Dallas Firm at Center of Scheme that Allegedly Fleeced Pro Athletes

Former Astros and Rangers pitcher Roy Oswalt reportedly invested millions in what the SEC describes as a "Ponzi-like" scheme run by a representative of a Dallas-based wealth management firm.EXPAND
Former Astros and Rangers pitcher Roy Oswalt reportedly invested millions in what the SEC describes as a "Ponzi-like" scheme run by a representative of a Dallas-based wealth management firm.

In court documents, the Securities and Exchange Commission refers to him only as "Client One," and all we know about him is that he is a prominent former Major League Baseball player who lost millions in a "Ponzi-like" scheme involving Ash Narayan, an investment adviser working for a Dallas-based wealth management firm. Also, he played for the Houston Astros from 2001-2010. And was employed by the Texas Rangers in 2012 and retired in 2013.

In other words, he's pitcher Roy Oswalt.

The SEC was slightly more circumspect with two other victims of the alleged fraud scheme. Client Two is another pro baseball player who made his first investment in 2004-05, when he was still under his rookie deal. Client Three is a football player who went pro in 2009. They have been identified, by Bloomberg and others, as San Francisco Giants pitcher Jake Peavy and Denver Broncos quarterback Mark Sanchez, respectively. All told, the three men invested $30.4 million with Narayan, who took an additional $1.6 million in fees off the top.

On Tuesday, the SEC announced that U.S. District Judge Barbara Lynn of Dallas had frozen Narayan's assets as part of a civil suit against him. 

The SEC filed its complaint in May, three months after Narayan was fired by Preston Center-based RGT Capital Management, Ltd., where he'd been employed for 19 years, most of them as the managing partner of the firm's Irvine, California outpost.

According to the complaint, Narayan bonded with the athletes over their "shared Christian faith and interest in charitable work." Soon after Sanchez met Narayan in 2009, according to the SEC, they learned that they had attended the same California church. Reassured by this and the sizable roster of pro athletes Narayan represented, he talked them into having him handle their investments. All three advised him that they wanted to pursue safe, conservative investment strategies.

Instead, the SEC alleges that Narayan secretly plowed their cash into The Ticket Reserve Inc., a company he was heavily invested in and whose board of directors he sat on. The firm was essentially a reservation service for big-ticket sporting events like the Super Bowl, allowing fans to guarantee themselves a seat if their team advanced to the game. If that didn't happen, they'd only be out the reservation fee.

But the company struggled. In 2009, a flood of scam ticket brokers flooded the company's FirstDIBZ website, collecting money for unusually cheap Super Bowl tickets that never materialized. Last year, a successor venture, TeamTix, never delivered promised Super Bowl tickets to Seattle Seahawks fans.

Sometimes, Narayan told his clients he was investing their money in The Ticket Reserve. Usually, he didn't, sometimes forging his clients' signatures, court documents allege. And according to the SEC, he never mentioned that he owned three million shares of company stock, collected nearly $2 million in finders fees for investing their money with the company, or that the company was losing millions every year.

In fact, according to the SEC, it was only through Narayan's continued investment of funds that the company was able to remain afloat. Hence the SEC's description of the scheme as "Ponzi-like."

The SEC is asking the court to force Narayan and others at The Ticket Reserve to pay back Narayan's investors.

“We allege that Narayan exploited athletes and other clients who trusted him to manage their finances. He fraudulently funneled their savings into a money-losing business and his own pocket,” Shamoil Shipchandler, director of the SEC's Fort Worth regional office, said in a statement. “The asset freeze stops the uncontrolled spending of investor assets within The Ticket Reserve until the case is resolved, preserving money that rightfully belongs to Narayan’s clients.”

RGT Capital Management, the Dallas firm, is not named in the SEC complaint.

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