Posted on by Dan Wolf

Do The Math

I love stories like this one from today’s Sacramento Bee.  It’s about the plea deal reached between prosecutors and Jeffrey R. David, former chief revenue officer for the NBA’s Sacramento Kings.  Not just because of the audacity of the crook.  Not only because justice is finally being served.  And not even because of the business-sports tie-in.  Though in fact all of these things contribute to the glorious whole of this sordid story.  No, what I like most is doing the math.

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Follow along with me here if you will:   Mr. David embezzled $13.4 million from the naming-rights sponsors of the King’s new arena, The Golden 1 Center, in downtown Sacramento.  He then used that money to buy beachfront real estate in the southern California communities of Hermosa Beach and Manhattan Beach.  Once he was caught – this came after someone found a folder labeled “Turbo tax” which detailed his schemes on a company computer he’d left behind – Mr. David “agreed to cooperate fully and completely.” This, according to his defense attorney, Mark Reichel:

“…he has since spent every day working to ensure all of the monies were repaid and, in fact, the funds were repaid at lightning speed. The money has been invested in high-end real estate in Southern California and was not at risk and was very liquid. The properties have been sold, the government has had the money for over a month and Mr. David accepts responsibility for his conduct and looks forward to continuing to show his remorse. He understands what he did was wrong.”

Here’s the kicker, and this is where the math comes in:

Federal officials moved to seize the properties, but allowed them to be sold in recent months for a total of nearly $14.8 million. After deducting Realtor costs and other fees, the team expects to recoup the entire amount it lost.

Aside from the amount Mr. David spent on chartering private jets (>$100,000) and miscellaneous expenditures charged to his personal AMEX (<$100,000), and taking into account the commissions paid to realtors (typically in the 6% range), it appears that Mr. David’s return on investment – that is, the difference between what he paid for these properties and what he sold them for – was well in excess of a million dollars. And all over the course of just a couple of years. For those keeping score at home, that’s in the 10 percent range. That’s not too shabby even in boom times.

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OK, so the guy’s a sleaze.  And, he got caught with his “Turbo-tax” down around his ankles.  And, he’s going to jail:  Most likely for a term somewhere between 2 and 8 years.  Most likely in minimum security.  Most likely with other white collar criminals rather than with hard core rapists and murderers.  But still, with good behavior he could be out before Michael Cohen.  And, last I checked, there was a Chief of Staff position still unfilled in DC.  Might be just perfect for a guy who clearly knows his way around a deal – and a courtroom.  If you’re a Chief Executive willing to cut a few corners in pursuit of the Art of the Deal, you could do worse – just sayin’.
😉
Jeffrey R. David, 44, the former chief revenue officer for the Sacramento Kings who currently holds the same position with the NBA’s Miami Heat – well, at least until he surrendered to authorities he did.

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