Deep Dive
Shownotes Transcript
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This episode of Swindled may contain graphic descriptions or audio recordings of disturbing events which may not be suitable for all audiences. Listener discretion is advised. The board unanimously approved the recommendation of the expansion committee and the plan of expansion over the next four years will come to fruition. Nashville will join the league in 1998-99.
In June 1997, National Hockey League Commissioner Gary Bettman announced that the league would expand to include a new team based in Nashville, Tennessee, a city synonymous with ice hockey.
Nashville had just built a new arena to attract the NHL, the NBA, or both. Wisconsin businessman Craig Leopold jumped at the chance and signed the lease. The Nashville Predators were born. And now, just 16 months after being awarded a franchise, Nashville is ready to drop the puck.
Like most expansion teams in professional sports, the Nashville Predators struggled at first.
Ticket sales declined steadily over the years after that initial excitement. And just as the team was getting good, a labor lockout canceled the 2004-2005 season, quashing whatever interest lingered. "I'm tired of losing money," Predators owner Craig Leopold said in 2007 after suffering an estimated loss of $70 million in the team's first 10 years.
Behind the scenes, Leopold had been searching for local investors to share the bath and keep the team in Nashville. The Predators were good. They were qualifying for the NHL Stanley Cup playoffs seemingly every year, but still no interest and no luck. "I have come to the conclusion that I cannot make it work," Greg Leopold announced. "It's painful to say that. As hard as we'd tried and as good a team as we have, we are by far the lowest revenue team."
On May 24, 2007, Craig Leopold announced his agreement to sell the Nashville Predators to Jim Bossili, the Canadian billionaire co-CEO of Research in Motion, for $220 million. The Predators were the second team Bossili had tried to buy in the past 12 months. He had submitted an offer for the Pittsburgh Penguins in 2006 but backed out after the league prevented him from moving the team closer to his office in Hamilton, Ontario.
Naturally, Predators fans were worried that Jim Bossili would try to do the same thing to Nashville. But less than a month after the agreement, Jim Bossili made it clear that's exactly what he planned to do. He renewed a lease in Hamilton and started accepting deposits for season tickets using the Predators logo. This was before any money had changed hands. A total lack of NHL ownership decorum. This upset Craig Leopold, who cancelled the deal.
What transpired after May 24th was very unexpected. We certainly didn't anticipate Jim Balsillie renewing an arena lease in Hamilton, Ontario, or soliciting season ticket deposits in Hamilton and using our logo to do that, or applying for an NHL relocation of the franchise before applying for ownership of a National Hockey League team.
Predators fans rejoiced, but only momentarily. Markets like Kansas City and Las Vegas were reportedly desperate to get their hands on an NHL franchise.
However, Predators fans discovered that the team couldn't break their very expensive lease in Nashville. The paid attendance averaged at least 14,000 per game. The team averaged 200 shy of that number the previous year. Maybe the Preds could be saved after all, at least temporarily.
A coalition of fans calling themselves R-Team Nashville, organized with local sports radio to plan a rally. The 15-hour ticket drive, if successful, would make leaving the city difficult for the Predators' new owner, whoever that may be.
Get out of the pool, turn off that grill, slip out of the office, do whatever it takes to get down to the Somme Center on Thursday, July 19th at 6 p.m. for a free public rally to support the Nashville Predators. This will be your chance to yell, scream, let off a little steam, and maybe even buy a season ticket or two. Let's show the world how much Nashville supports the Preds. This is your team, and you have the power to keep it that way.
More than 7,000 people, including Tennessee's governor and first lady, attended the rally. The coalition exceeded its sales goal less than halfway through the day. The Predators would not be leaving Nashville anytime soon. 726 tickets in one day is the single biggest day since our opening day sales event in September of 1997.
and I love the governor holding the sign, "Get your damn hands off my team." Predators fans received even better news the following month. Nashville owner Craig Leopold has signed a letter of intent to sell the Preds for about $193 million to a group of eight mostly local investors who will keep the team in the Music City.
