Lawsuit: 'Bogus' investment cost Olson $1 million
DALLAS (AP) - Former Arizona coach Lute Olson contends in a lawsuit that he lost more than $1 million by investing in "bogus'' bonds with David Salinas, the Houston financial adviser for college coaches who committed suicide while under investigation by the Securities and Exchange Commission.
Olson's suit, filed in federal court in San Diego on Sept. 7, accuses Salinas and an associate of fraud. It seeks to recover money the Hall of Fame coach says he invested six months after he retired in October 2008. Olson was Arizona's coach for 24 seasons, leading the Wildcats to four Final Four appearances and a national title in 1997.
Olson's attorney, Michael Aguirre, said Thursday that the $1 million loss has left his 77-year-old client without a significant portion of the money he'd set aside for retirement. The lawsuit will give Olson a way to pursue funds that might not be otherwise recoverable by a receiver appointed by the SEC, Aguirre said.
The SEC filed a civil suit Aug. 1 claiming that Salinas and associate Brian Bjork defrauded more than 100 investors of $39 million by selling corporate bonds that didn't exist. The suit was filed two weeks after Salinas, 60, shot himself to death at his home in the Houston suburb of Friendswood.
"This was all retirement money,'' Aguirre said. "I don't care who you are. This was a very important and material part of his retirement plan.''
Olson is among several current and former college basketball coaches who invested with Salinas, who also operated a well-known Houston AAU basketball program. Some coaches have acknowledged that they were investors, but Olson's lawsuit is the first known instance of a coach publicly detailing his involvement.
Aguirre said Olson filed the suit in San Diego, where he maintains a residence, because filing in Texas would mean greater expense for him.
"He would like to make this a home game,'' Aguirre said.
Other coaches who invested with Salinas include Billy Gillispie of Texas Tech, Scott Drew of Baylor and former Utah coach Ray Giacoletti, currently an assistant at Gonzaga. Sports Illustrated has reported that the value of Gillispie's investment was $2.3 million.
Olson's lawsuit says he made two investments of $993,562 and $50,058 in what he was led to believe were low-risk corporate bonds with yields of up to 9 percent. Now, the suit says, the coach has discovered that the bonds were never acquired.
Olson believed his money was safely invested because Salinas and Bjork "appeared to be speaking the truth based upon (their) track record,'' the lawsuit says.
Aguirre said Olson agreed to invest after Salinas and Bjork visited his home in Tucson, Ariz., and explained their plans. Olson felt comfortable with the pair because he knew other coaches who'd invested, the attorney said.
Bjork's attorney, Matt Hennessy, declined comment Thursday.
Bjork was a co-founder of Salinas' AAU program, Houston Select Basketball. He also has a coaching background that includes working for Scott Thompson, a former Arizona assistant under Olson who later became the head coach at Rice, Wichita State and Cornell.
Hennessy provided the SEC with a handwritten note, purportedly signed by Salinas, six days before the financial adviser's death, according to court records. The note says Salinas was fully responsible for all activities related to his company, J. David Financial Group, and that Bjork and others "performed their duties with unknowing consequences which might occur.''
Bjork has since entered into an agreement with the SEC in which he's agreed to pay for the possible disgorgement of "ill-gotten gains'' and a civil penalty without admitting to or denying the government's allegations in the civil case, according to a court filing.
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