In Mid-November, the U.S. Attorney’s Office for the State of Massachusetts, arrested Adrian Kawuba for defrauding investors who believed they were financing sports in Africa and other nations.
Kawuba guaranteed investors a return on their money in exchange for financing higher-risk, short term ventures. According to the prosecuting attorneys: “Kawuba allegedly used the money to pay for luxury goods and to pay purported returns to his investors – in some instances paying back an investor’s earlier investment with money that investors had just sent Kawuba for a new investment.”
In other words, Kawuba had created a sports Ponzi scheme, complete with returns on investments, along the lines of Bernie Madoff, and many other fraudsters before and after. Kawuba could face up to 20 years in jail and a fine of $250,000.
Sports Fraud
As a sports ethics keynote speaker, sports ethics consultant and book author, I am not surprised at a scam of this nature. Sports holds great appeal for those aspiring to work their way into the world of high finance, team ownership, status and obviously, wealth. Investment in the sports world is perilous even when absolutely legitimate. There are all kinds of scams that lure people into the web of catastrophe.
A fraudster such as Kawuba, operates in an atmosphere where oversight is slight to non-existent. The unethical players try to attract investment based on sales techniques and smoke and mirror tactics however, they rarely present legitimate business plans, cash flow analysis and transparent assessments of risk.
What motivates people such as Kawuba? Usually it is the need for money and power. This was demonstrated as the fraudster spent a great deal of the money on luxury goods. He had no intention of creating a legitimate investment; any “returns” he forked-over to early investors were window dressing to attract more dupes into the plan.
How does a person rationalize such behavior? The flippant answer might be that he didn’t care one way or the other. The other possibility is that he saw his investors as rich suckers who deserved to get fleeced. If ethical people, believe that fraudsters such as Kawuba care, they are making a serious mistake.
Sports Ethics does not limit its work to the athletic side of sports, but to its business aspects. Fraud is fraud; whether an accounting scam or sports, the same moving parts are still in play. Due diligence and not hype must be weighed against risk. Though sports betting is a major business in our industry, pure betting without knowledge and expert help, will almost always lead to disaster.
Chuck Gallagher, (828) 244-1400. Chuck@chuckgallagher.com
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