On August 2nd, 2007, Craig Leopold announced that he sold the Nashville Predators for $193 million to a group of local investors fronted by David Freeman, the CEO of 36 Venture Capital. The only partner from outside the Nashville area was a man named William Del Biagio III. His friends called him Boots.
William DelBiagio was a 41-year-old venture capitalist from San Jose, California, the founder and CEO of Sandhill Capital. Business Insider called him a quote "young financial god" after he launched the fund with money he saved from co-founding a bank with his father when he was 20 years old. Why didn't I think of that? To his credit, Boots' Silicon Valley investment fund did perform well initially.
But rumor has it he was soon dipping into his own pockets to cover Sandhills' basic operating expenses after the young financial god made a bunch of bad bets right before the tech market crash of 2000. Still, the Del Biagio family lived well in San Jose and were well-liked.
Bootsy was a philanthropist just like his old man. It reportedly raised $400,000 for the American Heart Association by having the singer Seal perform on a stage set up on the tennis court at the Del Biagio's home.
It was no secret that William "Boot Scootin' Boogie" Del Biagio liked to brush shoulders with famous people, especially those involved with hockey. He opened a real estate investment fund with the owner of the Los Angeles Kings, and his most frequent golf buddy was hockey legend Mario Lemieux. Del Biagio and Lemieux also went in together on a $2 million house in Santa Monica, like friends often do.
Booty Boy met these people after he finally got his chance to join the league in 2002. William Del Biagio purchased a 2% stake in his hometown San Jose Sharks, which he later sold to buy a larger piece of the Nashville Predators five years later. Del Biagio's 26% share of the Predators had cost $25 million. He had taken out numerous loans totaling $45 million to pay for his stake and other things.
As collateral for the loans, Del Biagio used statements for an account at Merriman Curran Ford Group, a brokerage firm in San Francisco, that showed he had a balance of $20 million in money market funds. The only problem was that neither those statements nor those funds belonged to William Boots Del Biagio. They belonged to unwitting customers of Merriman Curran Ford, whose information had been supplied to Del Biagio by a stockbroker at Merriman who owed him $2 million named David Caccione.
Caccione sent the statements to listed accounts worth tens of millions of dollars to Boots, who doctored his name into the place of the rightful owners and presented them to banks and NHL owners like Craig Leopold to borrow money to obtain ownership of an NHL team. And it worked. It wasn't until a routine compliance audit of Merriman's accounts in May 2008 that the SEC discovered something was wrong.
After the scheme was uncovered, the banks who loaned William Del Biagio millions of dollars on a fraudulent basis demanded repayment immediately and filed lawsuits against him, including Heritage Bank of Commerce, the bank Boots had co-founded with his father. That same month, William Del Biagio resigned from his venture capital firm for "personal reasons" and filed for bankruptcy. His wife divorced him, and the SEC was digging into everything
It was discovered that Boots had also taken in $20 million of individual investments from close friends and acquaintances in a Ponzi-style scheme. Del Biagio blew the cash on his home mortgage and decorations, massive credit card bills, and at least $4 million in gambling debts. But he wasn't totally selfish. Del Biagio did invest some of his clients' money in stocks that tanked almost immediately.
William Boots DelBiasio III was arrested on December 4, 2008 and charged with one count of securities fraud.
A separate criminal complaint filed by prosecutors in the U.S. Attorney's Office in San Francisco says Del Biagio obtained $100 million in loans and loan guarantees from 13 banks and private lenders. David Caccione was also charged with one count of securities fraud. Both men pleaded guilty.
Caccione was sentenced to five years in prison and ordered to pay approximately $50 million in restitution, primarily to his former employer Merriman Curran Ford, whose stock tanked after the scandal. William Del Biagio was sentenced to eight years in prison and ordered to pay $67.4 million in restitution to the banks, NHL owners, and personal investors he ripped off.
