Blind-sided: Blue Jackets’ Jack Johnson is bankrupt; who led him there is biggest shocker
By Aaron Portzline
The Columbus Dispatch • THURSDAY NOVEMBER 20, 2014 12:43 PM
On the morning of Oct. 7, two days before the Blue Jackets opened the 2014-15 season, Jack Johnson left his Ferrari parked in the garage of his Dublin apartment and drove his BMW to a federal courthouse Downtown to file for bankruptcy.
Johnson has earned more than $18 million during his nine-year NHL career, not including the $5 million he will be paid this season by the Blue Jackets.
Almost all of the money is gone, and some of his future earnings have already been promised — which is why Johnson, surrounded by a new team of financial advisers and an attorney, signed his financial surrender.
The scene was nearly four years in the making, after a string of risky loans at high interest rates; defaults on those loans, resulting in huge fees and even higher interest rates; and three lawsuits against Johnson, two of which have been settled and one that’s pending.
“I’d say I picked the wrong people who led me down the wrong path,” Johnson, a 27-year-old defenseman, told The Dispatch last week. “I’ve got people in place who are going to fix everything now. It’s something I should have done a long time ago.”
He has declined to comment further.
But sources close to Johnson have told The Dispatch that his own parents — Jack Sr. and Tina Johnson — are among the “wrong people” who led him astray financially.
In 2008, Johnson parted ways with agent Pat Brisson, who represents some of the National Hockey League’s biggest stars, including Sidney Crosby, Patrick Kane and Jonathan Toews.
With no agent and little knowledge of how the financial world works, Johnson turned over control of his money to his parents.
In 2011, in the weeks leading up to Johnson’s first big contract — a seven-year, $30.5 million deal signed with the Los Angeles Kings, under which he now plays for the Blue Jackets — Johnson signed a power of attorney that granted his mother full control of his finances.
Tina Johnson borrowed at least $15 million in her son’s name against his future earnings, sources told The Dispatch, taking out a series of high-interest loans — perhaps as many as 18 — from nonconventional lenders that resulted in a series of defaults.
The tangled web is one that The Dispatch has been investigating since the spring, and — according to court documents, NHL sources and sources with knowledge of the situation — involves a U.S. congressman from Iowa, the son of an oil baron in Texas and a former University of Michigan basketball star.
Because Johnson’s name is on the loans, he has been sued at least three times for more than $6 million for defaulting, as in the case of the mortgage on a house in Manhattan Beach, Calif. In court documents, Johnson says his parents bought the house with his money but without his knowledge.
Johnson’s parents allegedly each bought a car, spent more than $800,000 on upgrades to the Manhattan Beach property and traveled, often to see him play NHL games for the Kings and Blue Jackets.
“Jack would ask (his parents) questions: ‘What’s this? What are these guys calling about?’ ” a source said. “And they would tell him not to worry about it, just worry about playing hockey.
“These were his parents, right? He trusted them. It wasn’t until last spring or early summer that he understood there was a significant problem.”
In his bankruptcy filing, Johnson claims assets of “less than $50,000” and debts of “more than $10 million,” although sources say the debt could be in the neighborhood of $15 million.
A bankruptcy hearing is scheduled for Jan. 23 in Los Angeles.
Tina Johnson’s cellphone number listed in court documents is no longer in service.
Jack Johnson Sr. has not returned several messages left on his cellphone, and several of the lenders have no storefronts or business phones.
Johnson has cut off all contact with his family, a source said.
Johnson’s paychecks from the Blue Jackets have been garnisheed to the point where, at the end of last season, “His paychecks were gone before he even got them,” a source said.
“I’ve seen lots of instances of parents riding their kid’s coattails around,” said an NHL executive familiar with the case. “I’ve never seen a case as ugly as this one, where the parents took such advantage of their kid.”
Retracing the problems
Johnson has been a big deal in hockey circles since he was a teenager.
He attended Shattuck St. Mary’s School, an elite boarding school in Minnesota, where he became close friends with teammate Crosby, now an NHL superstar with the Pittsburgh Penguins.
