“I just closed another matter in which total payment was 2.7 percent,” he said. “So even though 35 percent to 40 percent doesn’t sound very good, it is pretty dramatic for a situation where you had a Ponzi scheme.”
– Court-appointed Receiver Steven Harr
Victims of a Houston investment advisor that committed suicide shortly after authorities began an investigation are set to receive a pro-rata portion of a $10 million distribution approved by a Texas federal court. David Salinas, a former college booster whose victims included a who’s-who of college athletics, is believed to have run a massive Ponzi scheme that may have bilked victims out of more than $50 million. The distribution to victims comes at the request of court-appointed receiver Steven Farr, who estimates that victims could eventually recover 35% – 40% of their losses.
According to the SEC, Salinas and Brian A. Bjork formed two entities, Select Asset Management and J. David Financial, to orchestrate two fraudulent offerings of securities from at least 2004 until 2010. The schemes collectively solicited more than $50 million from over 150 investors who believed their funds were being used to either purchase bonds in large U.S. companies or fund a short-term commercial loan portfolio. Salinas also used his affiliation with a prominent Houston summer basketball program to solicit high-profile college athletics coaches, including Arizona coach Lute Olson, Baylor coach Scott Drew, and Texas Tech coach Billy Gillespie.
Farr, the court-appointed receiver, indicated that he had received collective claims from victims of over $50 million. Of those claims, approximately $33 million have been approved for inclusion in the distribution process, while more than $13 million of claims remain subject to review. While the amount of the current distribution may reflect a downward revision to adjust for reserves for undecided claims, the latest report from Farr showed that an additional $14 million remains in reserves.