Oftentimes, football stars are looked upon and treated as celebrities. We see them in television ads, read about them in the news, and of course watch them on the field during game time. What we often don’t see is when the endorsements these athletes take part in turn sour. For one former NFL player in particular, this is all too true.
Prior to retiring in 2012, former NFL offensive lineman Leonard Davis spent several years playing for four different teams and rising to football fame. Since he played his final game, however, Davis and his wife have been focusing on something else, specifically Tye Williams, their former financial advisor, their former broker-dealer Next Financial, and former lawyers and accountants. The Davises alleged all of these former trusted advisors played some part in draining the $70 million Davis earned playing professional football, according to the couples’ pending lawsuit in a Texas state court.
Tye Williams, along with lawyers and accountants, allegedly participated in a scheme that led Davis and his wife to invest $15 million of their assets into Smashburger franchise contracts. Almost instantly this resulted in massive losses for the couple, however they continued to pay the management and service fees to Williams, lawyers, accountants and their firms while also offering them other lucrative advantages.
According to the lawsuit, Williams and his assistant received compensation and benefits from the Smashburger investments into which they steered the Davises’ assets. Williams’ windfall would specifically amount to 20 percent of the profits from one of the restaurants, 15 percent from four others, a $1,000 car allowance for Williams, healthcare coverage, bonuses, consulting fees with no supporting contracts, and personal expense reimbursements, including money for Williams and his wife’s 2010 Valentine Day escape package at the Ritz-Carlton hotel in Dallas.
So far the litigation has led to a settlement for an undisclosed amount between the couple and Next Financial, the couple’s former broker-dealer, and Williams’ last workplace as a financial advisor. The Davises’ allegations could ultimately lead to FINRA and the CFP Board permanently barring Williams from their rosters.
While his this lawsuit tells a story too often told about professional athletes being taken advantage of by trusted advisors it also presents a major warning to professionals who assemble as a team for clients. Crucial steps must be taken in writing at the outset in order to delineate everyone’s responsibilities and ensure the client’s best interests are being taken into account.
What is a Breach of Fiduciary Duty?
A breach of fiduciary duty occurs when fiduciaries obtain profit through self-dealing or cause losses through a breach of their duty. Breach of fiduciary duty can be based on self-dealing, full disclosure and candor, the duty to make an accounting to beneficiaries, and duty of loyalty, among others.
Houston Breach of Fiduciary Duty Attorneys
If you are a partner or executive in a business, and you believe that one of your associates is failing to live up to his or her fiduciary duty, contact one of our corporate attorneys at the Houston law firm of Adair Myers Graves Stevenson. We can review your case and determine whether or not it constitutes a breach of fiduciary duty.
Or if you are a fiduciary, and you have been accused of breaching your fiduciary duty, our attorneys can explain your legal options and protect your interests.
If you are in a fiduciary role and you are concerned about your potential liability, especially where you are working alongside other professionals for a single client, we can consult with you about crafting agreements that can protect you before litigation happens.
To discuss your breach of fiduciary duty case or how to protect yourself from fiduciary litigation, call one of our experienced fiduciary duty attorneys at 713-522-2270.