When an NFL-athlete client heard about the alleged fraud of star quarterback Vince Young in 2012, former advisor Kenneth Ray Cleveland used it to his advantage.
“Saw that, but it is like I said this morning in my text message, you get the credit for your financial success,” Cleveland wrote in a 2012 email to former Indianapolis Colts defensive tackle Cory Redding. “Dare I say Vince Young is every bit as good an athlete as Cory Redding, but Cory Redding does his homework.”
Now, Cleveland has been sentenced to seven years in federal prison for a $4.7 million fraud scheme aimed at Redding and a handful of others, which eventually robbed the athlete of his retirement savings, the U.S. Attorney’s Office in the Southern District of Indiana says. The sentence followed Cleveland’s guilty plea to federal fraud and money laundering charges in connection with a long-running investment fraud.
Cleveland, 64, worked as Redding’s financial advisor for a decade, starting not long after Redding entered the NFL after college, prosecutors say. He first registered Cleveland Financial Services in California in 2002, and was referred to Redding by one of Redding’s former professors.
Over the next 10 years, Cleveland used fraudulent financial statements, emails, text messages and even in-person meetings, to describe how much of Redding’s money was invested, prosecutors say. He also played on Redding’s fears and “stoked his confidence” by comparing him to less financially successful NFL players like Vince Young, who sued his advisor for fraud in 2012. At the time, Young played for the Buffalo Bills.
“By the end of the 2014 season, when Redding was ready to retire from the NFL, Cleveland claimed to have made him millions,” the prosecutors say in a release. “But that was a lie. Redding’s money was gone.’”
Instead, Cleveland spent Redding’s money on a variety of personal expenses including credit cards, mortgages, office rent, health care and even payments to his mother, sister and daughter. He also used Redding’s money to fund a Ponzi scheme, making interest payments to other investors, prosecutors say.
In 2011, the SEC revoked the registration status of Cleveland Financial Services, according to the firm’s last Form ADV.
As a result of the fraud, Redding did not retire after the 2014 season with the Indianapolis Colts and instead played another year for the Arizona Cardinals to recoup some of his losses.
Cleveland's public defender, Michael Donahoe, says the sentence could have been less severe. “I argued that his age reduced the risk of recidivism and that he was not a danger to the public to go out and re-offend, and would never be in a position to handle other people’s money again,” Donahoe says. “Based on that, there was very little chance of him committing additional crimes.”
Sentences tend to be more severe, however, when individuals are involved, as opposed to institutions or corporations, he says. “There’s much more sympathy,” Donahoe says. “The harm hits closer to home because we can all relate to how it would feel if our life savings had been wiped out.”
Cleveland already served 18 months in state prison in California for related crimes, according to Donahoe. However, since he was not forthcoming to authorities about the crimes relating to Redding, the judge did not consider previous incarceration as time served.