CINCINNATI - A former business partner of University of Cincinnati Coach Tommy Tuberville pleaded guilty in Alabama Friday to one count of investment fraud, as part of a plea deal in which in which John David Stroud agreed to repay a dozen investors $2.1 million.
Tuberville is among the investors entitled to restitution, said Vic Haslip, a Birmingham attorney who represents the UC football coach.
The Alabama Securities Commission announced the guilty plea in a press release. It said Stroud collected $5.2 million from investors, telling them he would use the money to trade in commodity futures and foreign exchange currency contracts.
“While some investor funds were used to purchase a limited amount of commodities, they were primarily used for unauthorized business and personal expenses, and to pay returns to other investors. Stroud’s activities ultimately defrauded investors of approximately $2.1 million,” said the press release.
Stroud was an Auburn businessman whose investment affiliates included three companies co-founded by Tuberville, according to a federal lawsuit filed against both men in 2012. The lawsuit alleged Tuberville "identified and solicited investors" for Stroud and provided "strategic direction and guidance" to the fund they operated as TS Capital Management.
Tuberville could not be reached for comment. He has denied any involvement in the alleged fraud, claiming he, too, was a victim of Stroud, a money manager he met while coaching at Auburn University.
Tuberville's attorney, Vic Haslip, said Stroud's indictment names the coach, along with several of the plaintiffs now suing Tuberville, as victims who are entitled to restitution. Tuberville has stated in an affidavit that he is owed $450,000. Stroud has refused to testify in the civil case because of the pending criminal charges. But Haslip said Stroud's admission of guilt is "consistent with what we've contended all along," that Tuberville is a victim of fraud, and therefore not liable.
The civil securities trial was initially scheduled for trial this month. But it has since been delayed until October. Stroud is scheduled for sentencing November 10 in Lee County Circuit Court in Montgomery, Ala. Prosecutors are recommending a 10-year sentence.