Retired cornerback Bryant McFadden made millions as an NFL player, but his all-cash portfolio is the investing equivalent of a super-conservative prevent defense.
McFadden says he owns no stocks nor bonds. That’s because he’s scared to invest in even the most plain-vanilla vehicles after he says he was burned for $200,000 by Hawk Systems, a Palm Beach County penny-stock firm that’s the subject of a long-running legal battle.
“That was my first investment. It has put a scar on me,” McFadden said in a phone interview. “When I see different opportunities arise, I always think back to this.”
Palm Beach County long has been a noted hot spot for both dubious penny stocks and for pro football players seeking offseason homes.
NFL players, with their short shelf lives and oft-lavish lifestyles, are notoriously easy marks for shoddy investments. Researchers from CalTech and the University of Washington, in a study published in 2015, reported that nearly 16 percent of NFL players had filed for bankruptcy within 12 years of retiring.
McFadden, now 35 and living in the Atlanta area, played for the Pittsburgh Steelers and Arizona Cardinals. He was far from the only NFL player to lose money to Hawk, a company that touted big plans for a fingerprint reader that it said could be used to start cars.
According to its filings with the Securities and Exchange Commission, Hawk Systems was burning cash during the time it was soliciting money from McFadden and other investors. From late 2007 through 2009, Hawk Systems reported nary a nickel of sales and $18.3 million in losses.
The biggest name among the investors is Anquan Boldin, the Pahokee native who has caught 1,076 passes and scored 83 touchdowns during his 14-year NFL career. Now with the Detroit Lions, Boldin has made more than $65 million as an NFL receiver.
Boldin invested $250,000 in Hawk Systems. He was intrigued by the company’s plan to sell its biometric chips to automakers and hotels, but now he considers his money lost.
“There’s definitely some things that haven’t come to fruition that I was told,” Boldin said in a 2013 deposition.
Among the other former NFL players to invest in Hawk Systems are running back Greg Jones and lineman Alex Barron. Like Boldin and McFadden, Jones and Barron played college ball at Florida State before going pro.
The former Seminoles were in their mid-20s when they invested in Hawk Systems — and, despite hefty bank balances, they weren’t especially sophisticated as financial analysts.
McFadden, for his part, majored in computer graphic design at Florida State and said he didn’t take courses in finance or business.
McFadden and Boldin describe hearing a similar pitch from David Coriaty, the former president and chief executive of Hawk Systems. Both saw Coriaty use his purported biometric chip to start his silver Lamborghini.
“It worked to perfection,” McFadden recalled. “It seemed so legit.”
The players also toured a manufacturing plant in Mangonia Park where Hawk Systems said it was making its product.
Adding credibility to the pitch was the physical presence of Coriaty, a muscular man who, investors said in an interview, claimed to have played for the Miami Hurricanes and Miami Dolphins. And one investor said in a court filing that Coriaty claimed to be a former Dolphin.
Considering Coriaty’s hulking size, it didn’t seem an outlandish claim — in arrest reports for domestic battery incidents in 2012, 2015 and 2016, officers describe Coriaty, now 47, as 6-foot-2 or 6-foot-3 and weighing 245 to 270 pounds.
McFadden bit, investing $100,000 in 2008. Jones and Barron invested similar amounts. And in 2009, McFadden said, he agreed to loan Hawk Systems $100,000 in the form of a promissory note.
“I was a little bit hesitant at first, because I didn’t see anything back from my initial investment,” McFadden said. “But this was not an investment. This was a loan. That made me feel a little comfortable.”
McFadden hasn’t gotten back any of his money, and the NFL in 2010 issued a warning to players considering investing in Hawk Systems.
Also in 2010, Mark Spanakos, a large shareholder of the company, sued for fraud. In a Palm Beach County suit that named Hawk Systems, Coriaty and three other executives as defendants, Spanakos alleged that executives used investors’ money for personal expenses.
Coriaty couldn’t be reached for comment and his attorney declined to comment, but the company has denied the claim.
“We believe that Mr. Spanakos’ allegations are without merit and intend to vigorously defend against the lawsuit,” the company said in a regulatory filing.
The legal dispute — which has dragged on for nearly seven years, already has outstripped the length of the average NFL career — is still being litigated in Palm Beach County court. In SEC filings, the company listed headquarters in West Palm Beach and later in Boca Raton.
The episode underscores just how vulnerable pro athletes can be when they turn to investing, said Jacob Frenkel, a former SEC attorney who’s now a lawyer at Dickinson Wright in Washington, D.C.
“Athletes and entertainers do not receive anything close to meaningful advice or guidance about how to invest or preserve their wealth,” Frenkel said. “At the same time, the trust within these communities makes athletes and entertainers victims time and time again.”
Other disappointed investors said they were drawn in by Hawk Systems’ connections to NFL players. Bob and Mary Fowler, retirees who live in the Sarasota area, recall being wooed by Coriaty at a suite during a game.
“We absolutely love football, and we thought, ‘Oh, wow,’” Mary Fowler said.
The couple invested $55,000, money that’s now gone. And McFadden said he feels “sick” when he thinks that the glamour of his NFL job was used to lure other investors.
“It doesn’t feel good to feel like you’ve been scammed out of hundreds of thousands of dollars,” he said.