I'm incredibly sorry," he said in court. "I can't begin to express how sad and ashamed I am. I'm losing sleep and I'm scared, and I truly understand what the victims are going through. There were so many investments and I was under a lot of pressure. I thought somehow I could pull it all together. I was blinded by pride and ego."
In 2010, the Nashville Predators consolidated ownership. The local investment group that owned the team bought the 26% stake held in William DelBiagio's bankruptcy estate for $15.2 million, a discount. The NHL was in a hurry to put the ordeal behind them. It was embarrassing. The league had failed to do its due diligence on a prospective owner. Again, that's right.
Believe it or not, this was not the first time someone successfully purchased an NHL team with fraudulently obtained funds. The savior of a beleaguered fanbase and franchise is exposed as a phony on this episode of Swindled.
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The Islanders have a new look for the upcoming season, but not much else. They lost goal scorer Ray Ferraro and free agent Steve Thomas isn't likely to return. So the Isles are focusing on the future. New York was the second worst team in the NHL last season and used their high draft pick to select Wade Redden. Sophomore Brett Landros returns, bringing power and size to the forward position, but he's still very rough. New head coach Mike Milbury is probably their most significant addition.
he should improve the work ethic of this young team. By the time the National Hockey League's 1995-96 season arrived, the New York Islanders were a shell of the franchise that had won four Stanley Cup championships in a row in the early 80s. Those teams were the pride of Long Island. Hall of Famers like Clark Gillies, Mike Bossie, Dennis Potvin, Brian Trottier, and Billy Smith
fond and distant memories that only grew more distant after each disappointing season that followed. By '95-'96, the Islanders' dynasty had been completely dismantled. Injuries, trades, and roster mismanagement had relegated the pride of Long Island to the laughingstock of the league. The team had rock bottom a couple years earlier when they were swept in humiliating fashion by their hated rivals, the New York Rangers. Legendary Islanders coach Al Arbor retired that offseason.
In addition to the team falling apart, Nassau Coliseum, where the Islanders played their home games, was also falling apart. There weren't enough concession stands or bathrooms to accommodate even the sparse crowds that still attended. The venue's most modern features were the trash cans used to collect the water dripping from the ceiling.
There was no hope in sight. The Islanders' penny-pinching owner, John O. Pickett Jr., would not allocate funds for improvements to the Coliseum nor for better players for the team. Islanders fans recognized the purgatory in which they found themselves. Attendance dropped from 14,000 a game during the team's heyday to less than 5,000.
The New York Islanders were losing $5-8 million annually. The team's owner, John Pickett, was also losing interest. He got remarried and moved to Florida, leaving control of the Islanders' day-to-day operations to a group of local businessmen who owned a minority stake. They were Robert Rosenthal, Ralph Pileski, Paul Greenwood, and Stephen Walsh. Fans dubbed them the "Gang of Four."
eager to begin a new chapter in New York Islanders hockey. One of the Gang of Four's first orders of business was to approve a uniform change, despite a thousand fans signing a petition asking them not to.
The old Islanders logo was simple, timeless. A circle with an orange silhouette of Long Island in front of a royal blue background with white lettering that read NY and the bottom of the Y was a little hockey stick. To Islanders fans, it was a reminder of better times. For the Gang of Four ownership group, it was a reminder of the team's recent futility.
The Gang of Four wanted to put the past behind them. At the same time, it would be an easy way for the Islanders' organization to make some additional money. On June 22, 1995, Stephen Walsh, one of the gang, unveiled the New York Islanders' new uniforms. "This is Long Island, and this is a new team," he said. "We also are attuned to the winds of change, and quite frankly, we believe the time for a new uniform has come.
Later in the press conference, Stephen Walsh acknowledged the reality of the professional sports business. "The reality is that merchandising is a major part of the sports business. We're the youngest team in the league. We should give the guys a chance to have their own identity. But I'd be lying if I told you that increasing our sales wasn't a big part of our thinking. Our fan base is the kids growing up. We have to reach them."
