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Arbitration filing: Rosenhaus Sports vice president seeking $1M from firm

A suspended employee of Rosenhaus Sports is alleging that the prominent agency owes him more than $1 million in commissions and compensatory damages, according to an arbitration filing with the NFL Players Association. Yahoo! Sports previously obtained a memo regarding the arbitration, but full details of the filing were unknown.

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Drew (R) and Jason Rosenhaus during an NFL game last season. (US Presswire)

Rosenhaus Sports vice president Danny Martoe accuses brothers Drew and Jason Rosenhaus of breach of contract and fraud. Martoe, who has worked with the agency since 2005 but is currently on administrative leave with pay, says he "contributed to over ninety-one (91) players becoming Rosenhaus Sports clients," according to the filing. Among those clients are Dallas Cowboys wide receiver Dez Bryant, who recently fired Drew Rosenhaus, San Francisco 49ers safety Dashon Goldson, Carolina Panthers tight end Greg Olsen, Pittsburgh Steelers tight end Lawrence Timmons and New England Patriots tight end Rob Gronkowski.

In a 2010 email cited in the arbitration filing, Jason Rosenhaus described Martoe as "a proven veteran who has … given everything he has to Rosenhaus Sports," and whose "closing ability" with players was invaluable to the firm at the time. Despite the praise, Martoe accuses the Rosenhaus brothers of fraudulently inducing him to work for the firm. Martoe said in the filing that he was consistently given both written and verbal assurances by the Rosenhaus brothers that they would fully compensate him for his efforts. However, Martoe claims the brothers never intended to fulfill what he says was a contractual obligation.

Although a fee dispute is the crux of the problem between Martoe and the Rosenhauses, a number of allegations in the 36-page filing call the brothers' business practices into question. One allegation in particular, if true, could subject the brothers to unspecified discipline from the NFLPA.

According to the filing, "Rosenhaus Sports" suggested to Martoe that if he introduced agency clients "like Dez Bryant and others" to a financial advisor at SunTrust bank, "SunTrust would give Rosenhaus Sports a bigger loan and a better [loan] rate," which would result in Martoe getting "paid faster." Such an agreement could violate NFLPA policies.

NFLPA regulations require agents to act "at all times in a fiduciary capacity on behalf of players." That requirement means agents must always put the best interests of their clients first. It prohibits agents from "engaging in any … activity which creates an actual or potential conflict of interest with the effective representation of NFL players."

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Danny Martoe (L) with Drew Rosenhaus.

While the legal definition of "conflict of interest" varies from state to state, a potential conflict can exist when an agent's objectivity is compromised due to personal or financial benefits the agent may gain by advising a player in a particular way. In this case, if the Rosenhaus brothers were using their players to gain a more favorable loan, that could be a violation of NFLPA regulations.

Martoe also alleges in the filing that Rosenhaus Sports, which Drew claims represents more than 140 players, has been experiencing financial troubles.

Among Martoe's specific allegations in the filing:

In 2009, Drew Rosenhaus had to "personally lend" Rosenhaus Sports $300,000 to "pay the bills."
In 2010, Rosenhaus Sports did not pay employee salaries for two months.
In February 2011, "Rosenhaus Sports admitted that paychecks were late one week because the firm was 'on empty.' "
Between 2009 to 2012 "[s]everal Rosenhaus Sports American Express accounts were closed on at least two occasions for non-payment."
In March 2012, "Rosenhaus Sports conceded that it could not pay commissions earned by Mr. Martoe, offering to pay 50-35% of what was owed to him by the end of the year while aiming to bring his 'outstanding balance current' by the end of 2013."
That the firm's "financial difficulties are a product of, among other things, the manner in which it recruits and maintains its clients with loans, advances, other payments, i.e., marketing guarantees, or reductions in agent fees due to Rosenhaus Sports."

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Martoe declined comment through his attorney, David Cornwell, who has a long history of representing NFL players and coaches.

Rosenhaus declined to comment on the allegations contained in the filing, citing the confidentiality of the arbitration process.

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