To stay close to their son, Johnson’s parents rented a home one block from the school.
When Johnson went on to play two seasons at the University of Michigan (2005-07), his parents were omnipresent there, too. Jack Sr., who played hockey at the University of Wisconsin, was a hit with Wolverines fans for his second-intermission dances during home games in Ann Arbor’s Yost Ice Arena.
And it was at Michigan, sources say, that Johnson’s path to financial ruin began.
Maurice Taylor, a star basketball player at Michigan from 1994 to ’97 who was later disassociated by the school after a string of NCAA violations, steered Johnson and his family toward Simon Vo, who was to serve as Johnson’s business manager after Johnson fired Brisson, the agent.
Johnson had been paid relatively modest salaries early in his career, earning a high of $1.6 million in his fourth season in the league.
In the months leading up to his $30.5 million deal with the Kings, however, Vo and Steve Miller, who owned a mortgage company in Los Angeles, began discussing with Johnson’s parents the idea of “monetizing” Johnson’s contract, sources said.
“Monetizing” — that is, borrowing against guaranteed future salaries — has led to the financial woes of many professional athletes.
One prominent NHL agent, asked whether he would ever advise his clients to monetize a contract, responded: “Never, never, never.”
Two months after Johnson’s big contract extension was signed with the Kings on Jan. 8, 2011, his parents began borrowing money against their son’s earnings, court documents show.
Things quickly got out of control.
“Intended or unintended, there are cases where there is a sense of entitlement among the parents of pro athletes,” said Gary Marcinick, a partner at Columbus-based Budros Ruhlin & Roe, a fee-only wealth-management firm. “It’s more common than you think.
“The families have made great sacrifices to get these players where they are. That’s the thought process. It’s almost a tribal sense — that they’re all in this together.”
Marcinick — who has worked with several pro athletes, including several current and former Blue Jackets players — said he has no knowledge of Johnson’s situation and would not discuss it specifically.
But, he said, the idea of a player being unaware that he is millions of dollars in debt is both hard to fathom and entirely believable.
“It is plausible; I’ve seen it,” Marcinick said. “These players are so young, and they have a lot of money coming in — so they’re targets. They rely blindly, often, on the judgment of their parents or agents, and they sometimes have agendas that are not optimal.
“Players find it difficult to question their agents. They don’t even know the right questions to ask. And they’re even more reluctant to question Mom and Dad.”
Miller was the first lender, extending a $1.56 million loan on March 9, 2011, that Johnson’s parents used to buy the home in Manhattan Beach, a third of a mile from their son’s residence, while he played for the Kings.
Johnson, a source said, believed that his parents took out a mortgage using money left to them in the will of a relative who had recently died.
The loan — which carried a 12 percent interest rate, almost three times the market rate — quickly went into default because it called for an initial payment of more than $1 million. (The contract extension Johnson signed with the Kings didn’t kick in until the following season, and he didn’t have that much in the bank.)
One day after the home loan was signed, on March 10, 2011, the Johnsons borrowed $2 million at an interest rate of 12 percent from a software developer in Iowa named Rodney L. Blum, who this month won a seat in the U.S. House.
Blum’s office did not respond to interview requests left with Blum’s spokesman by The Dispatch. It’s unclear how Johnson’s family came to know him or why he was making a personal loan at a high interest rate.
Barely a month later, on April 14, 2011, the Johnsons borrowed $3 million — at 24 percent — from Pro Player Funding in upstate New York, a company that “monetized” several NFL players’ contracts during a work stoppage. Former NFL stars Vince Young, who went bankrupt, and Bryant McKinnie, who was sued for default, were among the company’s clients.
Johnson was sued by both Blum and Pro Player Funding within a month of the loans being signed. He signed settlements, according to court documents, without appearing in court to contest the lawsuits.
To settle Blum’s suit, Johnson had $41,800 — or 25 percent — garnisheed from his bimonthly Blue Jackets paychecks over much of the past two seasons.