Other NHL teams had recent success with rebrands and new jerseys. The Los Angeles Kings had changed their colors from purple and gold to black and silver, but they had just signed the greatest hockey player of all time, Wayne Gretzky. The Mighty Ducks of Anaheim were selling merchandise like crazy, but they had a cute logo and were owned by Disney. The new expansion team, the San Jose Sharks, were also doing quite well because people liked the design. However, none of those teams really had a legacy.
Not like the New York Islanders, whose front office apparently did not have a clue at the time. The team hired Shawn Michael Edwards Design, SLME, who had designed and redesigned the branding for several professional sports teams. The Islanders were living in the shadow of the Rangers, SLME designer Ed O'Hara told Newsday. "We all agreed that a strengthened tie to Long Island was important, to keep the heritage of the island and amplify it. Savvy marketers will tell you to think locally.
The idea for the Islanders' new branding was inspired by Long Island's most famous son, Billy Joel. He released a song called Downeaster Alexa in the late 80s about the plight of Long Island's Baymen, the region's most recognizable waning industry. The Baymen were rugged and tough and intimidating, perfect for a sports team's logo, some may suggest.
SME Design submitted the New York Islanders new logo to team executives during the 94-95 season. It was a gray-bearded, fierce-looking fisherman wearing a teal slicker and a rain hat while brandishing a hockey stick. It was different, that's for sure.
The New York Daily News leaked images of the new logo months before it was officially unveiled. The paper described it as, quote, "...embarrassingly reminiscent of the Gorton's Fisherman." The advertising logo used on boxes of Gorton's frozen fish sticks. It was a brutally accurate comparison, and it was made worse in context with the rest of the new uniform.
Gone were the traditional royal blue and orange striped sweaters of seasons past. Now, the Islander's jersey would feature a wave-like striped pattern of teal, white, orange, and gray. The names and numbers on the back were distorted, and there were lighthouse patches on both shoulders, just in case the nautical connection wasn't obvious enough.
The fan reception of the rebrand was cold, as expected, but Islanders executives knew that the new identity would be embraced if the team was a winner. That's why "Mad Mike" Milbury was hired as the new head coach. He was a no-nonsense former player for the Boston Bruins, who famously climbed into the stands in 1979 and beat a Rangers fan with his own shoe. Milbury was a perfect fit for Long Island.
The fans were cautiously optimistic. There was a new leader, a new jersey, a new mascot that looked like a giant cartoonish version of the new logo, even a new goal horn that sounded like a coastal foghorn. The New York Islanders were ready for 1996.
Just kidding. In the first five games of the 95-96 season, the New York Islanders started with zero wins, four losses, and one tie. It was the worst start to a season in team history. The front office made blunder after blunder as it relates to the roster, and Mike Milbury's unorthodox tactics and communication techniques were already wearing thin on players and fans. The losses continued to pile up.
As did the humiliation. Opposing fans started chanting "We want fish sticks" when their teams took an inevitable lead. Eventually the Islanders fans adopted the chant as their own and added throwing fish and fish sticks onto the ice in disgust at having to watch such a dismal team.
As the season wore on, dismay turned into outright hostility. Islanders fans booed one of the Gang of Four's daughters when she sang the national anthem, and the new fisherman mascot started wearing a protective cup to every home game. The new logo was the target of most of the fans' ire. The former players hated it. The current players quietly hated it. Clearly, it was cursed.
A coalition of fans was formed to protest the rebrand. They argued that it stripped the team of its tradition. The fans organized a march for April 6th, 1996. At least 300 people showed up.
A week after the rally, the Islanders' front office admitted its mistake. The team blamed the National Hockey League for pressuring them to rebrand to increase merchandise sales, which had come to fruition. The Islanders sold the 17th most jerseys in the league that first year of the Fisherman logo, up nearly 10 spots from prior seasons. Nevertheless, the fans' voices were heard.
