Former NFL Player Sentenced to 40 Years for Running $10 Million Ponzi Scheme
Merrill Robertson Jr., a former player for the Philadelphia Eagles, has been sentenced to 40 years’ imprisonment for defrauding investors, including coaches he knew from his time playing football for the Fork Union Military Academy and the University of Virginia.
According to the Securities and Exchange Commission’s complaint, Robertson, co-conspirator Sherman Vaughn Jr., and the company they co-owned, Cavalier Union Investments LLC, diverted nearly $6 million of the more than $10 million they raised from 60 investors to pay for personal expenses and used other funds to repay earlier investors.
Robertson and Vaughn portrayed themselves as experienced investment experts and Cavalier as a sophisticated company with various divisions, investment funds, and investment advisers, when in fact, none of these statements were true.
They claimed that Cavalier used investor money to invest in a broad range of business ventures, including restaurants, real estate, alternative energy, and assisted living facilities.
Instead, they spent investor funds on cars, family vacations, spa visits, luxury goods, educational expenses for family members, and a luxury suite at a football stadium.
Cavalier became insolvent shortly after launching, and despite its inability to pay existing investors from ongoing operations, the pair continued to solicit and accept funds from new investors without disclosing that the company could not meet its obligations.
To avoid detection, Robertson and Vaughn even sent investors phony account statements that represented that an investor’s assets were held in a nonexistent investment fund, such as “Cavalier Union Investments LLC Bond Fund B.”
The SEC’s litigation against Robertson, Vaughn and Cavalier Union is ongoing, but was stayed pending the completion of Robertson’s criminal trial. The SEC seeks permanent injunctions, return of allegedly ill-gotten gains with interest, and civil penalties. Vaughn pled guilty in September 2016, and a jury convicted Robertson on August 24, 2017.
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