SAN FRANCISCO – Silicon Valley financier William (Boots) Del Biaggio III was scrambling during the summer of 2007 to buy a significant portion of the NHL’s Nashville Predators.
The 24 per cent piece of the team he was after would have achieved a long-term goal, cementing his status as a major player in the NHL. Authorities allege he wanted the franchise ownership so much that he turned to crime.
Today, he faces more than six years in prison after pleading guilty to one charge of fraud for using forged financial documents to obtain US$110 million in loans from several banks and two NHL owners.
Del Biaggio’s lawyer did not immediately return telephone messages. In court papers, Del Biaggio admitted to the fraud and said he will attempt to pay back his victims.
The rise and demise of the flamboyant 41-year-old high roller is chronicled in federal court records, including a Securities and Exchange Commission lawsuit that outlined the fraudulent loans and a separate $19-million Ponzi scheme in which he used investors’ money to finance his lavish lifestyle.
Hockey was Del Biaggio’s passion. In 2002, he bought a two per cent ownership stake in the San Jose Sharks. Two years later, he was part of an investment group involving Pittsburgh Penguins owner Mario Lemieux and Los Angeles Kings president Luc Robitaille that purchased the minor-league Omaha Lancers in Nebraska.
Del Biaggio and Lemieux were frequent golf partners and the two purchased a $2-million home in Santa Monica, court records show. And Del Biaggio and Robitaille opened a $2-million real estate investment fund.
Del Biaggio, the son of a respected banker and grandson of a successful beer distributor, lived with his three children and socialite wife in a gated home in San Jose’s Almaden neighbourhood. An elaborate fundraising event there turned his tennis court into a stage for the singer Seal and brought in $400,000 for the American Heart Association. He maintained his office on Silicon Valley’s famed Sand Hill Road and was considered a high roller in Las Vegas.
Nevertheless, the millions he needed in 2007 for his 24 per cent share of the Predators was far beyond his means.
So Del Biaggio turned to David Cacchione, a financially strapped stockbroker who owed him $2 million. According to federal prosecutors and the SEC, the duo hatched a simple, lucrative and illegal scheme.
Cacchione emailed Del Biaggio account statements from several wealthy clients showing tens of millions of dollars worth of stock holdings.
Del Biaggio then doctored the account statements by cutting out the clients’ names and pasting in his own.
Using the falsified documents, Del Biaggio obtained about $110 million in loans and loan guarantees from two NHL owners and various banks, including $4 million from the Heritage Bank of Commerce, which he and his father launched in the mid-90s.
Del Biaggio also showed the account statements to NHL authorities to back his ownership bid. And that has led some to question whether the league adequately examined Del Biaggio before authorizing the sale of the Predators to his ownership group.
“What kind of due diligence did the NHL do on this?” said Jeffrey Citron, a Toronto lawyer who served as the NHL union’s No. 2 lawyer for five years ending in 2000. “Typically I would expect them to be much more thorough.”
The NHL defended its handling of Del Biaggio’s ownership application and said that his influential hockey friends had no bearing on the approval process.
“Del Biaggio’s application received the normal level of due diligence done on investments of the same size,” said NHL deputy commissioner Bill Daly. “Del Biaggio was not given any special treatment.”
Court records show that Minnesota Wild owner Craig Leipold and AEG, which owns the Los Angeles Kings, loaned Del Biaggio a combined $17 million to buy the team without the permission or knowledge of the commissioner’s office.
The league has since changed its policy to require owners to disclose all financial deals with each other.
“The situation was unfortunate and regrettable, but it has not had a huge effect on the league or how we conduct business,” Daly said.
Lemieux declined to comment and a spokesman for the Los Angeles Kings said neither Robitaille nor an AEG representative would comment.
Del Biaggio’s world began crumbling a year ago. New York-based Modern Bank demanded repayment of its loan in late May after discovering that the accounts Del Biaggio used as collateral did not belong to him.
Then his father’s bank and several other lenders sued him. Del Biaggio filed for bankruptcy. And his wife filed for divorce.
Del Biaggio, who has pleaded to a federal fraud charge, is scheduled to be sentenced in July to at least 6 1/2 years in prison.
Del Biaggio’s fraud of more than $100 million is not in the league of the billions stolen by Bernie Madoff, but his greed has devastated his victims.
Lawyer Ronald Laupheimer has to continue working because most of the $600,000 retirement nest egg he invested with Del Biaggio was lost in the Ponzi scheme.
The 63-year-old is considering selling his San Francisco home of 35 years and, like other Del Biaggio victims, he worries that the banks and NHL owners Del Biaggio defrauded will be awarded the lion’s share of his estate.
“I was pretty close to retirement,” he said. “It’s been tough and we don’t know what we are going to do.”