More than dozen college coaches involved in possible Ponzi scheme
Lute Olson, coaches had investments valued over $7.8 million with David Salinas
Salinas, who operated Houston Select AAU team, committed suicide Sunday
Suspicion is that Salinas steered players to coaches who invested large sums
More than a dozen current and former college coaches -- including Texas Tech's Billy Gillispie, Arizona's Lute Olson, Baylor's Scott Drew and Gonzaga's Mark Few -- are believed to have lost investments most recently valued at over $7.8 million combined with the late Houston-area businessman and AAU basketball operator J. David Salinas, sources close to the matter tell SI.com.
According to documents reviewed by SI.com, the value of Gillispie's investment alone was purported to be $2.3 million; Olson's, $1.17 million; Drew's, $621,000; Few's, $353,000.
Salinas, who committed suicide on Sunday amid a months-long investigation into his businesses by the U.S. Securities and Exchange Commission, died at age 60 from a gunshot wound at his home in Friendswood, Texas. He was the chairman of the eponymous J. David Financial Group in Friendswood, the founder of the Houston Select AAU basketball program and a Houston, Rice and Wichita State donor.
SI.com has learned that the Federal Bureau of Investigation has begun to look into the case, which centers around the supposed issuing of corporate bonds.
SI.com also has identified Few and former Rice, Wichita State and Cornell basketball coach Scott Thompson (investment most recently valued at $65,000) as the latest names to be added to an initial list of nine basketball coaches first reported by CBSSports.com. Those nine included: Gillispie; Olson; Drew; Nebraska coach Doc Sadler ($38,000); Texas A&M-Corpus Christi (and former Rice) coach Willis Wilson ($642,000); Gonzaga assistant (and former Utah head coach) Ray Giacoletti ($1.2 million); United States Merchant Marine Academy (and former Nebraska) coach Danny Nee ($23,000); Augustana College coach Grey Giovanine ($533,000); and former Houston and Nevada coach Pat Foster. Save for Foster, SI.com was able to independently confirm each of those individuals as clients of Salinas.
"This is a tragic event that impacts the family and friends of David Salinas," Gonzaga athletic director Mike Roth told SI.com in a statement following a request for comment from Few. "The Securities and Exchange Commission is investigating the matter as it is not a basketball matter. We sympathize with all of those whose lives have been affected by this shocking event."
Olson, Drew, Sadler, Wilson, Nee and Giovanine did not respond to requests for comment; Texas Tech, on behalf of Gillispie, declined to comment.
"I'm shocked and surprised like everyone else, and trying to figure it all out," Thompson told SI.com. "I think David befriended many people, and many coaching friends, and I invested with him like many other people did."
The list of clients isn't limited to basketball. Two Texas football coaches also invested with Salinas: Baylor football coach Art Briles ($780,000) and former Houston football coach Bill Yeoman. Another investor was Rudy Davalos ($83,000), the former University of New Mexico athletic director, San Antonio Spurs assistant and University of the South basketball coach. (Briles, Yeoman and Davalos could not be reached for comment.)
The current list of known investors involves at least 100 accounts in all, the majority of them not sports-related, with the grand total of dollars at risk ranging well into several tens of millions of dollars.
While investors, a number of whom included high-profile Houston businesspeople, did appear to receive statements from Salinas, it remains unclear whether the bonds themselves ever actually existed, and it is uncertain how much each coach initially invested. According to government filings reviewed by SI.com, Salinas was never actually a registered investment adviser representative, and the J. David Group was never registered as an investment adviser firm with the SEC.
"He had a great reputation as a strong money manager, not just locally but nationally," one source familiar with the situation said. "People are shocked. A lot of these investors were his friends. There's a feeling of, 'How do you know what's safe?'"
Now, as names of clients continue to surface in what looks to be a burgeoning financial scandal, another regulatory body may be compelled to enter the mix: the NCAA. No existing NCAA bylaw prohibits university representatives from investing in what they believe to be legitimate securities, but a conflict of interest would seem to arise when the head of a successful AAU program is also the person managing (and profiting from) those investments.
The NCAA did not respond to an e-mail requesting comment.
Raising further suspicions is that several coaches who invested with Salinas, who was also known for his lavish Final Four parties, would sign players from Salinas' Houston Select AAU team. Dates of coaches' investments remain unknown. But the paths of Demetri Goodson (Gonzaga, before transferring to Baylor this summer), Henry Dugat (Baylor), Jawann McClellan (Arizona), Alonzo Edwards (Nebraska, later North Texas), Louis Truscott (Nebraska, then Houston), Rodney Williams (Nebraska), Justin Wiggins (Tulsa) and Joseph Jones (Texas A&M) spark potential questions, for example. Other notable Houston Select alumni include Dexter Pittman (Texas), Cartier Martin (Kansas State) and Toure Murray (Wichita State).
On Monday former University of Houston basketball coach Tom Penders told The Daily that Salinas had solicited a $100,000 investment from Penders and "made a strong, strong implication" that it would help him gain access to Houston Select prospects. "He talked about all these coaches that he had investing with him," Penders told The Daily. "I told him because he was an AAU guy, I couldn't possibly get involved in that. I said, 'I think that's kind of a rules violation, or could be.'"
For the coaches who did invest, Salinas was someone they intimately trusted.
"Obviously this is a tragic event," Gonzaga's Giacoletti said in a statement provided to SI.com. "I've known David and his family and invested with him for the past 22 years. My heart goes out to his family and friends."