Feds charge — and sue — Tim Duncan’s former financial adviser

Tim Duncan's former financial adviser, Charles Banks, is transported to federal court early Friday morning after he turned himself in on federal charges. Banks was apparently indicted this week in connection with allegations that he duped Duncan into making certain investments, losing between $1.1 million and $25 million of Duncan's money on Friday, September 9, 2016. less Tim Duncan's former financial adviser, Charles Banks, is transported to federal court early Friday morning after he turned himself in on federal charges. Banks was apparently indicted this week in connection ... more Photo: Ron Cortes Photo: Ron Cortes Image 1 of / 15 Caption Close Feds charge — and sue — Tim Duncan’s former financial adviser 1 / 15 Back to Gallery

In a one-two punch, federal authorities unsealed criminal charges Friday against Tim Duncan’s former financial adviser and sued him over allegations that he misled the retired San Antonio Spurs star into investing millions.

Charles A. Banks IV, 48, an investment counselor and venture capitalist who lives in Atlanta, surrendered to federal authorities in San Antonio. A federal grand jury had indicted him Wednesday on two wire fraud charges. He was released after posting a $50,000 cash bond, 5 percent of $1 million bail that was set during a brief initial appearance before a federal judge here.

Later in the day, the SEC made public a federal lawsuit the regulatory agency filed against Banks in Atlanta, accusing him of defrauding an investor who the suit does not name. The allegations, though, point to Duncan as the victim.

The FBI had investigated Banks for at least a year. If convicted, he faces up to 20 years in prison on each count. His arraignment was set for Sept. 20.

Banks held hands with his wife as he left San Antonio’s federal court and remained quiet.

“He’s a long-term successful businessman, a family man, a church man,” said his criminal defense lawyer, John Murphy, a former federal prosecutor who served several years as acting U.S. attorney here. “We’re confident that when all the facts and circumstances come to light, everyone will see there’s another side, and that he’s innocent of these charges.”

The indictment said Duncan met Banks in 1998, while Banks worked for the investment firm CSI. Banks became president of CSI in 2000, and left that post in 2007. CSI was acquired in 2011 by SunTrust Sports and Entertainment Specialty Group, a subsidiary of Suntrust Banks Inc., the indictment said.

The indictment said Duncan still believed Banks was his adviser after he left CSI because Banks approached Duncan “regularly to offer investment advice and encourage him to invest or loan money in projects in which (Banks) was involved.” Banks also served as a communications conduit between Duncan and SunTrust, the indictment said.

While Duncan and his lawyers have alleged he was duped by Banks into investing millions in sports merchandising ventures, wineries and hotels, the eight-page indictment deals only with around $10 million in investments or business loans Duncan made toward a sports entity formed in 2010 called Gameday Entertainment LLC. Banks was its chairman.

The SEC’s lawsuit contains the Gameday allegations and more, accusing Banks of numerous violations of securities laws. Some of the accusations mirror those that Duncan made in his own litigation against Banks, who was his adviser for much of his career with the San Antonio Spurs.

Duncan sued Banks in early 2015, accusing him of pushing or duping him into several investments without disclosing his own interests in them, including the Gameday deal. Duncan claims more than $20 million in losses and is seeking millions back. One of Duncan’s lawyers, Michael Bernard, said Friday that the charges against Banks involve $10 million of those losses.

Duncan has said the losses from 2005 to 2013 were discovered during a review of his finances as part of his divorce in 2013.

“Tim is very grateful for the work of the FBI and particularly Special Agent Jeff Jenson and, of course, the U.S. Attorney’s Office,” Bernard said. “He certainly feels vindicated in his claims against Mr. Banks. When the suit was filed, Tim said he was doing it because he wanted to make sure this didn’t happen to anybody else or any other athlete.”

The indictment, the SEC lawsuit and Duncan’s allegations all accuse Banks of fraud over the Gameday deal. Instead of being beneficial toward Duncan, the indictment said, the $7.5 million loan investment deal was actually detrimental to him, exposing him to millions of dollars in liability.

“All great news,” Banks reportedly texted Duncan during one modification of the arrangement, according to the indictment. “No downside.”

In September 2015, U.S. District Judge Xavier Rodriguez split up Duncan’s original lawsuit. The judge agreed with Banks that three funds Duncan invested in must be litigated in arbitration and that claims stemming from the million investment loan Duncan provided should be moved to Colorado.

The judge ordered Duncan to amend the San Antonio lawsuit to include only claims that can be resolved under the jurisdiction of the federal court here, resulting in a second lawsuit Duncan filed in November 2015.

In the latest suit, Duncan alleges that Banks duped him into pumping $1.1 million into a cosmetics company claimed to be profitable when it actually was in bad financial straits.

Duncan alleges Banks did not disclose that Métier Tribeca LLC, which does business as Le Métier de Beauté (the Craft of Beauty), was failing to meet its financial obligations or that Banks and others would not pitch in any of their own money for the deal when Duncan had initially been told that they would.

Among those Duncan was led to believe would invest in the company was another NBA standout, Kevin Garnett, the new lawsuit alleged.

Banks has previously denied Duncan’s allegations, saying Duncan has made millions off the investments and that Duncan agreed to certain minimum investment periods but is now trying to cash out early.

“I knew that Tim was unhappy because he wanted to get out of some of his investments after his divorce,” Banks told Wine Spectator in 2015. “But we've got some terrific investments and I'm not going to let Tim Duncan or anyone else bully me into changing the fund and possibly hurting other investors.”

gcontreras@express-news.net