Former University of Virginia linebacker Merrill Robertson and his partner in an investment firm have been charged with stealing $6 million in funds from investors, including football coaches at schools he attended, to finance their “luxurious” lifestyles.
The U.S. Securities and Exchange Commission said Robertson, 36, and Sherman Vaughn, 45, treated their Cavalier Union Investments as “their personal piggybank,” raising more than $10 million from investors on the bogus premise that they were experienced investment experts who could generate a rate of return between 10% and 20% annually on their promissory notes.
In fact, the SEC said in a civil complaint, Cavalier was “functionally insolvent” shortly after it was formed and “relied on cash from investors to stay afloat and pay investors who requested their money back.”
Robertson was arrested Wednesday on parallel criminal fraud charges. He and Vaughn allegedly spent investor funds on cars, family vacations, spa visits, luxury goods, educational expenses for family members, and a luxury suite at a football stadium.
The defendants “operated a Ponzi-like scheme using money from new investors to pay back old investors and finance their luxurious personal lifestyles,” the SEC alleged.
After his college career, Robertson signed with the Philadelphia Eagles as an undrafted free agent in April 2003, but was released during training camp. He and Vaughn founded Cavalier in 2010, touting it as a “leading private investment firm” offering investments opportunities in restaurants, real estate, and alternative energy.
According to the SEC, they targeted unsophisticated senior citizens and former football coaches, donors, alumni, and employees of schools Robertson had attended, including Virginia and Fork Union Military Academy.
In reality, the SEC alleged, the few investments Cavalier made were in restaurants that suffered substantial losses and ultimately failed. The firm allegedly still listed two restaurants, Game Day Pizzeria and Sweet Frog, as assets even after they closed.
“Robertson and Vaughn preyed on elderly victims and others who placed their trust in these individuals, only to have their savings stolen,” Sharon B. Binger, director of the SEC’s Philadelphia Regional Office, said in a news release.