The $8 billion scam that Texas billionaire R. Allen Stanford is accused of hatching could ensnare high-profile athletes who were represented by Teddy Forstmann’s management firm IMG.
The Post has learned that IMG quietly agreed to steer clients looking for investment advice to Stanford Financial Group, potentially exposing them to millions of dollars in losses resulting from the financial firm’s alleged fraud.
According to three sources with knowledge of the situation, IMG and Stanford have a quid-pro-quo agreement under which Stanford Financial pays IMG a low- to mid-seven-figure consulting fee in exchange for IMG advising its clients – which include golfers Tiger Woods, Arnold Palmer, David Toms, Sergio Garcia and others – to have their money managed by Stanford.
The backroom bargaining has exposed IMG to charges of double-dealing, and is raising questions about where the firm’s allegiances lay: with Stanford Financial or its athlete clients.
“It’s certainly a conflict of interest,” said one source. “IMG is trading on its athletes’ names to make money for themselves and then turning around and telling them to invest money with Stanford.”
Stanford on Tuesday was accused by the Securities and Exchange Commission of masterminding an $8 billion fraud in which he sold certificates of deposits that boasted unrealistically high returns.
He remains at large. No criminal charges have been filed against him, as SEC charges are civil, not criminal, matters.
IMG’s deal with Stanford Financial involved the management firm advising the now-tarnished financial firm on where to spend sponsorship money, particularly related to golf tournaments.
Stanford’s alleged fraud could cost IMG north of $10 million in fees, as well as any clients who got burned in the scandal.
Stanford Financial’s chief marketing officer, Suzanne Hamm, who runs the firm’s relationship with IMG, could not be reached. Dave Haggith, IMG Golf’s director of communications, vehemently denied the quid-pro-quo charges.
“IMG does not conduct its business that way,” Haggith said. “As a company, we wouldn’t have enjoyed the success we’ve had by engaging in such conduct. Stanford, like many other companies, came to IMG to assist with its golf business because of our history and expertise in the area. Any suggestion otherwise is just wrong.”
But IMG isn’t the only company Stanford approached with a quid-pro-quo offer. Stanford also held talks about a consulting deal with sports-marketing firm Octagon, during which it inquired about a “financial management deal,” according to a source with knowledge of those discussions.
“Basically, they wanted assurances that Octagon would park its clients’ money with them if they did a deal,” this source said.
An Octagon spokesman said the firm has not done any deals and has no money invested with Stanford.
The scope of Stanford’s scam is linked to certain investment products managed by his Antigua-based bank. So even if IMG was steering clients to work with Stanford’s brokerage firm, it doesn’t mean they invested in the tainted products.
However, Stanford’s brokers were given incentives – and were subject to firm-wide pressure – to lure clients into the now-suspect products. The commission on the CDs, for example, was up to 3 percent, compared with the less than 1 percent normally paid at other firms, said Randy Pulman, a San Antonio-based attorney.