SBJ/July 17 - 23, 2006/Labor Agents

Steinberg: I didn’t know of loans at the time

NFL player Chad Morton has claimed in a lawsuit that his former agent, Leigh Steinberg, and one of Steinberg’s former employees borrowed more than $300,000 from him for a business venture and did not repay it, an allegation that, if true, could violate NFL Players Association agent regulations.

Steinberg said Morton did lend money to SLL Enterprises, a company set up to invest in China in which Steinberg says he is a minority equity partner. But Steinberg added, “I was unaware of the circumstances at the time the loan was made. I later became aware of it. After I became aware of it, I tried to help Chad unravel the situation.”

NFLPA regulations prohibit agents from borrowing money directly or indirectly from NFL players. Morton, a running back and kick returner for the New York Giants, was a Steinberg client from 2000 until late last year.

Chad Morton says in a lawsuit that his former
agent borrowed money from him.
Morton is now a client of David Dunn, Steinberg’s former partner who was involved in a bitter court fight with Steinberg in 2002 after Dunn left and took 50 NFL player clients to form his own agency, Athletes First.

In the current lawsuit, the lead counsel for Morton is Laura Sullivan, wife of Mark Humenik, Athletes First general counsel and a lawyer who represented Dunn in Steinberg v. Dunn as well as other legal matters. Sullivan did not return a phone call. Maxwell Blecher, another attorney representing Morton in the case, referred a call to Sullivan and to Humenik, who also did not return the call. Attempts to reach Morton through the New York Giants were unsuccessful.

David Cornwell, attorney for Steinberg, said that Steinberg did nothing wrong and was not aware that his employee, David Kim, who was running SLL Enterprises, had borrowed money from Morton at the time the loans were made. Kim is no longer an employee of Steinberg’s Newport Beach, Calif.-based firm.

“After [Steinberg] was informed about [the loans], he worked amicably with Chad to try to unravel the transactions. It was only after David Dunn and his crew got involved that this became an adversarial process,” Cornwell said.

The lawsuit, filed in Orange County (Calif.) Superior Court late last month, names Steinberg, Kim, SLL Enterprises and Steinberg’s sports agencies as defendants and seeks unspecified compensatory and punitive damages.

Kim did not return repeated phone calls to his cell phone, but he told the Los Angeles Times that Steinberg did not know about the loans at the time they were made.

Although Cornwell and Steinberg deny that Steinberg knew about the loans initially, the lawsuit states that in June 2003, “Steinberg, Kim and SLL Enterprises, jointly and severally, borrowed $300,000 from Morton.” The suit states that Morton made loans of $300,000, $100,000 and $200,000 to SLL from June 2003 through July 2004. Morton was repaid some of the money, but was owed the principal sum of $388,500 since April 2005.

Whether Steinberg knew about the loans or not, the NFLPA has disciplined agents in the past for actions taken by the agents’ employees. The suit also alleges that Steinberg violated the California state athletes agent act by allowing his representative to provide financial services to his client, among other things.

NFLPA general counsel Richard Berthelsen would not comment.

LANDRY JOINS CAA: MLB player agent Greg Landry has left SFX Sports and joined Creative Artists Agency, sources said.

It is not clear how many player clients Landry took with him to CAA. Landry has represented Chicago Cubs pitcher Kerry Wood and Toronto Blue Jays pitcher Roy Halladay, among others.

Landry did not return a phone call made to his office at CAA. A CAA spokesman would not comment. A spokesman for Live Nation, parent company of SFX Sports, did not return a phone call.

Liz Mullen can be reached at lmullen@sportsbusinessjournal.com.

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