Oxford City FC versus Oxford City Football Club Incorporated

by | Dec 14, 2015 | Finance, Latest, Non-League

The Southern division of the National League might not necessarily be the sort of place where one would expect to find stories of financial intrigue and sexual impropriety, but recent events concerning a now former director of Oxford City Football Club may well be causing raised eyebrows at the game’s governing bodies in this country as the American Securities and Exchange Commission announced fraud charges and a court-ordered asset freeze against a man who was a director of the club until six days ago, one Thomas Guerriero.

The Securities and Exchange Commission is the American government agency responsible for the regulation of financial securities. In the United Kingdom, the same responsibility falls under the remit of the Financial Conduct Authority. This week, they announced fraud charges and a court-ordered asset freeze against a Florida-based penny stock company which they state has been falsely touting itself as “the largest publicly traded diversified portfolio of professional sports teams in the world” under the name of ‘Oxford City Football Club Incorporated’ in the United States of America. Whilst Oxford City Football Club Incorporated isn’t actually Oxford City FC, it – or Guerriero – did hold a 49% stake in Oxford City FC,

The allegations are certainly serious. It is claimed by the SEC that Guerriero, as CEO of Oxford City Football Club Incorporated, used pressure tactics and what is known as a “boiler room” of salespeople to raise more than $6.5 million from primarily inexperienced investors who, it is claimed, were misled to believe that the company was a thriving conglomerate of sports teams, academic institutions, and real estate holdings. The company, it is alleged, purported that it would earn more than $238 million over five years from existing and new sports-related facilities, when its only material involvement in football was that share-holding in Oxford City FC, which is described as “a lower division English soccer club, which generated a small amount of revenue but never turned a profit,” and Oxford City Nomads of the Hellenic League. In the company’s quarterly report from May 2015, the two clubs are mentions as follows, all of which may raise the eyebrows of anybody with so much as a cursory knowledge of the machinations of English football:

1) We own 49% of Oxford City Football Club (Trading) Limited, which operates a professional outdoor soccer team, which competes in the “Conference North” of the English Football Association under the name Oxford City Football Club. The team has been in existence for 132 years, being established in 1882. The Conference North, and its member clubs, are collectively able to compete for the prestigious English FA Cup, against some of the best English teams in the world for this championship trophy.

2) Oxford City Nomads is the Company’s 2nd professional outdoor soccer team, which competes in the “Hellenic Premier League” of the English Football Association under the name Oxford City Nomads. The Hellenic Premier League, and its member clubs, are collectively able to compete for the prestigious English FA Vase, against some of the best English teams in the lower steps for this championship trophy.

This isn’t the only allegation leveled at the company. It is reported that the company advised that it held real estate holdings worth approximately $100 million and owned a radio broadcast network with projected profits of almost $20 million, when Oxford City Football Club Incorporated actually had assets of approximately $1 million and never owned a radio station – it simply purchased one hour of air time per week. It also claimed to own an online university with students already enrolled and projected profits of $495 million for the upcoming five-year period when, in reality, there was no such university that ever enrolled a student or had any revenue at all. There’s a hint of the hubris behind the claims being made about the company’s wealth to be seen here.

The SEC claims that this dishonesty permeated every inch of the nature of Oxford City Football Club Incorporated, right down to the sales techniques used. Prospective investors were, they claim, told they were being offered a limited-time deal to purchase shares in the company at a heavily discounted rate from the publicly quoted price, whilst, unbeknownst to what they describe as “the victims,” the stock price was actually controlled by Guerriero. It is even stated by the SEC that Guerriero claimed to record phone conversations with potential investors using a “verbal verification system” that supposedly tied the stock “transaction” to their social security number and birthday when, in reality, Guerriero and his associates simply pressed any button on their phone to make a sound signaling the fake start of a recording.  If investors later refused to pay, they would be threatened with lawsuits based on their “recorded” verbal commitment. Scott Friestad of the SEC’s enforcement decision, minced no words in his description of Guerriero:

“As alleged in our complaint, Guerriero portrayed himself as one of the most powerful and influential CEOs in the history of Wall Street when he’s really a penny stock fraudster mixing lies and verbal threats to line his own pocket with money from unsuspecting investors.”

This isn’t the first time that controversy has dogged Guerriero, either. He’d previously worked as a broker at firms such as JP Turner, Fordham Financial Management, and Reuven Enterprises Securities Division, from whence he was fired in 2008. The firm was expelled from the industry by FINRA – the Financial Industry Regulatory Authority – last September. He then found himself accused of sexual harassment by an intern in 2010, and settled out of court for a reported $50,000. In early 2014, he was forced to abandon plans to open an Oxford City-branded university in the United States after the University of Oxford said that it was “monitoring” his activities, presumably with a view to calling copyright infringement on him.

When he arrived at Oxford City FC in 2013 stating that he would be at the club for the next thirty years in order to implement his plans for it, though, none of the controversy that has followed him around saw the light of day. The BBC described him as a “Wall Street boss,” while the club’s managing director Colin Taylor stated that, “This a new era in the history of Oxford City Football Club and puts the foundation in place for a sustained and exciting future.” Taylor was striking a somewhat different tone yesterday, though not necessarily that which many people might have expected. A short official statement which appeared on the club’s website on the twelfth of December read as follows:

Thomas Guerriero resigned as a director of Oxford City (Trading) Ltd on Wednesday 9th December due to continuing concerns about his health. Since his appointment to the board in March 2013 Mr Guerriero has worked tirelessly bringing sponsorship to the club. He has been seriously unwell for several months and has recently endured repeated surgery.

The Club thank him for his efforts and wish him a speedy and full recovery.

Speaking to the Oxford Mail newspaper, however, Taylor had to take a slightly different tack:

We are a very busy and diverse club with circa 50 teams of all ages and abilities so it will be business as usual for the everyday running of the club as the assets are held within the charity in which he had no involvement or position.

We will lose a sponsorship source, but that happens all the time in football where there is always emphasis on identifying new income streams.

We clearly would not condone any form of malpractice in any way, but obviously the club had no knowledge or control of what went on in a separate legal entity the other side of the world. He became a director of the club which was fully approved by the Football Association in compliance with their ‘fit and proper persons’ test procedure.

Taylor was keen to emphasise that the club’s assets were held entirely separately to the companies concerned and it is also understood that Guerriero’s 49% shareholding in the club will now revert to the charitable trust that holds the other 51% of shares in the club. This season is the club’s first playing in the National League South after having played three years in the National League North following promotion from the Southern League. And while no-one is aware of any impropriety on the part of anybody connected with Oxford City FC, it is surely likely that someone will have to go over the club’s accounts for the last couple of years just to check that nothing untoward has been going on that could jeopardise its well-being in the future.

Presuming that the club is completely in the clear, this should remain a salutary lesson of the potential pitfalls of those who arrive from nowhere at a small football club with ambitions for the future. Who knows what sort of a mess Oxford City FC might have found themselves in had money from the sort of practices described above actually sluiced through their accounts, after all. Perhaps, when Thomas Guerriero recovers from his illness, he might take the time to explain exactly what on earth has been going on here. We suspect that we may be a long time waiting.

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