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Feds: Sag Harbor Property Part of $15 Million Investment Fraud Scheme Case

Fraud scheme victimized NHL players and Long Island investors, US Attorney's office says.

A property in Sag Harbor is wrapped up in federal court case about fraud schemes totaling $15 million.

An indictment was unsealed Wednesday morning in federal court in Brooklyn charging Phillip A. Kenner, a former financial advisor to several former and current National Hockey League players, and Tommy C. Constantine, also known as “Tommy C. Hormovitis,” a former professional race car driver.

The are accused of wire fraud and wire fraud and money laundering conspiracies in connection with schemes involving fraudulent real estate and business investments. Kenner is also charged with wire fraud involving a separate scheme to buy real estate in Sag Harbor, Loretta E. Lynch, United States Attorney for the Eastern District of New York said in a statement on Wednesday afternoon.

Kenner allegedly abused his position as a trusted financial advisor and long-time friend to the victims, using schemes he and Constantine concocted to subsidize an extravagant lifestyle.

Other schemes involved a real estate development project on the Big Island of Hawaii causing a $13 million loss for the victims. Kenner reportedly solicited at least 13 players to invest $100,000 each and convinced several NHL players to open lines of credit that he then had access to.

FBI and IRS agents arrested the two defendants earlier Wednesday in Scottsdale, Ariz., where they both live, and a search warrant was executed at Kenner’s house. The will appear before United States Magistrate Judge Bridget S. Bade at the federal courthouse in Phoenix for removal proceedings to the Eastern District of New York.

Kenner was licensed as a financial advisor in 1994 and worked at a firm in Boston, where he built a client list of several NHL players, before starting his own firm in 2003, the US Attorney's office said. "Between 2002 and this year, Kenner advised numerous hockey players on investments in a series of allegedly fraudulent schemes that he represented would earn significant profits for the players; however, the victimized players instead suffered losses exceeding $15 million," according to the statement.

Kenner reportedly acquired a 25 percent interest in property in Sag Harbor without using any of his own money. The US Attorney's office did not specify where the property was located.

"To achieve this result, Kenner took $395,000 from a player’s line of credit, without that player’s knowledge or permission. Kenner also convinced another player to pay $375,000 for a 50 percent interest, when Kenner only gave him a 25 percent interest and pocketed the other half of the money," according to the statement.

The investors discovered Kenner had not used any of his own personal money to buy the property in early 2010, and then they sold the property at a loss. In turn, Kenner filed a civil lawsuit in Arizona against one of the investors over the property, the US Attorney's office said.

"As alleged, Phillip Kenner spun a web of lies, deceit and broken promises that stretched from Hawaii to Mexico to the East End of Long Island," Lynch said. "Kenner used his school connections to build a client list of NHL players. Once he gained their trust he promptly betrayed it by steering them to fraudulent investment schemes that enriched himself and Constantine to the tune of millions at the players’ expense."

"Beyond the NHL players, in August 2006, Kenner and Constantine also allegedly defrauded Lehman Brothers Holdings, Inc. of $2 million based on Kenner’s misrepresentations concerning the use of a real estate loan," according to the statement.

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