Sports bettor promised to make money 'faster than Warren Buffet' in $29M investment fraud, SEC says
A Nevada sports better who promised investors he could earn profits “faster than Warren Buffet” was actually defrauding them out of millions of dollars, the Securities and Exchange Commission alleged in a criminal complaint.
Officials said 74-year-old John F. Thomas and 72-year-old Thomas Becker enticed more than 600 investors from 40 states to invest $29.5 million in their unregistered security since 2014 by promising returns between 250 percent and 600 percent.
The two men, who had both previously pleaded guilty to felony charges in the early 1990s related to a pyramid scheme, offered pooled investment contracts for a share in profits generated by what they claimed was a proprietary sports betting system, according to the SEC’s complaint. They marketed their six businesses, which went by names like Einstein Sports Advisory and Vegas Basketball Club, as “an extraordinary investment opportunity” and a “low-risk way to TRIPLE your funds” in less than six months.
Thomas even told one investor in 2017 that they “grow money 10 times faster than Warren Buffet” and told another investor the next year that they “grow money a million times faster than Warren Buffet … actually we grow it a quadrillion times faster,” according to the complaint.
However, the men spent just $4.4 million — 15 percent of the investors’ money — on sports betting, SEC officials said. And at least $11.6 million they paid out to investors represented Ponzi payments made with other investors’ money without their knowledge.
Meanwhile, they spent about $8 million on personal and business expenses, including about $860,000 on retail purchases, wellness products and utilities, and more than $256,000 on food and travel, according to the complaint.
At least $5.8 million went to commissions for a network of more than 150 brokers and agents who helped them solicit investors. The SEC also charged three of those brokers in connection to the scheme.
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Thomas and Becker kept the fraud going by providing investors with false spreadsheets, prompting some of them to reinvest, officials said. On one day when they claimed to have made more than $5.3 million, they’d actually only earned about $105,000 through sports betting. On another day when their spreadsheets showed $60.5 million in profits, betting slips showed they’d only actually earned about $119,000 in betting wins.
The companies have continued signing new agreements with investors as recently as May and received deposits as recently as July, officials said.