At the beginning of their respective careers, Roy Oswalt, Jake Peavy, and Mark Sanchez all did the right thing. Knowing the bulk of their lifetime earnings would come in the next few years, they sought a financial advisor to help them save and invest their money in low-risk, conservative investments.
In Ash Narayan, they thought they found someone who was the perfect financial advisor: a fellow Christian who shared their values and understood their long-term strategy, and had been vetted and approved by the NFL Players Association. Sanchez even attended the same church as him. Oswalt, who was introduced to Narayan through his agent, put as much as 80 percent of his salary into a brokerage account managed by Narayan. Peavy and Sanchez also put significant portions of their salaries in Narayan's hands. Through the NFL, Sanchez had his game checks direct deposited into investment accounts managed by Narayan. It was exactly what they were supposed to be doing with their money. Don't spend it, save it.
Turns out, Narayan was little more than a con man, according to an SEC lawsuit filed last month (the lawsuit refers to the three athletes as Clients One, Two, and Three, but an AP report names them). Despite being a registered financial advisor in the NFLPA database, he did not hold a CPA, although he claimed to have one in his email signature. For six years, instead of safely investing the athletes' money—as well as 74 other clients—he defrauded them out of millions, secretly transferring their money to an unprofitable ticket-buying business in which he held considerable interests. Overall, the three athletes lost $30,435,000. Peavy alone lost more than $15 million.
Narayan sat on the board and held significant shares in Ticket Reserve Inc. (TTR), a company that tried to "monetize anticipation," as CEO Richard Harmon described it, "in a world in which 'people spend a lot more time anticipating stuff than actually doing stuff.'" It's not clear precisely what their business model was, but TTR tried to monetize pre-purchasing rights to big ticket events such as college bowl games where the teams had not yet been established. Fans would, in theory, pay for the right to buy tickets once the teams were known.
The business was never viable, running operating losses of more than $3 million for four straight years. "To be sure," Harmon wrote to Narayan in a May 2014 email, "our revenue sucks. Our balance sheet is a disaster." Ticket Reserve would have been sunk if not for the fact that Narayan stole money from Oswalt, Peavy, and Sanchez and redirected it to TTR without their consent or knowledge. This was how Narayan "raised" 90 percent of of TTR's investment capital. For his efforts, TTR paid Narayan finder's fees of more than $1.8 million.
Oswalt did agree to invest $300,000 in TTR, but instead of deducting the agreed upon sum, Narayan removed over $7 million from his account. Sanchez agreed to invest $100,000, but instead of doing that, Narayan perplexingly removed $7 million from Peavy's account, who never even heard of TTR, much less agreed to invest in it. To authorize all these transfers, Narayan forged signatures.
Narayan's partners at TTR helped cover up the fraud, according to the lawsuit, by engaging in "Ponzi-like payments"—using new fraudulently-obtained proceeds to cover the tracks of old ones.
In February 2016, Oswalt discovered all the deductions from his account and fired Narayan. He then called Peavy, his ex-teammate, and told him about the fraud. Narayan was fired from his firm, RGT Capital Management, and an SEC investigation was launched. It's unclear how or when Sanchez found out about the fraud.
At the time of this writing, according to the NFLPA online database, Narayan is still an NFLPA-approved financial advisor. The NFLPA's financial advisor registration program has previously been criticized for not doing enough to protect players from fraud. The NFLPA charges $2,000 per financial advisor application. The NFLPA did not immediately return a request for comment.
According to the NFLPA website, financial advisors are carefully vetted by the union:
"All financial advisors must have appropriate professional qualifications to be eligible to participate and pass a background investigation. The eligibility requirements for advisors include, but are not limited, to the following:
1. Bachelor's degree from an accredited university.
2. Minimum of eight (8) years of licensed experience (qualifying licenses include FINRA series licenses, Attorney, CPA or an insurance license).
3. Minimum of $4 million of insurance coverage, through professional liability, errors & omissions or a fidelity bond.
4. No civil, criminal or regulatory history related to fraud.
5. No pending customer complaints or litigation at the time of application.
6. Must not maintain custody of player funds unless deemed a qualified custodian"
Update: on June 22, the NFLPA Security issued a fraud alert for Ash Narayan, suspending his registration with the NFLPA financial advisor program "immediately and indefinitely."