Going through various headlines, the case of baseball star Shohei Ohtani's interpreter,
Ippei Mizuhara, being federally charged with fraud caught my attention. He allegedly stole $16 million from Ohtani. Unfortunately, fraud is a common act among the famous. The stars put their trust in people they've known for a long time and that trust backfires in a big way.
Back to the original story, Mizuhara made unauthorised transfer payments between November 2021 and January 2024. He did this to finance his voracious appetite for sports betting. He has agreed to surrender to federal authorities. It's reported that winnings were transfered to Mizuhara's account instead of Ohtani's one. Mizuhara also attempted to impersonate Ohtani to make banks approve large bank wire transfers. The prosecutor said, "Mr. Mizuhara committed fraud on a massive scale.”
Money has the ability to bring in criminal activity to the extreme. The amount stolen between 2004 and 2018 is startling: $600 million in losses. This is only half the story as other victims refuse to come forward. This is mostly likely due to embarrassment (Silvertown & Spiegelhalter, 2019).
The methods of fraud can vary. However, the most common is trust. This can either be direct or indirect - through mutual contacts. These trusts can be leveraged into the fraudster's windfall. Research has identified a few commonalities: individuals posing as financial professionals; making unauthorised investments; unauthorised use of cash by representatives; misappropriated earnings; unauthorised use of name, image and likeness; false advice and investments and finally, undisclosed conflicts of interest (Silvertown & Spiegelhalter, 2019).
One question that keeps on popping up with this topic: why are athletes the most popular? There are a few reasons why. First, athletes don't have the time to manage their own finances and hence put someone else in charge. Secondly, athletes often employ non qualified and/or inexperienced people. Thirdly, misplaced trust is every fraudster's prime target. Next, athletes hire experienced people but they might have unchecked access to their clients accounts. The most despicable one of them all is exploitation by family and friends (Silvertown & Spiegelhalter, 2019).
Athletes can put various safegaurds to protect themselves. These include: Establishing a formal relationship with a properly accredited financial advisor; periodically reviewing financial information; requiring regular disclosures and performance updates from representatives and reviewing that data; signing a formal contract with any representative and including rights to audit in any formal arrangement (Silvertown & Spiegelhalter, 2019).
There are additional factors that athletes can take up. They should hire highly reputable, vetted parties to handle their finances. They should hire people based on reccomendations. Fantastic financial professionals would be adept at both wealth accumulation and preservation. Before entering into any type of professional relationship, an athlete should consider a host of risk areas because individuals often will make many claims or provide credentials that may not be entirely truthful (Silvertown & Spiegelhalter, 2019).
A critical step an athlete can take to lower their risk is to conduct due diligence on their financial representatives or potential investments in advance. Due diligence may include: background investigations; conflict of interest checks; analysis of relevant documents; audit or review of financial reports; interviews; reference checks; investment strategy (and history of success); training and education and reputation among others in the industry and other professionals who have worked with them. In all cases, it is wise to use experienced, reputable, independent third parties to perform these due diligence steps (Silvertown & Spiegelhalter, 2019).
When talking about fraud, the phrase, "keep your friends close and your enemies even closer" comes to my mind. However, with fraud, friends and enemies are more likely to be one in the same. No one can really be trusted when it comes to handling finances. I can't really offer any advice or solution because anyone a person hires might do a 180. They might be objective the one day but might do something against the law the next day due to sudden hardships.
Let's face it. The reality is that fraud is here to stay and nothing can be done to prevent it from happening.
Reference List
Silvertown, J. & Spiegelhalter, S. 2019. Athletes targeted by fraud. [online]. Available from: https://assets.ey.com/content/dam/ey-sites/ey-com/en_us/topics/assurance/ey-forensics-athletes-targeted-by-fraud-june-2019.pdf [Accessed: 14 April 2024].
Source Material
Von Quednow, C. & Yan, H. ‘Fraud on a massive scale’: Baseball star Shohei Ohtani’s ex-interpreter faces federal charge after allegedly stealing $16M. CNN. Available from: https://edition.cnn.com/2024/04/11/sport/ippei-mizuhara-shohei-ohtani-investigation/index.html