The next two years brought additional loans and additional defaults, sources said, but the next loan that ended up in the court system was extended on Sept. 13, 2013: a $400,000 loan at 18 percent from EOT Advisors in Tarrant County, Texas.
Adam Blum, son of an oil baron and operator of EOT Advisors and other financial planning firms, would not comment through his attorney. Blum is not believed to be related to Rodney Blum.
EOT Advisors sued Johnson on Dec. 30, 2013, for $1 million and for fraud, saying the loan application failed to disclose his true financial standing.
The case remains open, although it is frozen because of Johnson's bankruptcy filing.
Johnson will find it easier, those close to him say, to make financial restitution than to reopen his relationship with his parents.
Those close to him say Johnson is pretty frugal. The Ferrari, which likely will be a casualty of the bankruptcy, was the one “extravagant” gift he bought for himself upon turning pro, a source said.
When Johnson demanded transparency from his parents and hired his own attorneys and financial advisers in May, he took aim at the first loan taken out in his name.
On Sept. 22, he sued Miller, National Mortgage Resources and Vo and his company, CYA Investments, for at least $1.5 million, including punitive damages.
Johnson’s suit was intended in part to stop Miller and National from foreclosing on the house in Manhattan Beach, where his parents lived until he unearthed his financial woes.
Johnson had a buyer ready to pay $1.8 million for the home — money he would have used to pay the debts remaining from the initial loan, he said.
But the courts denied Johnson’s injunction to prevent the foreclosure.
In the court filing, Johnson describes the loan as “egregious, unethical and wrongful,” and said it was a “deliberate and predatory lending scheme ... to line their own pockets at the expense of Johnson.”
Further, the filing says, they “unscrupulously” conspired to have Johnson’s mother acquire the power of attorney, and that he was “provided only the ‘signature page’ of the loan document and requested, by his mother, to sign.”
Two sources close to Johnson say he is confused and hurt and is concerned about the well-being of his 16-year-old brother, who lives with his parents in Michigan.
But Johnson, sources told The Dispatch, doesn’t want to pursue criminal charges against his parents, who aren’t named in his suit.
John Davidson, the Blue Jackets’ president of hockey operations, would not comment publicly but did say the club is aware of Johnson’s situation and is “standing beside him.”
The NHL would not comment on Johnson’s situation. The NHL players’ association certifies players’ agents but has opted not to certify financial planners, according to a spokesman.
Johnson’s Columbus-based attorney, Marc Kessler, said Johnson has surrounded himself with a network of people who, finally, are serving his best interests.
“Jack’s financial situation was detrimentally affected by the actions of those who were trusted to handle his business affairs,” Kessler told The Dispatch. “Unfortunately, these were predatory lenders going so far as to use Jack’s NHL contract as collateral.
“In order to best protect his future, he’s filed for Chapter 11 bankruptcy protection and he’s enlisted a new group of professionals who are helping him get through these matters. Jack remains focused on hockey. He appreciates the support of the entire Blue Jackets organization and the fans during what is a pretty difficult time.”
This is a horrible enough thing to happen to a normal person, but JMFJ has always had this freakishly close relationship to his family, which is probably what led him to ignore their shadiness until it was too late. I'd have been inclined to believe that his parents were duped by someone, but he clearly thinks that they outright lied to him about stuff.
I first thought there was something wrong when he deleted his Twitter and Facebook for no apparent reason, and then there was the lawsuit against the business manager, but in that story it seemed that his mother was also being taken advantage of at the time. Perhaps that was before he found out more.
Michael Arace commentary: Blue Jackets’ Jack Johnson in sadly familiar predicament
By Michael Arace
The Columbus Dispatch • THURSDAY NOVEMBER 20, 2014 4:59 AM
Seven months ago, The Dispatch caught wind of attempts to serve a subpoena on Blue Jackets defenseman Jack Johnson at Nationwide Arena. Johnson tried to evade service, and his teammates were helping by acting as a sort of human shield.
Subpoena? For what?
