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Tim Duncan’s ex-adviser reaches a deal with SEC

May 31, 2017 GMT

Tim Duncan’s former financial adviser has reached a partial settlement with the U.S. Securities and Exchange Commission, which sued the adviser over allegations of securities fraud in his handling of the retired Spurs star’s investments.

Court records show Charles A. Banks IV, 49, of Atlanta, has agreed to a settlement that bars him from defrauding anyone else while acting as a securities adviser. The so-called “consent decree” also blocks him from being a director or operator of any entity registered with the SEC. The decree also places Banks on notice that he is subject to “disgorgement” — the SEC’s way of taking away the profits obtained by illegal acts and returning them to investors.

The SEC sued Banks in Atlanta federal court in September, and the decree comes a month after Banks pleaded guilty in a separate criminal case in San Antonio.

RELATED: Ex-adviser admits defrauding Tim Duncan

Both the criminal case and the SEC lawsuit focused on a 2012 investment Duncan made in Gameday Entertainment LLC, a startup for which Banks served as chairman. But the lawsuit also makes more securities fraud accusations against Banks over Duncan’s investments in a cosmetics company and wineries. Those claims remain pending.

Banks had advised Duncan since his rookie season with the Spurs, even after Banks left CSI Capital Management in 2007. After leaving that company, Banks offered Duncan opportunities to invest in Banks’ ventures that included wineries, cosmetics, hotels and sports merchandising.

At Banks’ urging, Duncan loaned Gameday $7.5 million, for which he would receive 12 percent interest paid in monthly installments, according to the SEC lawsuit.

According to the SEC, Banks led Duncan to believe that he was one of several investors participating in an equity offering from the company when in fact Duncan was the only one. The SEC also says Banks received a $225,000 fee from Gameday for securing Duncan’s investment. The commission also accused Banks of diverting 20 percent of Duncan’s monthly returns to himself, pocketing $15,000 each month for about two years.

Then in 2013, Banks persuaded Duncan to guarantee a $6 million bank line of credit to Gameday, telling his client that the step would actually reduce his financial exposure should Gameday run into trouble. Rather than let Duncan look over the terms of the deal, Banks allegedly showed Duncan only the signature page. Duncan signed it and faxed it back to Banks’ office, according to court records.

In April, in the criminal case here, Banks admitted to much of the allegations related to the Gameday deal. But Banks argues that Duncan lost no money in his investment in Gameday 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.

Banks could face up to 20 years in prison when U.S. District Judge Fred Biery sentences him on June 27.

gcontreras@express-news.net

Twitter: @gmaninfedland