The Islanders petitioned to change back to the old logo for the following season, but the NHL told them no. It was too late. Retail stores needed at least one calendar year to clear their existing stock.
The Islanders were stuck with the Fishermen for at least one more season. You gotta wonder, has the NHL not been watching the Islanders games? They turned down New York's request to go back to their old uniform design and logo for next season. The league says the Islanders missed the deadline to inform them of any change. New York had changed logos before last season. They will go back to their old logo and get rid of Captain Highliner after next season. The New York Islanders finished the 1995-96 season 22-50-10.
good enough for last place in the Atlantic Division. Again, the Islanders were somehow getting worse. The team's big-time trade acquisition was MIA after being sent home for demanding a trade. The general manager was fired. Coach Mike Milbury assumed the role, pulling double duty for the same pay, a typical frugal move from the Islanders' absentee owner.
An uninspiring off-season would follow. Another season of mediocrity straight ahead, but no need to abandon ship. As every Bayman knows, it is always darkest before dawn. But as every Islanders fan would find out, it just gets dark again. Support for Swindled comes from Simply Safe.
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It became clear to us that to ensure our success and achieve those goals, we needed to change the majority owner of this franchise and to find a majority owner who would be totally committed in time and resources to achieving those goals. I am pleased to announce that we have found that individual and his name is John Spano. He knows his hockey.
He's dedicated, he's young, he's bright, he's creative, he's financially strong, and most importantly, he has an unrelenting desire to win. Finally, there was light at the end of the tunnel. On October 11th, 1996, the day before the New York Islanders' first home game of the 1996-97 season,
John O. Pickett, the team's owner, announced that he had, quote, "agreed in principle to sell a substantial portion of the club." The buyer was a man named John Spano. He was a Manhattan native who worked and lived in Texas. Spano was only 32 years old, but he had the financial portfolio of a successful CEO and the physical appearance of a man in the throes of a midlife crisis.
According to John Pickett, John Spano was quote, "the type of owner that the Islanders need. He's got youth. He's got money. He's a hockey fan, an Islanders fan. He's got it all." In addition, John Spano knew all the right things to say. For example, owning the Islanders was a dream come true. You know, when I was a little kid, I used to come out here and watch Dennis and Bossy and Trache play. And I mean, it's a dream to me. It hasn't sunk in yet.
Spano promised to be a hands-on owner. He had a home in the Hamptons on the east end of Long Island. He plans to commute back and forth from Dallas quite frequently. It wasn't that big of a deal. Spano had a private plane, and pretty soon he promised Islanders fans the team would have a new arena. Yes, we will get a new building.
Because it was his highest priority, Spano said, to keep the Islanders on Long Island. Personally, it will stay on Long Island. I wouldn't come back here. I do live in Texas, but I'll spend a great deal of time here. I wouldn't do this deal if I had any intentions of moving the team. There's just too much. There's too much history. The market is too strong. John Spano announced that the easiest way to do that would be to make the Islanders competitive again.
If the team played well, fans would return to the games en masse and everything else would take care of itself.
And the easiest way to make the Islanders competitive, Spano acknowledged, was to open his pocketbook to improve the roster, which he was prepared to do. "Get the fans back in the building. We have to do something to get them excited again about coming to Islander games. Whether it be marketing, whether it be upgrading the talent, anything along those lines to get them back. That and the building are the number one priorities. They're the same."
"I have the capital," John Spano told the New York Times. "I am risking a lot of what I have. The one thing I have is the capital. I don't need anybody's money right now."
John Spano agreed to purchase the New York Islanders and associated assets for $165 million. Spano took out a loan for $80 million to pay for the team up front, and he agreed to pay five annual installments of about $17 million for the cable television rights that were included. The first installment was due on April 7, 1996, the closing date of the sale.
There was still an entire hockey season to play, but the sell of the New York Islanders to John Spano was basically a done deal. "Almost home! It's official to the extent that he has signed off with the lawyers and all that, now all it needs is league approval and John Spano will be the official owner of the New York Islanders."
