Former National Basketball Association player Gilbert Arenas has sued a nationally recognized, independent accounting and business management firm for over $40 million. Arenas claims that Boulevard Management, Inc. fell well short of the standard of care that it publicly advertises, causing Arenas to lose many millions of dollars.
Arenas had a very successful career in the NBA. In July 2008, he signed a contract with the Washington Wizards that included $111 million in compensation. Boulevard was tasked with managing those funds.
The 21-page Complaint filed in the Superior Court of the State of California for the County of Los Angeles says that Arenas hired Boulevard in 2006 and, in the 8 years that it was retained, Arenas paid the company $2.25 million for management and investment related services. Yet, despite paying such large management fees, Arenas claims that the company and its executives managed his finances with absolute recklessness, negligence and/or willful and intentional disregard, which led to Arenas losing his wealth.
In fact, Arenas claims that Boulevard was not even aware that his July 2008 contract with the Wizards was later amended to alter the term of the deal and change the economics of the contract. Otherwise, Boulevard would have altered the way in which Arenas' assets were managed, per the Complaint.
Arenas further charges Boulevard with enabling and facilitating the theft of his money by a former personal assistant, failing to monitor his accounts, allowing unauthorized persons to manage and spend his money and charging excessive fees. Arenas says that even though he paid $2.25 million in fees, the company could not even get the easiest of tasks accomplished -- the timely payment of his bills.
A major issue gets to who had authority to direct funds out of Arenas' account. The Complaint alleges that only Arenas had such authority to direct the transfer of funds from, and to, any account, and that Arenas' employees, agents, family members and friends had no such capacity by way of a power of attorney or otherwise.
However, the Complaint states that between January 2007 and February 2013, Boulevard transferred millions of Arenas' money to a third party bank account at Arenas' personal assistant's direction. The transfers were irregular amounts and purportedly not made with Arenas' knowledge, participation or consent. Arenas alleges that if Boulevard had exercised due care, then it would have realized that Arenas' personal assistant was embezzling millions of dollars from Arenas' personal accounts and put it to a stop.
Arenas has asked for no less than $40 million in addition to punitive damages, interest at 10% annum, attorneys' fees and a reimbursement of what he deems to be excessive management fees.
Darren Heitner is a lawyer and the Founder of South Florida-based HEITNER LEGAL, P.L.L.C., which has a focus on Sports Law and Entertainment Law.
