Ex-NFL player accused of Ponzi scheme: SEC

The former football player and his partners sold investors on the idea that they earn money by loaning it to players in Major League Baseball, the National Basketball Association, National Hockey League and NFL.

"Allen and Daub tell investors that they can participate in some or all of the funding for a specific loan to a specific athlete. Investors receive copies of the purported loan documents and a schedule of monthly repayments reflecting interest rates of 9 percent to as much as 18 percent on loans lasting from a few months to a few years," according to a court document filed last week with the U.S. District Court in Massachusetts.

Athletes could borrow a minimum of $75,000, and typically their loans totaled $600,000 over a 12-month period.

"Investors [were] often led to believe that their investment … [was] backed by the athlete's contract, meaning that Capital Financial receives repayments directly from the athlete's team or could do so if necessary," the court document explained. However, such arrangements were not in place.

Allen and Daub would withdraw money raised from investors in a manner that "does not appear consistent with any legitimate business use or practice," the SEC says.

"For example, the [personal bank] card purchases include, among other things, charges at casinos, pawn shops, jewelers, grocery stores, cigar shops and clothing retailers," the statement said. "Additional card purchases [were] made at storage facilities, airlines, hotels, restaurants, night clubs and limousine companies."