McCrary case cautions athletes

Ex-Raven bilked in real estate deal

June 27, 2008|By Brent Jones | Brent Jones,Sun reporter

Michael McCrary had known Edward Giannasca for half a decade, and, until the former Baltimore Raven realized that he'd been cheated out of millions, he thought of the longtime developer as a stand-up guy.

McCrary trusted Giannasca so much that, with few questions asked, he handed him a $3 million check three years ago for a real estate project that would convert a building in New Orleans into condominiums.

Giannasca, though, betrayed that loyalty, pocketing along with his other partners about $12 million in insurance money after Hurricane Katrina spoiled the deal and telling McCrary that the insurance claim they'd filed had been denied, a Baltimore circuit judge ruled Wednesday.

The judge ordered Giannasca and others, including developer Stuart C. "Neil" Fisher, to pay $33 million in danages to McCrary, who says he'll use his experience as a cautionary tale for current and former NFL players.

None of the defendants attended the court hearing, and none could be reached for comment.

"I'll tell all the players I know getting into business to use me as a resource," McCrary said. "Unfortunately, I got involved with bad partners, but I learned a great deal from it. Athletes are vulnerable. They tend to rely on personal relationships. That's the judgment on making a decision. Yeah, that's a factor, but it's got to make good business sense."

It is a familiar story for many professional athletes, who for decades have dealt with failed business ventures, leading the NFL to create a player development program in 1991.

In 2005, the league launched its Business Manager and Entrepreneurial Program in partnership with Stanford and Harvard universities and business schools at Northwestern and the University of Pennsylvania.

Chris Henry, the NFL's director of player development, said five slots at each school are reserved for retired players.

"We recognized that with or without us, players are going to get involved in entrepreneurial ventures. We decided to open this program to open their eyes to the intricacies of owning and operating their own businesses," Henry said.

McCrary considered Giannasca a friend after meeting him in the late 1990s. Giannasca became involved with McCrary's charity, Mac's Miracle Fund, and they kept in contact over the years and discussed possible business ventures after the defensive end retired in 2002.

Giannasca knew that McCrary wanted to get involved in real estate. McCrary knew that Giannasca had years of experience in the field.

What McCrary did not realize was that Giannasca, shortly after receiving McCrary's check, would recruit Fisher, who has been dogged by allegations of fraud and failed projects since the 1980s. Giannasca's past is similarly littered with lawsuits.

In May 2005, Giannasca was part of Baltimore's Ritz-Carlton project, but he was fired by his employer for his involvement in the New Orleans deal. The developer, Midtown Baltimore LLC, sued Giannasca in July 2005, accusing him of fraud and breach of contract.

The complaint alleged that Giannasca defrauded Midtown by spending time developing the New Orleans condo project rather than working full time on overseeing sales, marketing and construction of the Ritz-Carlton. Giannasca, now 46, used Midtown employees, computers, designers and consultants to work on the New Orleans project, the complaint charged.

Giannasca countersued that August, alleging that his former Midtown partners cheated him out of his ownership interest.

Fisher had been part of a previous project that was to bring a Ritz-Carlton to South Baltimore in the late 1990s, but the deal fell through in November 1999 after The Sun reported that Fisher had no apparent assets and was refusing to pay a $1.28 million fraud judgment issued in a Maryland land deal.

In previous projects in Florida, New York and Maryland, Fisher proposed upscale waterfront developments that fell through amid disputes, bankruptcies and lawsuits alleging fraud.

McCrary said he knew none of this before signing the deal with Giannasca.

"These people have made a career of fraud and deceit. I realized I had to put an end to it," McCrary said yesterday.

McCrary said he became suspicious when neither Giannasca nor Fisher would provide financial or progress statements for the New Orleans project, even before Hurricane Katrina hit.

McCrary's lawyer, Kenneth B. Frank, said his client put up about $550,000 for what Giannasca and Fisher claimed were operating costs.

"He didn't believe they were spending the money for legitimate purchase," Frank said.

After the hurricane, the partners sold the building in November 2005, and McCrary was able to recoup his $3.5 million, Frank said. McCrary said he was told by the partners that they had filed an insurance claim as well, and that the claim had been denied.

But Giannasca and Fisher received a $1 million insurance settlement in October 2005, and about $11 million more from February to April 2006.

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