A top former executive with the Sacramento Kings has agreed to plead guilty in an audacious scheme in which he siphoned off $13.4 million from two of the team’s top sponsors and spent it on beachfront homes in Southern California.
Jeffrey R. David, the former chief revenue officer for the team, agreed Wednesday morning to a plea agreement in a deal that will recoup all of the money diverted from the Golden 1 Credit Union and Kaiser Permanente, his lawyer told The Bee.
David, 44, is expected to enter his guilty plea in a Sacramento federal courtroom in January. Prosecutors plan to argue for sentence of 8 1/2 years, while his attorneys are expected to argue that he should serve no more than two years in prison.
The scheme was uncovered over the summer after David’s post was eliminated on June 1 and he moved on to a similar job with the NBA’s Miami Heat. David left his position with the Heat following The Bee’s revelation in August that he was under FBI investigation.
“From the moment Mr. David was contacted by law enforcement he agreed to cooperate fully and completely,” defense attorney Mark Reichel said. “In fact, he flew on a plane from Miami, arriving in Sacramento around 3 a.m., to spend the entire day with federal law enforcement to explain everything truthfully.
“He has since spent every day working to ensure all of the monies were repaid and, in fact, the funds were repaid at lightning speed. The money has been invested in high-end real estate in Southern California and was not at risk and was very liquid. The properties have been sold, the government has had the money for over a month and Mr. David accepts responsibility for his conduct and looks forward to continuing to show his remorse.
“He understands what he did was wrong.”
William Portanova, an attorney for the Kings and former federal prosecutor, helped investigate the scheme and took evidence to his former colleagues in U.S. Attorney McGregor Scott’s office in August.
“Hopefully, this is the beginning of the end of a sad chapter,” Portanova said. “We are very grateful for the quick response and hard work by the U.S. attorney and FBI in retrieving our stolen assets,” he added.
Matina Kolokotronis, chief operating officer for the team, also issued a statement saying she was “grateful to the officials at the FBI and the U.S. Attorney for the Eastern District of California, McGregor Scott, for their hard work and swift action to hold Jeff David accountable and to recover all of the Kings organization’s assets.”
The investigation moved quickly once the Kings took their findings to federal officials, with prosecutors filing forfeiture documents in court within days to prevent either property from being sold or transferred, and the U.S. attorney on Wednesday praised the outcome.
“The very timely and very successful resolution of this criminal case is directly attributable to the consummate professionalism of Assistant U.S. Attorneys Michael Anderson, Matthew Yelovich and Kevin Khasigian and FBI Special Agent John Sommercamp,” Scott said. “To them goes the credit.”
The prosecutors filed 11 counts of wire fraud, money laundering and aggravated identity theft, with the agreement calling for David to plead guilty to one count of wire fraud and one count of aggravated identity theft. The wire fraud count is punishable by a sentence of up to 20 years; the identity theft count requires the court to impose a sentence of at least two years.
Kings officials said a team employee reviewing computer files left behind by David found a folder labeled “Turbo tax” and began investigating. The team ultimately found evidence that $9 million from the Golden 1 naming rights deal for the Kings arena and $4.4 million from Kaiser Permanente had been diverted to an entity called Sacramento Sports Partners.
David created the company in 2009, then converted it to a limited liability corporation in 2015, and federal investigators believe he used that firm’s bank accounts to transfer the money and eventually purchase two homes in Southern California.
Federal officials moved to seize the properties, but allowed them to be sold in recent months for a total of nearly $14.8 million. After deducting Realtor costs and other fees, the team expects to recoup the entire amount it lost.
A copy of the plea agreement obtained by The Bee includes documents that describe a sophisticated scheme running from 2012 through 2016.
The plan began with taking money from smaller sponsors involved with the Kings organization, which is described in the documents as “Company A,” the documents say.
David would draft invoices on Kings letterhead that used the mailing address of Sacramento Sports Partners, then bill sponsors for advertising for relatively small amounts, the documents say. One company was billed for $20,000, another for $4,500, the documents say.
“Following these initial successes, David targeted higher value sponsors of (the Kings) to defraud,” the documents say, leading him to Golden 1, which had negotiated a naming rights deal for the team’s new downtown arena, and to Kaiser Permanente.
In his job with the Kings, David had negotiated the payment schedules for sponsors and used that knowledge for his own benefit, according to the documents, which refer to Golden 1 as “Company B” and Kaiser Permanente as “Company C.”
“David exploited these initial agreements by negotiating ‘amendments’ directly with (Golden 1) and (Kaiser Permanente),” doing so supposedly on the Kings behalf, the documents say.
For instance, he suggested Golden 1 make an initial $9 million payment instead of the agreed upon $6 million for the first year in exchange for lower payments later, the documents say.
Golden 1 signed the amendment believing David had the authority to negotiate it, the documents say, and David forged the signature of the Kings president to complete the deal.
He also forged signatures of Golden 1 and Kaiser Permanente officials, the documents say, using the money he obtained to purchase homes in Hermosa Beach and Manhattan Beach.
He also used money he obtained fraudulently to make improvements on the homes, paid $100,000 to a private jet company and “paid tens of thousands of dollars in personal credit card bills” to American Express, the documents say.