Marc Silverman: Part CPA, Part “Watchdog”
The following is a guest contribution from Heather Brittany (@HeatherBrit). Heather is currently a law student at Loyola Law School, Los Angeles and Sports Chair of its Entertainment & Sports Law Society.
“It was the same old story. An athlete or entertainer put his or her finances in the hands of a ‘trusted’ advisor who takes advantage of the naivety of their inexperienced clients and breaches their fiduciary duty by defrauding them. The list of defrauded people reads like a roster of Hall of Famers and Oscar award winners. From seasoned veterans to rookies, no sport or craft is immune to fraud. All are at risk. The sports and entertainment industry is big business. Unscrupulous people target this industry due to the amount of wealth involved with the players and entertainers.” — Marc Silverman
After hearing about athlete after athlete being taken advantage of and defrauded by their supposedly trusted advisors, Marc Silverman had enough. In the summer of 2010, Silverman founded MH Silverman & Associates LLP, an auditing service that focuses on the protection of athletes and entertainers. Silverman received his Bachelors of Accountancy from George Washington University in Washington, D.C. He is a certified public accountant, and an associate member of the certified fraud examiners.
Heather Brittany: What initially inspired you to create MH Silverman & Associates LLP?
Marc Silverman: Back in the late 1990’s, I was fascinated by the story of William (Tank) Black, an NFL agent, who defrauded several of his NFL player clients out of millions of dollars. It involved sports and fraud, two things that I followed closely. Soon after that, I thought of a business that would assist athletes from being ripped off.
After writing up a business plan, Silverman decided to push it aside and burry it in his basement. However years later, while cleaning his basement, he stumbled back upon his plan. With the added knowledge he had gained over the past few years, and with his passion still ignited, he decided to make his business plan a reality.
MS: After some additional research, [I found that] many advisors say that they have the athlete’s best interest in everything they do. However, athletes are still being defrauded by their agents, financial advisors, business managers, friends, family and former teammates; just to name a few. John Elway was recently defrauded out of $15 million. Thus, with my 20 years of auditing experience, I decided it was time for me to throw my entrepreneurial hat in the ring and start my own business. The biggest changes I made to [my original] business plan [are that] my services are now focused on all advisors, not just agents, and I also changed the name of my firm. Since I am marketing my auditing expertise, I thought I would name my firm, MH Silverman & Associates LLP.
HB: What does your company provide for athletes?
MS: We provide many services for athletes to ensure that they are not being defrauded by their trusted advisors. We are completely independent with no associations with any agents or financial advisors. We are hired by the athlete directly. Some of the services include:
- Pre-investment due diligence
Review investment opportunities prior to making the investment to ensure the investment opportunity is a sound investment and not a scam. Review and challenge financial projections of the proposed investment. Ensure that the athlete understands all the risks and fees associated with the investment. Perform background checks on all parties involved in the investment.
- Portfolio audits including investment verification and valuation
Verify investments are valid and properly valued. Review to ensure that all investments are properly audited by qualified auditors. Verify investments are owned by and in the name of the athlete.
- Cash receipts and cash disbursements audits
Review to ensure all earned revenues are appropriately deposited into the athlete’s accounts. Review all disbursements to ensure they are appropriately authorized and no misappropriation of funds is occurring.
- Royalty audits
Ensure that all earned royalties are paid to the athlete.
- Contract compliance examinations
Ensure all provisions of contracts are being adhered to.
- Forensic accounting
When fraud is suspected, perform a complete examination of all historical transactions to determine what happened and the amount of loss to start the recovery process.
HS: Why an audit? Please explain a little bit about what an audit is.
MS: Many people relate the word audit to a bad thing such as an IRS audit. While an IRS audit is not a good thing, especially for the one being audited, it does accomplish what it sets out to do. It catches people who cheat on their taxes. Audits are designed to catch cheaters.
The true definition of an audit is to ascertain the validity and reliability of information. In other words, an audit makes sure things are proper and accurate. It’s the watchdog. In the case of a professional athlete, a lot of trust is placed in the hands of their trusted advisors including their agent, financial advisor, insurance expert, tax person and money manager. An audit provides assurances to an athlete that whoever is handling their money for them, they are doing what they should be doing and not doing things that they should not be.
HS: Most professional athletes have an accountant. Isn’t that enough?
MS: Most accountants primarily handle your tax returns; this is not enough to detect improper money management. An athlete really needs to have someone overlooking his advisors’ shoulders to ensure proper handling of money. An audit does cost money, although not having an audit performed could prove much more costly in the long run.
“There is a tremendous need for my watchdog roll.” – Marc Silverman