NHL Hockey, Teddy Bears and Securities Fraud

We are fascinated with really rich people in America. We want to see where they live, what they drive, where they travel and what they eat. We roll out red carpets for them, we listen to their advice, we want to dress like them and we often admire their spouses.

nhlFor those of us who love sports, the richest of the rich, the guys we really admire are often professional team owners. Pick a sport, any sport, and if you love that sport you really want to be like one of the owners. Ethics? Forget ethics, you might say. I want to own a team! Not so fast, my friends and followers. I want to introduce you to Paul Greenwood.

In an article carried by the Associated Press (December 3, 2014) entitled: “Paul Greenwood headed to jail,” we are re-introduced to a former owner of the New York Islanders hockey team. He won’t be seen in the owner’s box again, as he is in the process of heading off to jail for 10 years starting February 9, 2015.

According to the article:

“Greenwood pleaded guilty in 2010 to securities fraud, admitting that he cheated charities, schools, pension funds and others out of hundreds of millions of dollars. He used a portion of the money to buy collectible teddy bears and to invest in $100,000 horses…The government said…Greenwood carried out the fraud from 1996 through February 2009, cheating institutional investors. During those years, the men operated a securities business while Greenwood lived in North Salem, Connecticut. The businesses included WG Trading Co. LP, based in Greenwich, Connecticut, and Westridge Capital Management Inc. in Santa Barbara, California.”

Greenwood was a fraud and committed fraud. While cheating everyone in his path, he lived the “high-life.” He collected antiques of any kind you can imagine, including rare Steiff toys, teddy bears (!), race horses, farms and houses. Oh yes, he managed to buy part of the New York Islanders. He held the team for a while and then the man with the “golden” touch sold his share at a huge profit.

In all, Greenwood took more than $80 million in investor money for his own benefit. He did so without hesitation. He did so without any ethical compass. Organizations, schools and charities placed money and their trust with him and he stole it.

In court yesterday, the wheeler dealer was quoted as saying:

“I’ve lied. I’ve cheated and I’ve stolen. Words cannot express my remorse for what I’ve done.”

Missed opportunities to do well

For several years, Paul Greenwood had been a college professor before devoting his full-time efforts to investing. He knew the ethical way, and undoubtedly preached it to his students. He failed to convince himself.

As the funds started to pour in to his various investment funds, he saw an unethical opportunity to use the funds for his own gains. I will grant that he probably didn’t start out as an unethical person but the low hanging fruit was there for the taking. You know, “suckers” like you and me.

In 1992, without the permission of his investors, he moved about $2.6 million into a part ownership (about $4.5 million in 2014 dollars) of the Islanders. This was mixed with money from his crooked business partner and other associates until they owned controlling interest in a hockey team. It must have been pretty cool sitting in the owner’s box. There are all kinds of people he could have impressed. He can recall these stories from his jail cell.

It is said that Paul Greenwood did a lot of volunteer work in the community and with veterans. I would like to think that a small part of what he did was motivated by a sense of guilt. I am sorry he went down the path that he has traveled. Now he must pay the price.

Paul Greenwood is a prime example of why we should not be impressed with a person’s wealth alone. Greenwood is also a prime example of bad choices leading to terrible consequences. I am reminded of Donald Sterling at this time, a racist and anti-Semite who behind the mask of his millions, managed to impress many people for many years before the house of cards fell down. Behind Sterling’s mask was an ethically corrupt man.

Judge the men and women you admire in sports by who they are as ethical human beings before the amount of money they have in the bank. Fame and money can be fleeting; a person’s reputation is far more enduring.

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