NFL Players Association Countersues over Hedge Fund Liability

The National Football League Players Association is countersuing six current and former players who are seeking to hold the union and league liable for millions of dollars they lost in an alleged fraud scheme.

The NFLPA, in papers filed last week in federal court in Atlanta, accuses Steve Atwater, Ray Crockett, Al Smith, Blaine Bishop, Carlos Emmons and Clyde Simmons of breach of contract. Simmons is a former Philadelphia Eagle.

The action by the union follows a lawsuit filed last June against the NFL and NFLPA by the players over $20 million they lost by investing their money with a hedge fund manager that they say the union endorsed even though the manager had liens against him.

The fund manager, Kirk Wright, was arrested in Miami Beach, Fla., last May on federal fraud charges and is awaiting trial. He also faces a civil complaint filed by the Securities and Exchange Commission against him and his company, International Management Associates.

According to authorities, Wright and his company collected as much as $185 million from at least 500 investors since 1997 and used false statements and documents to mislead some of them to believe the value of those investments was increasing. Much of that money is now missing.

The countersuit claims the players violated a provision in union regulations that says the union does not endorse any of its registered financial advisers and is not responsible for the skill, honesty or competence of any registered adviser. It also claims the players breached union rules by not exhausting internal remedies before suing the union.

The NFLPA wants the court to enter a judgment enforcing the disclaimer-of-liability provision and ordering the players to pay the union’s costs and attorney’s fees for defending itself.

It also wants the court to order Atwater and Bishop to contribute to any damages the union might be ordered to pay to the other four players, alleging Atwater and Bishop trumpeted to the other players the investment opportunities in Wright’s hedge funds. Finally, the NFLPA is asking that Atwater and Bishop be forced to pay any commissions they received for working for Wright to the other four players.

The NFLPA, in its April 23 countersuit, also filed a claim against Wright, seeking to recoup any damages they may be ordered to pay the players in the future.

The NFL, which also is being sued by the players, hasn’t file a countersuit, but, like the union, is asking that the players be ordered to pay the league’s costs and attorney’s fees in defending itself.

An attorney for the players, James M. Evangelista, said Tuesday that the counterclaims by the union are meritless and are part of a tactic designed to raise doubt about the players’ allegations.

“At best they’re meritless,” he said of the counterclaims. “At worst, they’re frivolous.”

Evangelista declined to say if he has had settlement discussions with the league and the union regarding the players’ lawsuit.

“At this point, we’re really looking forward to getting into the discovery phase of the case and getting into the facts of the relationship between Kirk Wright and the players association,” he said.

In March, a federal judge denied a motion by the NFL and NFLPA to dismiss the players’ lawsuit. A trial date on the lawsuit by the players has not been set.