The U.S. Attorney's office is investigating the authenticity of a National Basketball Players Association contract that authorized future payment of more than $3 million to an investment firm that employed the son of executive director Billy Hunter, sources told Yahoo! Sports.
One of the focuses of the probe centers on the legitimacy of the signatures on the union's document with the company, Prim Capital, including those of the NBPA's late general counsel Gary Hall and NBPA director of player services Purvis Short, sources said.
After issuing a report on its investigation of the union's business practices that included doubts about the legitimacy of an NBPA agreement with Prim, the law firm of Paul, Weiss, Rifkind, Wharton and Garrison recently secured several past union agreements to give handwriting experts a chance to examine Hall's signature, sources said. Those documents were shared with the U.S. Attorney's office to assist in its ongoing probe of the union, sources told Yahoo! Sports.
Hall died on May 11, 2011.
The agreement called for a "five-year term, stretching from the date of execution, that cannot be cancelled or revoked while in effect for any reason by the NBPA." Under terms of the deal, the NBPA would pay Prim $602,000 per year.
"In our opinion, this provision is highly unusual and inconsistent with normal business practices," the Paul-Weiss report said.
Prim Capital managing director Joseph Lombardo's signature is also on the agreement.
Prim Capital hired Hunter's son, Todd, in 2002, and has provided financial services to the NBPA since 2003.
The Paul-Weiss report recommended the union's players consider ending the financial partnership, or, minimally, examine other possible firms to oversee the union's financial advisement program for the players.Hunter terminated Prim's relationship with the NBPA after the Paul-Weiss report was released.
Two days before Paul-Weiss released its Jan. 17 report on the NBPA, the law firm says Prim Capital sent its investigators a copy of the five-year agreement signed March 2, 2011. The report said Paul-Weiss had previously been "informed repeatedly by union employees over the course of the investigation that the 2005 Agreement was the NBPA's most recent document with Prim."
Prior to the emergence of this agreement on Jan. 15, Hunter had told Paul-Weiss investigators that the union's 2005 agreement with Prim had been extended orally from year to year, and said that he was "not aware," of a written contract in existence, according to the report. The union's top financial official, Theresa Messer, told Paul-Weiss investigators that "although she had raised with Prim the need for a written contract on multiple occasions, and had been told one would be prepared, she never received a new agreement," the report said.
The Paul-Weiss report said Messer was "shocked" to discover the existence of the agreement when investigators presented it to her.
The NBPA's executive committee is required by its constitution to approve expenditures more than $25,000, and were never shown the purported NBPA-Prim deal worth more than $600,000 annually, the Paul-Weiss report said.
The scrutiny of the NBPA-Prim relationship began with an April 2012 Yahoo! Sports investigation that reported on Hunter pushing for several million dollars of NBPA funds to be invested into a failing New Jersey bank – without revealing to executive committee members that his son, Todd, sat on the bank's board of directors. The Paul-Weiss report said the union spent more than $80,000 in studies on the possible bank investment.
The Paul-Weiss firm has been commissioned by a special committee of the NBPA to examine the union's business practices, and has been sharing information with the U.S. Attorney's investigation. The NBPA executive committee voted 5-0 to place Hunter on a paid leave of absence, and his future could be decided at a Players Association meeting on Saturday at All-Star weekend in Houston.
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