True to his word, the 32-year-old John Spano flew back and forth to Long Island throughout the season. Islanders fans, players, and staff learned more about their new money man. Spano was intense, but shy and awkward. He was married with no kids. He was easily accessible. He was worth hundreds of millions of dollars, but never had any staff around.
John Spano and his wife Shelby lived in Dallas, Texas, in a modest-for-them $3 million home that was paid in full with cash. He hobnobbed with the Dallas elite because John Spano was the elite. The collection of companies he founded called the Bison Group was 10 subsidiaries deep with over 6,000 employees. The Bison Group leased everything from aircraft and heavy equipment to cappuccino makers and hot dog machines for convenience stores.
And as if that wasn't lucrative enough, John Spano was sitting on a fortune he had inherited from his grandpa Angelo. His pockets were deep, which is what it would take to build a winner in Long Island. John Spano was ready for the challenge. "I've owned every great car that was ever made," he told Sports Illustrated. "I have the houses and everything else. I felt I was experienced enough to be able to take a hockey team head on."
Hockey had been John Spano's greatest passion for as long as he could remember, way before he had money. But ever since having the means, Spano has wanted to own an NHL team. In 1995, he was in negotiations to purchase a minority stake in the Dallas Stars for $42 million, but the deal fell through for whatever reason.
Then, in 1996, he attempted to buy the Florida Panthers from blockbuster video emperor Wayne Huizenga. Spano missed out when Wayne decided to keep the team. But later that year, New York Islanders owner John Pickett expressed his desire to sell the team to NHL commissioner Gary Bettman, who from past negotiations knew just the man who might be interested.
Of course that man was John Spano and the rest is unforgettable New York Islanders history. A few months after his initial meeting with John Pickett, John Spano was sitting in the owner's box at the games shooting the shit with Islander greats while the current team continued to flounder. John would try to conceal his smile when the fans started chanting "Save us Spano" but everyone in the half-empty Nassau Coliseum could tell he was enjoying every moment.
John Spano was the savior the New York Islanders had been waiting for, and he readily embraced the role. In November 1996, Spano took out a full-page ad in local newspapers to publish a letter to the fans that included a promise, quote, "I will do everything I can to return a winner to you." On January 4th, 1997, the National Hockey League's Board of Governors officially approved John Spano to buy the team.
Well, it was a rubber stamping to be sure, but the NHL did do some final paperwork Monday and approved the sale finally of the New York Islanders to John Spano. He's a 32-year-old Dallas businessman who paid $164 million for the Islanders hockey team and some associated assets.
The New York Islanders finished the 1996-97 season with a record of 13-23-9. Coach Mike Milbury had stepped down about midway through to focus solely on his general manager duties. Assistant Rick Bonas took over the coaching position. Nothing changed.
The Islanders finished last in their division once again, missing the playoffs for the third year in a row. And John Spano, the savior, missed the first installment payment on April 7, 1997, a few days before the end of the regular season, when his deal to purchase the team was set to close.
In place of the $17 million, John Spano offered John Pickett a promissory note written by Joseph Lynch at Comerica Bank certifying that the buyer had $107 million in a trust fund at Lloyds Bank in London, which was currently being transferred but delayed. Some kind of global event or something. There was also a letter from Spano's Texas lawyer attesting to his client's net worth exceeding $230 million.
Satisfied with the assurances, John Pickett closed the deal. John Spano was given the title to the team, but three months later, that first payment still had not arrived. Not for the lack of trying. John Spano sent Pickett a check for $17 million, but stopped payment when the funds never hit his account.
As a sign of good faith, Spano told Pickett he would wire $5 million ASAP, and he did. Except there was an issue with a misplaced decimal. Pickett received $5,000 instead. A full two months after the deal closed, John Spano finally delivered a check for $17 million to John Pickett. That check bounced. Whoops. Spano wired the money. Again, a misplaced decimal. $1,700 was delivered instead of $17 million.
