Sergei Fedorov filed a lawsuit against his former wealth manager Joseph Zada on Thursday, alleging that Zada defrauded the Russian superstar out of tens of millions of dollars.
The complaint states that Zada and his investment companies breached the fiduciary duty owed to Fedorov, by committing fraud, embezzlement and a host of other wrongs.
After a mutual friend introduced the two in 1998, Fedorov initially invested $43 million with Zapa. During their eleven-year relationship, Fedorov never received an accounting of his investments. As alleged in the lawsuit, whenever Fedorov inquired about his investments, Zada used a variety of deceptive tactics to prevent him from discovering the truth about his assets. When Fedorov asked for his money, Zada did not return it.
Earlier this year, the parties entered into an agreement that would pay back the former Detroit Redwing $60 million over a period of time in exchange for a release of any claim. However, at the time of the lawsuit, Zada had yet to make a payment. A signed copy of the March 2009 agreement is included in Fedorov’s complaint
While Fedorov was allegedly defrauded out of a substantial sum of money, he is by no means destitute. He recently made the news by signing a 2-year contract to play for Metallurg Magnitogorsk of the Continental Hockey League that is believed to be worth $4 million a year. As the suit says, Fedorov’s talents lie in ice hockey, not money management.
The lawsuit portrays Fedorov as someone who possesses limited knowledge of, and experience in, investment, legal and financial matters. Regrettably, athletes often lack the necessary knowledge to manage and invest their own assets. Although reputable financial planners and manager often fill this role, an outsider sometimes gains the athlete’s confidence. Thereafter, this person is entrusted with substantial sums of money, which is usually lost or embezzled.
Fedorov’s lawsuit comes almost a month after nearly two-dozen NHL players filed a similar suit against a California developer. The complaint alleges that the defendant spent $25 million on strippers, private jets and parties instead of allocating it towards developing a Mexican golf resort.
Fedorov seems to stand a better chance to recover his money, as Zada acknowledges that he owes the debt. “I'm absolutely not debating that money is owed,” Zada told the Detroit Free Press, who broke the story. The only issue seems to be how Zada will make such a repayment, as the Free Press is also reporting that Zada has been sued eight times in the last fourteen months.
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