(AP) East Rutherford, NJ. The Federal Trade Commission is investigating a fraudulent Ponzi scheme carried out by several New York Jets high-level executives, according to a source from inside the Jets organization. Speaking on condition of anonymity, the source confirmed earlier reports that owner Woody Johnson has called for a formal investigation into the misappropriation of funds totaling approximately $120M in 2010 and nearly a half-billion dollars dating back to 2009.
According to Johnson’s complaint, obtained by Yahoo! Sports, General Manager Mike Tannenbaum, an employee of the New York Jets since 1997 and head coach Rex Ryan, who joined Tannenbaum in 1999 “colluded to mislead key decision makers and investors” though the use of “faulty bookkeeping and willful misrepresentation of the company’s product.” The complaint goes on to cite examples of “conspiratorial fraud,” including “intentional falsehoods regarding several key employees of the Jets, including quarterback Mark Sanchez, inside linebacker David Harris, and wide receiver Santonio Holmes.
Ronald Stain, lead attorney for Johnson’s estate, further alleges that Tannenbaum and Ryan conspired to intentionally “hype up” the value of Sanchez, a quarterback who currently ranks 31st in the NFL during his fourth season, swindling investors into a total of $85M dating back to 2009. Harris, an average NFL linebacker, makes a whopping $12M per year, a highly inflated value, while Holmes recently signed a $51M contract despite never being among the NFL’s elite players.
“It has all the makings of a Ponzi scheme,” Stein said. A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from the money paid by subsequent investors, rather than from profit. It entices new investors by offering higher returns than other investments, often with outlandish promises and guarantees.
On page 51 of the report, Johnson specifically cites Ryan’s misleading promises on return: “(Ryan) has made at least a dozen empty guarantees regarding Super Bowl parades, wins over opponents, division titles, promises for unrealistic player development for guys like Aaron Maybin, Stephen Hill, and John Connor. With each subsequent failure, Ryan failed to disclose the true value of these teams, instead seeking to raise more capital through hype campaigns, bluster, and false bravado.”
In addition, Ryan is accused of instructing players to over-inflate their physical and mental capabilities, encouraging chest-thumping, false hype, and self-aggrandizement, conning Johnson and his investors to spend large sums of money for players that are worth a fraction of the cost. The report makes mention of Ryan’s bloated opinion of himself, referencing his decision to publish the book Play Like You Mean It, normally the protocol of a successful, accomplished coach with Super Bowl rings, none of which accurately describe Ryan, according to the results of an investigation conducted by Johnson’s independent counsel.
If the allegations are true, it would be a major blow to an organization that has not won a division title in 14 years and, according to a league insider, “on the eve of their own apocalypse.” Currently the Jets are a dismal 3-5 and coming off a 30-9 beat down at the hands of the Miami Dolphins, despite a plethora of long-term contracts offering “superstar” money to scrub players. In addition, the cap situation should be “impossibly bleak” in 2013, according to an NFL executive. Even after cutting some more money-hoarding scrubs, the Jets figure to have about $7M to replace 23 players, including 12 starters.
“This might be the first time in NFL history when a team has a full salary cap of dead money,” the NFL executive suggested. “At this rate, the full salary cap will be dead money by 2017. They may have to forfeit every game because there are no players. All of the money will be tied up in dead contracts to Sanchez, Holmes, and the rest of those deadbeats. And that is really the definition of a Ponzi scheme. You are ultimately investing in nothing. Lots of money. Zero return- not that they aren’t close to that right now.”
Tannenbaum is also being investigated under the Sarbanes-Oxley Act, a law that requires above-board, responsible financial disclosure. Johnson alleges that beginning in 2009, Tannenbaum claimed he was “maneuvering the cap.” When asked for more specific information, Tannenbaum replied that he was “creatively moving numbers around to free up cap space,” a statement consistent with cooking the books.
“You can’t have your cake and eat it, too,” CNN analyst Jonathan Reich said during his Economics Hour broadcast when commenting about the story. “Basically, he was just pushing it back. Not owning up to terrible player evaluation, lack of viable draft picks. Quinton Coples over Chandler Jones? Gholston over Mayo? Really? He just kept sweeping it under the rug. Pushing it to the next year, the next year, the next year, until finally, it blows up. Did you really think you could make horrendous signings and pay a fortune for guys like Bart Scott and Calvin Pace and just make it go away? Did you really think that wouldn’t eventually come back to bite them?”
“It’s a simple question,” Stein concluded during his press conference. “Where’s the money? It’s a simple question. It’s not on the field. We are talking about $120 million. Show me how these players add up to anything other than a pile of crap on your front lawn? Mark Sanchez? Shonn Greene? This is the biggest scam since Bernie Madoff.”
Health officials in northern New Jersey and the more seedy areas of New York City have been put on alert for potential health hazards. City officials are concerned about the effects that this news will have on the New York Jets fan base. Pelted for over 40 years with a pathetic hpe that leads to delusion and suffering, the green group of fans already known for low intelligence and poor hygiene may be a severe health risk for the rest of the civilized world.