It did not take long for beat writer Aaron Portzline to find a trail of public records that described a string of usurious loans, subsequent defaults and inevitable lawsuits.
Along the trail there appeared prominent businessmen, one now a member of the U.S. House of Representatives, who had little side businesses that entailed loaning money to people who could not otherwise get loans. They charged exorbitant rates of interest.
The word predatory sprang to mind.
Then, another question: Why was Johnson, who has grossed nearly $19 million in salary, who makes $5 million annually, apparently broke?
The mind jumps to all kinds of conclusions when you learn of something like this. In this case, all signs point to Johnson as victim, that he was taken advantage of by his family.
It seems astounding, but it happens. He is only the latest athlete/millionaire to go bust.
Sports Illustrated put meat on the bones of this concept in March 2009, with a story headlined, “How (and Why) Athletes Go Broke.” ESPN in 2012 followed up with a 30 For 30 installment entitled, Broke. Director Billy Corben described his documentary this way:
“It’s essentially a step-by-step guide, ‘How to Lose Millions of Dollars Without Breaking a Sweat.’ ”
It is about 20-year-olds who suddenly are rich and who have no concept of personal finance. They are caught up, and competing, in the lifestyle. They are stalked by people looking to get their money. Sometimes, it does not take long to vaporize.
According to SI, 60 percent of NBA players are broke within five years of retirement, and 78 percent of NFL players are experiencing some level of financial stress within two years of retirement.
Stay around long enough in my business and you know some of these guys. I covered University of Connecticut basketball in the late 1990s, at a time when Richard Hamilton was the easygoing superstar and a kid by the name of Josh Nochimson was the student manager.
Hamilton took Nochimson along to the NBA as his business manager. In 2008, Hamilton sued Nochimson, alleging that Nochimson had stolen $500,000 to $1 million from him.
“We don’t like to look over stuff, but you can’t trust anybody,” Hamilton said at the time. “I don’t give a damn who it is, you can’t trust nobody.”
Two years ago, tennis star Arantxa Sanchez Vicario got into tax trouble with the Spanish government.
She made more than $60 million in purses over her career. She found out her family “lost” most of the money.
The way it looks, something similar happened with Johnson, who trusted his parents to handle his money. The way it looks, Johnson’s parents were less than forthcoming when the sharks started circling. The way it looks, Johnson’s parents got in a hole, could not dig out and left their kid in their hole with the shovel.
I feel for Johnson, who essentially has divorced himself from his parents and filed for Chapter 11 bankruptcy protection. He is experiencing something that is emotionally wrenching and publicly embarrassing.
I am also rooting for Johnson, who has taken ownership of a situation that was not wholly of his making. That is admirable. I hope this is a cathartic experience for him and the start of something new, and better.
His chin is raised.
I really like the image of the human shield of Blue Jackets. :P
Jack Johnson's family torn apart
Blue Jackets star severs ties with family as he blames parents for bankruptcy
By Scott Burnside | ESPN.com
Updated: November 20, 2014, 3:11 PM ET
It's often hard to reconcile what you believed to be the truth for years from what you later find out is the real truth.
So is the story of Columbus Blue Jackets defenseman Jack Johnson.
The hockey world was abuzz Thursday as the explosive story of the financial wreck that Johnson's personal life has become was reported by veteran Columbus beat writer Aaron Portzline -- and later confirmed by ESPN.com.
Documents also obtained by ESPN.com and information provided by those who are familiar with the Johnson situation confirm Portzline's meticulous outline of a young player whose own parents led him to financial ruin.
Johnson filed for bankruptcy, and documents allege that his mother Tina Johnson borrowed at least $15 million against her son's future earnings and that Jack Johnson's current worth is less than $50,000 with debt exceeding $10 million, according to the report.
The relationship between Jack Johnson and his parents has been severed, according to the Dispatch.
It is all true, one source familiar with the situation told ESPN.com.
Before he signed his current seven-year, $30.5 million deal, Jack Johnson parted ways with highly respected agent Pat Brisson and turned over power of attorney to his mother. In light of recent events, it would not be at all surprising to see Johnson return to Brisson as a client in the coming days.
