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Wine Magnate Charles Banks Confesses To Defrauding Tim Duncan of Millions

 

PERP WALK: Charles A. Banks IV is flanked by his wife and crack legal team.

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SAN ANTONIO — Tim Duncan’s former financial adviser pleaded guilty Monday to wire fraud for bilking the retired Spurs star in a multi-million dollar investment deal.

Charles A. Banks IV, 49, of Atlanta, admitted he bamboozled Duncan into guaranteeing a $6 million loan used as part of an investment in a sports-merchandise company linked to Banks.

Banks argued that Duncan lost no money in his investment in Gameday Entertainment LLC because he got monthly payments at 12 percent annual interest for more than two years. Duncan sued Banks and the company in 2015, and that lawsuit currently is on hold in Colorado.

Gameday was dissolved in January. But Duncan and federal prosecutors say he lost his initial $7.5 million investment because Gameday sank, and that he’s still liable for the $6 million guarantee to Comerica Bank.

U.S. District Judge Fred Biery is to settle the matter when he sentences Banks on June 27. The amount Biery determines could affect not only what restitution Banks might be ordered to pay back, if any, but also the punishment he gets. Wire fraud carries a maximum of 20 years in federal prison.

Banks’ lawyers declined comment before meeting with a probation officer who will prepare a pre-sentence report.

Duncan also declined comment after the hearing but his lawyers released a prepared statement later Monday in which he thanked the Justice Department.

“Mr. Banks is now a confessed felon,” the statement said. “I will continue to cooperate with the U.S. Attorney’s Office and Mr. Banks’ probation officer, at their request.”

The hearing revealed that the fraudulent activity occurred, in part, while Duncan and the San Antonio Spurs battled Miami in the 2013 NBA Finals, a series that the Spurs lost to the Heat after jumping ahead in the best-of-seven series, then losing steam in the final games.

Court records show Banks and Duncan were having text message conversations about Duncan’s ongoing interests in Gameday in June 2013 as Duncan prepared for Game 1 of the championship series and before Game 2. Some of the texts show Banks misleading Duncan about the $6 million loan guarantee, and Gameday’s financial health.

Back in San Antonio six days after the series ended, Duncan faxed paperwork to Banks needed for the $6 million guarantee, court records said.

Banks had served as Duncan’s financial adviser since Duncan’s rookie year in 1997 until Banks left CSI Capital Management Inc. in 2007. After Banks left CSI, he got involved in other investment ventures and offered Duncan opportunities to invest or loan money for them, according to a court filing by Duncan’s lawyers. One of those was Gameday.

To invest in Gameday, Duncan took out a $10 million line of credit from Comerica Bank in 2012, and loaned $7.5 million of that to Gameday in a deal that was to give Duncan monthly payments at 12 percent annual interest. Later, Gameday’s CEO Jeff Neal, explored with Comerica Bank the possibility of obtaining an additional line of credit of $6 million, what Neal called an “inventory loan,” according to Banks’ court filing.

In exchange for the line of credit, Comerica required a primary security interest in Gameday’s assets and required all other creditors, including Duncan, be subordinated to their interest, the filing states.

While explaining the process to Duncan via texts, Banks told Duncan that Gameday was “crushing it,” that the $6 million was modification “paying down” the original $7.5 million loan and that it would “remove 1.5m of risk for you. All GrEAT news. No downside.”

In reality, it was not a modification and created $6 million more in liability for Duncan, the filing states. Banks had an interest because as Gameday’s chairman, he was to get a cut from the overall deal.

“Banks drew $5.9 million out of Gameday for three years during these loans,” Assistant U.S. Attorney Greg Surovic told the judge, to which one of Banks’ lawyers, John Murphy, replied: “We disagree.”

While taking Banks’ plea, the judge asked him to explain his texts, particularly the reference to “crushing it.”

“That is a term of art,” Biery said. “What does ‘crushing’ mean?”

“It meant that the company was doing very well at the time,” Banks replied.

“So what you were telling him was untrue?” Biery asked after reading more of the texts quoted in court records.

“That is correct,” Banks replied.

“What they call nowadays ‘alternative facts,’” Biery said. “That is another term of art.”

ST. CROIX’S TIM DUNCAN AT COURTSIDE: “I’m gonna get paid!”

http://vifreepress.com/2017/04/tim-duncans-atlanta-based-financial-advisor-charles-banks-iv-expected-plead-guilty-wire-fraud-monday/

http://vifreepress.com/2016/09/charles-banks-high-priced-attorneys-arrange-skip-court-appearance-tim-duncan-fraud-case/

http://vifreepress.com/2016/09/fax-sent-duncan-playing-nba-game-might-banks-undoing/

http://vifreepress.com/2016/09/charles-banks-accused-stealing-20-million-tim-duncan-indicted-today/

http://vifreepress.com/2015/08/tim-duncans-25-million-federal-lawsuit-over-lost-money-going-nowhere-fast/

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The Author

John McCarthy

John McCarthy

John McCarthy has been reporting on the U.S. Virgin Islands and the Caribbean region since 1989. John's articles have appeared in the BVI Beacon, St. Croix Avis, San Juan Star and Virgin Islands Daily News. He is originally from Detroit, Michigan.

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