Feds Want Collection of Boras Clients to Pay Back Millions in Stanford Scam

Federal authorities have asked seven Major League Baseball players -- Greg Maddux, Bernie Williams, Johnny Damon, J.D. Drew, Andruw Jones, Carlos Pena and Jay Bell -- to return millions of dollars that they received from investor R. Allen Stanford as part of a payout in his alleged Ponzi scheme, according to a report in the Washington Times.

The players -- all clients of Scott Boras -- did not commit any wrongdoing, but, as early investors in the Stanford Financial Group, are believed to have received dividends from Stanford financed by investors that came after.

"The fact that the [ballplayers] are innocent investors and committed no wrongdoing does not entitle them to retain proceeds received from the fraudulent" scheme, lawyers for [Ralph S.] Janvey (the "receiver" in this case) wrote in a filing last week with the U.S. District Court in Dallas.

Janvey is looking to get about $9.5 million back from the ballplayers, though the money is not split evenly among them, according to the report. Damon would be on the hook for a little more than $400,000, while Maddux is being asked for almost $3.7 million.

"At the end of the day, these guys will get something back from the collective pot," white-collar defense lawyer Barry J. Pollack said. "While they might be putting in $1.25 now, they may be getting 75 cents down the road."

The receiver argues it is only fair that all of the money recovered goes into one pool and is distributed among all the investors, both those who made money and those who lost money.

Given the state of the economy, and the enormous salaries in baseball -- particularly among this group of seven -- it's probably going to be hard for most people to muster much sympathy for the players involved. But, on a basic level, it hardly seems fair.

The seven ballplayers didn't do anything wrong, other than invest with Stanford at an early stage, and now they might have to pay the price. Of course, that sadly seems to be the nature of these investor fraud cases. No one escapes without getting hurt financially.

David B. Smith, a Virginia lawyer who is co-chairman of the Forfeiture Abuse Task Force of the National Association of Criminal Defense Lawyers, said Mr. Janvey's filing is "unusually aggressive."

The players are not accused of wrongdoing, yet are being asked to turn over huge amounts, including the legitimately made money they invested at the start, not simply their profits, Mr. Smith noted.

"You get into these philosophical questions of what is really fair?" said Mr. Smith, who has represented the victims in several Ponzi scheme cases. "None of the cases that I have been involved in follow this scenario."