NFL Warns Players About Florida Investment Program

By PHIL MCCARTYOf DOW JONES NEWSWIRES

WASHINGTON -- The National Football League has warned players about investing with Florida-based Ware Enterprises and Investment Inc., which promises a 10% monthly return.

The Florida Office of Financial Regulation uncovered possible criminal activity after looking into Ware Enterprises and turned over its findings to the FBI in September, a person close to the probe said.

NFL spokesman Greg Aiello said the league investigated the Ware Enterprises investment program in response to a request from some of its players last summer. During the probe "we discovered that there are potential problems with the investment program," he said, but didn't provide further details.

As a result, Aiello said the league sent a memo to its teams and players in late July saying that they "developed information regarding possible misrepresentations" with respect to Ware Enterprises.

The memo asked players and teams to contact the NFL security office if any players had invested in the program, Aiello said. As many as 20 NFL players have invested with Ware Enterprises, Aiello said.

The NFL contacted the FBI and the Securities and Exchange Commission last summer about Ware Enterprises. In mid-October, the NFL turned over more specific information to both the FBI and SEC, Aiello said.

Calls to the FBI and SEC office in Miami went unreturned. An SEC enforcement attorney at the agency's headquarters in Washington declined to comment on the case.

Warren Ware, Ware Enterprises' president and chief investment manager, said in a telephone interview that the FBI and SEC "don't have a problem with us."

Asked about allegations of securities fraud and the NFL investigation, Ware said he doesn't have to register the program because he doesn't sell securities or invest in speculative funds. Ware added the NFL is frustrated with him because he will not provide it with information on his program.

He said his investment opportunity known as "Dreamkeeper Program" guarantees a 10% monthly return for the first 10 months, saying Ware Enterprises "has special relationships that allow it to have large returns."

Ware's brother Roderick, a senior accounts manager for Ware Enterprises, declined to say how the program invests client funds.

The head of the NFL Players Association financial advisory program, Kenneth Ballen, said he's heard of Ware Enterprises, but that it is not registered with the players union. The Players Association registers investment advisers and others who offer financial services to players.

Fraud is a real risk for NFL players. The Players Association conducted a survey showing that between 1999 and 2002, 78 players were defrauded of about $42 million. Ballen said he didn't know of any players who had invested with Ware Enterprises.

The Dreamkeeper literature says that the fund has "relationships with some of the nation's largest brokerage firms" that allow it to take part in "major initial public offerings and targets specific companies that may become participants in potential takeovers."

Ware's brother Roderick said, "If we were doing anything wrong, they would have shut us down already."

Federal law lets the SEC regulate investment contracts in addition to conventional stocks and bonds. The Supreme Court has said such contracts include "countless" plans in which people invest in enterprises in exchange for profits.

Private Investigator Probes Ware
A San Diego private investigator, the Fraud Discovery Institute, also has investigated Ware Enterprises and Warren Ware, and charged that Ware Enterprises has made "proclamations that the fund is endorsed by the NFL ."

The NFL's Aiello and Larry Sweeny, the NFL's director of investigative services, said they have no "firsthand" knowledge that Ware Enterprises is claiming to be endorsed by the NFL . Both were aware of the endorsement claim in the Fraud Discovery report.

"We urge players to consult us about their investments, but ultimately it's up to them," Sweeny said.

The Fraud Discovery report was produced by Barry Minkow, the group's co-founder who was imprisoned for seven years for defrauding investors through his ZZZZ Best carpet-cleaning company. Minkow, now an antifraud investigator, in early December uncovered an $800 million Ponzi scheme in Orange County, Calif., involving a firm called Financial Advisory Consultants.

Minkow said he interviewed several investors in Ware Enterprises and that many "immediately knew and could sometimes name NFL players that are participants in the fund."

According to Minkow's report, Ware Enterprises has more than 1,000 investors with a total of at least $100 million invested.

The report also said 15 to 17 NFL players have invested in the program in addition to some players from the National Basketball Association. Minkow said he also has contacted the FBI and SEC about Ware Enterprises.

Ware declined to comment on Minkow's report, saying he hadn't seen it.

The head of NBA's security, Bernie Tolbert, said he is familiar with Ware Enterprises and said as far as he knows no NBA player has invested in the program.

The NBA provides training to all rookies on financial management and how to detect potential fraudulent investments. The NFL provides a similar service for their players.

The Dreamkeeper Program solicitation materials said it accepts investments ranging from $2,000 to $10 million and guarantees investors a check equaling a 10% return each month for 10 months.

"After the first 10 months are over, payment of 5% of the active account balance will be paid out monthly. That is still 60% per year before taxes,"
the Ware Enterprises material claims. But later in the material, Ware says the 5% per month is not guaranteed.

"The prospectus contains no independent proof of profitability (and) is clearly an unregistered security being offered in several states (and
countries) by a man who is not a registered investment adviser," Minkow's report said. "The offering itself offers returns that clearly convey impropriety."

-By Phil McCarty, Dow Jones Newswires; 202-862-9251; phil.mccarty@dowjones.com