A Kansas City area financial adviser is accused of defrauding clients — including some professional athletes — by overcharging fees and recklessly steering them toward risky investments that resulted in millions of dollars in losses.
Douglas E. Elstun, 52, of Lenexa, faces civil penalties and permanent revocation of his ability to act as a financial adviser, according to a complaint filed in federal court Monday. The matter was investigated by the U.S. Securities and Exchange Commission.
John Picerno, an attorney representing Elstun, described Elstun’s conduct as an error he made while trying to overextend himself to those he was advising. He said Elstun intends to repay his clients to the best of his ability.
“This is a situation where Doug caught himself trying to please too many people and wear too many different hats to support his clients,” Picerno said. “He got into a situation where he was really trying to do everything and be a ‘Jack of all Trades’ for all of the guys he represented. It wasn’t how the rules and regulations are set up and he realizes that he was wrong for doing so.”
According to the complaint, Elstun was responsible for losing millions of dollars of his clients’ money and overcharging fees amounting to at least $360,000 while working with a now-defunct Kansas City investment firm called Crossroads Financial Management, Inc. Elstun was the majority owner and chief commercial officer of the firm, which closed in 2019.
From 2015 until 2018, investigators allege Elstun charged higher-than-advertised fees for managing the assets of professional athletes and charging “advisory fees” on other holdings — such as real estate and other property — not included in his agreements. He also placed money in high-risk investments while telling the clients they were more secure than they were, according to the federal complaint.
The complaint filed Monday did not disclose the identities of those Elstun is accused of defrauding. But during a 2016 interview with The Star, Elstun claimed to represent at least 14 current or retired athletes.
Among them were Will Shields, former guard for the Kansas City Chiefs; Darren Sproles, retired running back from the Philadelphia Eagles who also attended Olathe North High School and Kansas State University; and Paul George of the Los Angeles Clippers.
In developing financial portfolios for athletes, Elstun told The Star his firm aimed to provide security and assurance for pro athletes and ensure their “entire financial picture fits.”
“We want to make sure their minds are clear when they hit the playing field or court,” Elstun said at the time. “When an athlete hits the field and their personal or financial life is a mess, they don’t play as well.”
Elstun developed a reputation working with professional athletes following his own college basketball career. He played for the University of North Carolina and the Kansas Jayhawks. His official profile with the SEC names him as having 27 years of experience working with six separate firms.
Elstun currently works as a wealth strategist with Frontier Wealth Management, a national investment firm with an office in Kansas City’s Southmoreland neighborhood. The company manages roughly $3.5 billion in assets, according to its website.
Picerno, Elstun’s attorney, said his client has already begun to take steps toward offering restitution for the out-of-pocket losses suffered by some of his clients.
“He intends to make good and make everyone whole to the best of his ability in the future,” Picerno said.