All of this is both shocking and more than a little sad, not just the financial mess but the personal toll this must have taken and will no doubt continue to take on Jack Johnson, his younger brother Ken and the rest of the family.
I first met Jack Johnson at his parents' home near Ann Arbor, Michigan, a few months before he would be drafted by the Carolina Hurricanes with the third overall pick in the 2005 draft.
His parents, Jack Sr. and Tina, had moved to Michigan to be close to Johnson when he joined the U.S. National Team Development Program after attending hockey prep school Shattuck-St. Mary's in Minnesota, where one of his close friends was Pittsburgh Penguins star Sidney Crosby.
Crosby is represented by Brisson.
Before that, the Johnsons quit their jobs and moved to Minnesota instead of having Jack live on campus at Shattuck.
The Johnsons appeared to be a tight-knit family, with Jack Johnson doting on younger brother Kenny. Even at that young age, it seemed obvious that Jack Johnson was aware of the sacrifices his parents had made to pave a smooth route to hockey success.
"I think about it all the time," Johnson told ESPN.com in 2005. "If all this stuff works out, it's all because my parents got up at 4 in the morning to take me to skate before school started. I wouldn't be here if it weren't for them. I owe so much to them I'll never be able to make it up."
Prophetic? More than a little.
A few years later, I talked with Tina Johnson at the Vancouver Olympics in advance of the gold-medal game between Canada and the United States, for whom Jack Johnson was playing.
"Amazing is just a word that falls off your lips pretty often around here," she told ESPN.com at the time. "It's just such a joyful experience to be here together and nerve-racking at the same time."
Jack Johnson said at the time that he thought of his parents and his younger brother as he prepared for the first Olympic tournament game.
"They said there were a lot of emotions involved," Jack Johnson said in the days leading up to the gold-medal game, ultimately won by Canada. "They thought about all the 5 a.m. mornings, going to the rink, and actually I did too getting dressed. You kind of run through that -- everything that you went through to get here all the way back to when you're 5 years old to when you're 23 sitting in the Olympics. You can't help but think about things like that.
"To be able to share this with my family is real special. They're the reason I'm here, really. Without them, I wouldn't be here."
Now, less than five years later, his relationship with his parents appears to be on the rocks as Jack Johnson tries to rebuild his financial future.
While Jack Johnson's situation would seem to be a rare one, it is also a cautionary tale for all young athletes.
The National Hockey League Players' Association includes two financial components to its annual rookie education program. Young players are addressed every year by financial experts who provide advice about diversifying their investments and ensuring that their investments aren't handled by one single source.
There is also a part of the process that involves testimonials from players who share some of the mistakes or pitfalls they encountered in their lives.
The NHL also has a financial component to its annual security address to players, while the union's financial educational component is reinforced during annual visits with individual teams.
Still, it's obvious that people like Jack Johnson sometimes fall through the cracks, and the price they pay, on a number of levels, can be a steep one.
Talking with Jack Johnson last spring during the playoffs, he appeared to be in a good place with his career and was upbeat about his future, in spite of being left off the U.S. roster for the Sochi Olympics. He had embraced his trade from Los Angeles to Columbus as part of the Jeff Carter deal in 2012.
A fan favorite, Jack Johnson was enjoying his role in helping redefine a Blue Jackets team that had known nothing of playoff success as they pushed Pittsburgh -- and his pal Crosby -- to six games in a rollicking back-and-forth first-round series.
"I don't think I've changed at all since I've been here," Johnson said. "I'm just the same guy, I think, same guy that came out of college. I just ended up in a different city, just different place, different atmosphere. It's worked out great for me. I couldn't be happier here, and it's been a great fit for me."
If only his personal and financial life had found such a solid foundation.
This is the one that makes me really want to cry. And thinking about what he said, that he won the lottery as far as parents are concerned. This must be one of the biggest betrayals that anyone could ever experience.
JMFJ's horrible parents
November 21st, 2014