The Eddy Curry Story: More Money, More Problems

One of the side stories that has consumed the NBA the last few years is the many high profile bankruptcies of NBA players after their careers end.  In a well-remembered Sports Illustrated story from 2009 by Pablo S. Torre, it was estimated that 60% of NBA players go bankrupt within two years of retirement.  The article discussed the factors that led to the players losing astounding sums of money so quickly: hiring cronies to manage the cash, investing heavily in real estate (and failing to allocate funds to steady securities), divorce/child support costs, and just playing spending too much.

Since the 2009 article, we’ve seen even more bankruptcy filings by former big earners Derrick Coleman (reportedly earned $91 million in the NBA) and Antoine Walker ($108 million), as well long-retired vets like Rick Mahorn. Interestingly, we have heard the low lights of certain athletes but the stories never detailed the descent and the multiple bad decisions that it takes to blow millions as they were being made.  Rather, we only heard the lament after the filing of the bankruptcy petition.  More recently, we now have an active NBAer who may provide us with insight into the problems before we get to bankrupcy in Eddy Curry, who will make over $11 million next year (and has been paid over $57 million for his career so far).  Just a few months ago, he was whacked with non-payment of a loan, as well as a failure to pay a settlement on civil claim in Illinois.

We obviously can’t know exactly is going on behind the scenes but Curry has left a trail of litigation that gives a nice little window into his activities.  So let’s take a look at what we’ve got.  Remember, we don’t know what’s true or not but that the allegations are taken from court pleadings that we found online.  Here’s what we have with Curry:

-July 2008: Curry is sued by Jacob & Company Watches, Inc., a well-known jeweler for athletes and other celebrities.  According to the complaint, Curry purchased multiple pieces of jewelry for a total cost of $952,000 in 2005 but failed to pay off the full amounts, leaving a balance of $452.686.88.  The matter was settled in March 2009.  It is not clear what the settlement terms were but annexed to the motion papers was an e-mail exchange between the attorneys for the jeweler and Curry’s attorney that implied that Curry would pay the full amounts by November 2008.  Apparently, the money was not paid at that time and the jeweler moved for a default judgment against Curry in January 2009.  Presumably, this move finally convinced Curry to pay.

-In November 2008, another action was filed against Curry by a company called PSC Cur, LLC.  It is not clear what PSC does since the only document filed with the court was a judgment by a confession signed by Curry, attesting that he owed PSC $1.45 million dollars.

-In January 2009, Curry is sued by his chauffeur David Kuchinsky for $98,000 in back wages and expenses.  The complaint also had some salacious allegations that Curry sexually harassed and physically menaced.  In January 2010, the case was dismissed because there was apparently a mandatory arbitration agreement in the employment contract.  There is no record as to whether the arbitration has been resolved.

-A morass of litigation has arisen from a loan Curry was  given by a company called Allstar Capital, Inc. in February 2008.  While in Nevada, Curry was loaned $570,000 by Allstar.  The loan was to be repaid in slightly less than six months.  The interest rate was an incredibly high 84.36% per year and would increase to 89.36% if Curry failed to re-pay.  Nevada is one of the few states without usury laws (by comparison, Curry’s two main places of residence, Illinois and New York have usury limits of 9% and 16% respectively).  Allstar quickly obtained a judgment for $1.2 million in Nevada (plus continuing interest at the 89% number).

Since that time, Curry has sued Allstar and its principal Daniel Gordon, alleging that the contract should be voided because Gordon had lent the $570,000 by stealing the funds improperly from his wife.  The suit has been dismissed against Allstar but is still pending against Gordon, who also has a colorful past and pled guilty to criminal charges involving some illicit stock trading relating to the famous Enron meltdown in the early 2000s.

In the meantime, Allstar has executed on the judgment against Curry in New York.   Allstar sought to garnish wages from Curry to re-pay the money owed by at the rate of $75,000 per month.  Curry opposed the garnishment, claiming that such a large garnishment would create an undue hardship.  The dispute went into some details as to how NBA players are paid and where exactly their money goes.  Curry testified that of the $10.5 million he was to make for the 2009-10 season, half the salary is made in bi-monthly payments of $358,746.45 over the six-month regular season and the other half is paid in lump sum on July 1, 2010.

Curry further stated that much of his salary is pledged, garnished, or subject to other expenses.  Each pay check is garnished (through both judgments and taxes) in the amount of $207,007.06, netting Curry just under $275,000.  Curry argued that he had a load of expenses each month that made paying out $75,000 a month a burden.  Curry listed the following expenses:

-personal/household expenses: $30,000

-rent: $17,000

-payments to parents, sister, and father-in-law: $16,900

-cars: $2,900 for two range rovers plus $2,500 in insurance

-chef: $6,000

-mortgage on Illinois home: $40,000 (which is in foreclosure)

-childrens’ school tuition: $6,290

The items totaled $122,469.62 in obligations, leaving Curry with disposable income of about $150,000 per month.  Curry also apparently owes a good deal of cash to other creditors.  He stated that he owed $8.2 million to various creditors, notably $680,000 on his Illinois house’s mortgage (which has a negative equity value of $1,000,000 and is in foreclosure), $180,000 in attorneys fees, and $350,000 to fellow Chicagoan NBAer Juwan Howard.

-More recently, a Chicago judge issued a warrant for Curry’s arrest for failing to pay a civil settlement in a case where Curry had illegally had sexual relations with the plaintiff when she was 14 and he was 18. The case was settled for $660,000 but Curry been in arrears in the settlement payments to the tune of nearly $200,000.   His attorney in that case is the firm that he owes about $180,000 to and they had attempted to withdraw from the case for that reason earlier, though the court denied that application.  The article also mentions that Curry has filed a suit in Chicago against his former business manager seeking nearly $4 million.

If Curry represents the average NBA player in financial troubles, we can see that his problems stem from bad investments, irresponsible handling of affairs, overspending, and being taken advantage by vultures.  At this point, Curry should be able to put out most of these fires with the $11 million coming his way in 2010-11, assuming he gets his house in order.  But based upon the past record that seems unlikely.

Is there a way to protect some of these athletes from themselves?  It would’ve been pretty simple for Curry to have taken $100,000 per year in salary and put it in some annuity not to be touched for 20 years, thereby guaranteeing him a ton of cash for his golden years.  But the NBA can’t really legislate financial and personal common sense.  Hopefully, some players will look at all the players who have blown potential generations of fortunes and recognize that newfound wealth requires a professional to manage a complex financial estate.  This isn’t a problem unique to athletes.  Big money means big risk and all sorts of legal and tax issues that most people wouldn’t fully understand on their own either.