Drew Hawkins Provides Insight to The Athletic’s Breaking Story about Adrian Peterson
July 23, 2019
Adrian Peterson owes millions to Pa. lender, lawsuit claims; RB now faces potentially third default judgment
By Daniel Kaplan | Link to Article
Washington Redskins running back Adrian Peterson by October is set to top $100 million in career salary, 45 percent more than anyone else in NFL history at his position. And despite that, creditors are all but banging at his door, even leaving a summons attached to his front gate.
A Pennsylvania lender is suing Peterson for allegedly defaulting on a $5.2 million loan, the proceeds of which he used to pay back other debts he incurred, including millions from a “pay-day lender,” court documents in New York show.
The sum, which with interest and legal fees is now $6.6 million, is separate from the $2.4 million a Maryland state judge last week ordered Peterson to pay another creditor — Democracy Capital Corp. In 2018, a Minnesota court ordered him to pay $600,000 left unpaid on a $2.4 million loan.
The New York litigation is embroiled in charges that the lender’s counsel surreptitiously represented Peterson in another lawsuit regarding the player’s insurance, creating a conflict of interest. As a result, the judge canceled Peterson’s scheduled deposition Monday and held a hearing that in part centered on allegations that the running back’s confidential information, including his playing contract, were obtained irregularly.
That means DeAngelo Vehicle Sales (the term “vehicle” here means a financial instrument), which had Peterson served by affixing the summons to his front gate at his home in Houston on Sept. 18, 2018, according to court papers, may have to wait longer to receive a judgment on its claim.
Peterson borrowed the $5.2 million on Oct. 26, 2016, while with the Minnesota Vikings, according to documents filed in New York State Supreme Court by DeAngelo Vehicle Sales (DVS), a McAdoo, Pa.-based lender. According to the DVS loan agreement, Peterson would pay all of it back at once, plus 12 percent interest, just over four months later. If he did not, another 10 percent interest rate accrues on top of the base one, according to the loan documents.
The proceeds of the loan were largely to pay back other lenders: $3,197,250 to Thrivest Specialty Funding; and $1,339,695 to Crown Bank, the lender owed in the Minnesota bank default, the loan document shows.
In court papers last week, Peterson’s attorney referred to Thrivest as “some sort of pay-day lender for professional athletes and the insurance policy at issue had been procured to secure a loan agreement with Peterson.”
The insurance policy in question is known as a loss of value policy, which is taken out by athletes to insure if they are injured and thus get a smaller contract, they get the lost value. And that is precisely what happened to Peterson; he took the insurance on Aug. 24, 2016 and tore his meniscus and sprained his lateral collateral ligament during the third quarter of the Vikings’ 2016 NFL Week 2 matchup against the Green Bay Packers. Minnesota released him after the season, and he signed with the New Orleans Saints for $3.5 million a year, apparently triggering the policy which set the floor at $4 million per year (in this case the insurer pays out the difference, though Lloyd’s is rejecting the claim).
Because Peterson owed Thrivest, the lender became the “assured” in the contract, meaning it effectively had a lien on any payout. Thrivest then sold this claim to DeAngelo Vehicle Sales, and that’s where the controversy started.
Acting on behalf of DeAngelo in a federal court lawsuit, lawyer Darren Heitner advocated on behalf of Peterson’s claim (DVS would want the insurance claim approved to offset the loan), the running back’s lawyer argued. In doing so, Heitner obtained confidential information that has been used in the loan default case for DVS, the lawyer wrote.
“(T)here is evidence to indicate that Heitner Legal acquired confidential Information from Peterson,” wrote the running back’s attorney, Scott Philbin.
“(O)pposing counsel acquired confidential financial information of a party it is suing prior to judgment where it would not otherwise be entitled to this information.”
Philbin did not reply for comment.
“As I have stated to Mr. Peterson’s counsel, my firm has never held Mr. Peterson out as a client to third-parties,” Heitner wrote in a message to The Athletic. “Heitner Legal was never communicating with Mr. Peterson. There was and is no actual or perceived conflict of interest. No confidential information was obtained by Heitner Legal from Mr. Peterson. We have only represented the assured, DVS, in the relevant matters. I view Mr. Peterson’s tactics as nothing more than the latest attempt to stall the taking of his deposition.”
Heitner for his part said his client, DVS, is worried Peterson can’t pay back the money.
“I have no reason to believe that he has the capacity to pay it back,” he said. “It’s very concerning that he has existing liabilities, and that there are publicly announced large judgments against him. And so, you know, without even knowing whether he has the capacity to pay those debts … I have no confidence that he’ll be able to make any other sort of payment.”
Peterson in court papers does not deny owing DVS money, noting in an Oct. 12 answer to the lawsuit, “Defendant ADMITS that he has not made full repayment of the loan.”
Through 2018, Peterson had earned $99.2 million in salary, and is due to earn $2.5 million this season, according to Spotrac, which tracks players salaries. The next closest running back is the retired Edgerrin James with $68.9 million, according to Spotrac. The nearest active running back is Frank Gore with $60.2 million.
Peterson appears to be the latest example of athletes who despite enormous earnings, spend and borrow beyond their means.
“They make this money, they spend it, they then bank on the fact that, ‘OK, I’ve gotten through that, I’m going to get this next contract, and it’s going to be big, and I’m going to be able to write (away) all my woes at that point,’” said Drew Hawkins, speaking generally as the founder of Edyoucore Sports & Entertainment, which offers financial literacy programs. “And the sad fact is that once you get into, you know, this lifestyle and this habit of doing these things, it’s not something that you can just snap your fingers and change.”