He also alleged he paid one UM basketball recruit $10,000 to commit to the program. He said he bought UM players watches, diamond-studded dog tags, an engagement ring, and spent thousands on suits for them.
"Nevin Shapiro made a name for himself as a big contributor to student athletics, showering his favorite players with gifts and cash, living the high life, and rubbing elbows with the pros," New Jersey U.S. Attorney Paul Fishman said last September, after Shapiro pleaded guilty to running his multistate investment fraud.
Yahoo! Sports reported that at least 72 UM athletes, including at least 12 current football players, accepted the impermissible benefits between 2002 and 2010. The NCAA confirmed Wednesday that it has been investigating the allegations for five months. If the NCAA determines the allegations to be true, it could lead to major sanctions and put the future of the football program in jeopardy.
"If the assertions are true, the alleged conduct at the University of Miami is an illustration of the need for serious and fundamental change in many critical aspects of college sports. This pertains especially to the involvement of boosters and agents with student-athletes," NCAA President Mark Emmert said in a statement.
Shapiro's $930 million Ponzi scheme involved loans from investors who thought they were funding large-scale grocery purchases. Shapiro claimed he was reselling the groceries in different parts of the country at a hefty profit. In reality, investors lost more than $80 million, much of that going to finance Shapiro's lavish lifestyle.
Freedman, the attorney representing the bankruptcy trustee, said the trustee has discretion in going after assets belonging to Shapiro's company.
"Have we discussed a cutoff point? No, we have not. We are digesting a lot of info. Obviously, a $500 gift we are not going to go after," he said.
Freedman urged UM players who received gifts from Shapiro to contact his law firm – Tabas, Freedman, Soloff, Miller & Brown in Miami – to avoid a potential clawback suit. So far, the bankruptcy trustee has collected between $18 million and $19 million for Shapiro's creditors, the vast majority of that through negotiated settlements outside of court, Freedman said.
But the trustee also has filed 14 clawback suits against various entities alleging they owe money to the bankruptcy estate. Many additional clawback suits could follow in the coming months, with the trustee facing a two-year deadline at the end of December to file such actions.
"We don't seek to bring any additional attention to these athletes, and would encourage them to contact our office in effort to resolve those claims short of the filing the adversary complaints and the related litigation that would flow from those," Freedman said.
That is, if they don't voluntarily come forward to repay the bankruptcy trustee overseeing Shapiro's now-defunct investment company, Capitol Investments USA, which is facing more than $100 million in claims from bilked investors.
Under bankruptcy law, the trustee can seek to collect payments, cash and gifts such as jewelry and cars that Shapiro says he lavished on dozens of UM players in recent years. Yahoo! Sports published a detailed investigative expose Tuesday in which Shapiro, after 100 hours of jailhouse interviews over the course of months, alleged he spent tens of thousands of dollars on UM players, in violation of NCAA rules.
Miami attorney Gary Freedman, who represents the bankruptcy trustee, told the Sun Sentinel on Wednesday that the trustee has an obligation under the law to go after assets that actually belong to the creditors of Capitol Investments.
"Certainly, we have reviewed the various reports regarding certain athletes receiving, cash, gifts, and other benefits from Mr. Shapiro. We believe many of those fall under the bankruptcy code," Freedman said. "We have an obligation to investigate and seek their recovery in adversary cases in bankruptcy court, where we feel it is warranted."
Freedman declined to say whether particular UM players may be subject to clawback suits.
Shapiro, 42, alleged in the Yahoo! Sports expose that he paid former UM defensive tackle Vince Wilfork – a Boynton Beach native – a $50,000 payment in 2007 during his junior year, and later gave two $50,000 Cadillac Escalades to Wilfork and his fiancée. Wilfork, who now plays for the New England Patriots, declined to comment on the allegations, according to The Boston Globe.
Shapiro – who is serving a 20-year prison sentence – said he provided hotel rooms, prostitutes, his multimillion-dollar Miami Beach mansions and yacht for UM players to use as they wished. He also alleged he paid one UM basketball recruit $10,000 to commit to the program. He said he bought UM players watches, diamond-studded dog tags, an engagement ring, and spent thousands on suits for them.
"Nevin Shapiro made a name for himself as a big contributor to student athletics, showering his favorite players with gifts and cash, living the high life, and rubbing elbows with the pros," New Jersey U.S. Attorney Paul Fishman said last September, after Shapiro pleaded guilty to running his multistate investment fraud.
Yahoo! Sports reported that at least 72 UM athletes, including at least 12 current football players, accepted the impermissible benefits between 2002 and 2010. The NCAA confirmed Wednesday that it has been investigating the allegations for five months. If the NCAA determines the allegations to be true, it could lead to major sanctions and put the future of the football program in jeopardy.
"If the assertions are true, the alleged conduct at the University of Miami is an illustration of the need for serious and fundamental change in many critical aspects of college sports. This pertains especially to the involvement of boosters and agents with student-athletes," NCAA President Mark Emmert said in a statement.
Shapiro's $930 million Ponzi scheme involved loans from investors who thought they were funding large-scale grocery purchases. Shapiro claimed he was reselling the groceries in different parts of the country at a hefty profit. In reality, investors lost more than $80 million, much of that going to finance Shapiro's lavish lifestyle.
Freedman, the attorney representing the bankruptcy trustee, said the trustee has discretion in going after assets belonging to Shapiro's company.
"Have we discussed a cutoff point? No, we have not. We are digesting a lot of info. Obviously, a $500 gift we are not going to go after," he said.
Freedman urged UM players who received gifts from Shapiro to contact his law firm – Tabas, Freedman, Soloff, Miller & Brown in Miami – to avoid a potential clawback suit. So far, the bankruptcy trustee has collected between $18 million and $19 million for Shapiro's creditors, the vast majority of that through negotiated settlements outside of court, Freedman said.
But the trustee also has filed 14 clawback suits against various entities alleging they owe money to the bankruptcy estate. Many additional clawback suits could follow in the coming months, with the trustee facing a two-year deadline at the end of December to file such actions.
"We don't seek to bring any additional attention to these athletes, and would encourage them to contact our office in effort to resolve those claims short of the filing the adversary complaints and the related litigation that would flow from those," Freedman said.
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