John O. Pickett had had enough of this malarkey. John Spano had blamed his non-payment on everything from "ravenous South Africans" to a bomb threat by the Irish Republican Army. Pickett enlisted NHL Commissioner Gary Bettman to mediate.
Meanwhile, Long Island's daily newspaper Newsday had been tipped off that John Spano might not be who he said he was. The journalists started investigating and quickly discovered that nearly everything Spano had said was a lie. For starters, John Spano went to St. John's High School in Ohio where he had spent most of his childhood. Not St. John's Academy like he officially claimed. St. John's Academy does not even exist.
Guess what else didn't exist? John Spano's home in the Hamptons. No record of anyone with that name owning property in the area. Nor did he own a private plane. Spano's flights from Texas to Long Island and back were chartered. He put them on the Islanders tab.
Same with the irregular stays at Long Island's illustrious Garden City Hotel. Spano spent over $220,000 of the islander's operating budget on lodging and transportation. He also used the funds to hire sex workers to party with him, two or three at a time. It was the longest winning streak Long Island had seen in years.
It was true that John Spano owned a $3 million home in Dallas, but he hadn't paid in cash, as he said. Spano's house had a $1.8 million mortgage, and he owed $85,000 in unpaid property taxes, which he quickly paid when Newsday published the delinquency. Of course, that check bounced.
More concerning, the newspaper had also discovered that John Spano's Bison Group was not nearly as large as he had claimed. As of 1995, the Bison Group only had $3 million in assets with only 22 employees. So, it was doubtful that John Spano was worth the self-reported, but confirmed by lawyers and bankers, $230 million. There was no proof of an inheritance either. John Spano did not even have a grandfather named Angelo.
but he did have a track record of questionable financial dealings. Newsday discovered that a law firm was suing John Spano for nonpayment of services performed as part of his failed bid to buy the Dallas Stars.
Also, the Stahlbeck Group, a commercial real estate brokerage firm owned by Dallas Cowboy great Roger Stahlbeck, accused Spano of not paying back a loan. And hockey great Mario Lemieux, his second appearance in this episode, gave John Spano $1.25 million for shares in a company that had yet to go public. Mario Lemieux never saw that money again.
John Spano was honest about one thing though. There were ravenous South Africans after him that were called Linco Holdings that made pots and pans. A few years earlier, John Spano had convinced Linco Holdings to let him manage the South African company's expansion into the United States. Spano soon proved his worth when he submitted a nearly $2 million purchase order from Nordstrom, the luxury department store.
Lenko promptly manufactured the 270 sets of stainless steel cookware and shipped them to the States. Spano transferred payment in the form of a check that bounced. Lenko decided to follow up with Nordstrom, only to find out that the store had never heard of John Spano and that they did not sell pots and pans. Lenko sued John Spano.
It wasn't just a case of accepting him on face value, an official with the company told the Dallas Observer. He had the order from Nordstrom with their store logo and address right there. He had letters from banks attesting to his worth. Our people acted on what they thought was a good risk. They did their due diligence, and everything pointed toward a worthwhile business arrangement. The National Hockey League thought so too.
But on July 11, 1997, John Spano agreed to return the New York Islanders to John Pickett as long as Mr. Pickett agreed to take over the $80 million loan he had used for the down payment and to not sue. "I just can't describe how difficult this decision has been," John Spano said in a statement. "My instincts are to continue to fight for the Islanders and to try and reignite my personal passion for the sport."
Hockey. Islanders fans were devastated. Not only was the savior of the franchise a complete mirage, but the team was reverting to stingy John Pickett, who a fan newsletter referred to as the NHL's version of Dracula. Quote,
Any hockey fan worth his ice can recite a line or two from the movie classic Slapshot. Like, who owns the Chiefs? Owns! Owns! While we're on the subject, who owns the Islanders? Owns! Owns! It's not John Spano. Not anymore. He either walked away or was told to walk away after missing a deadline on a $17 million payment.
So the club has returned to its former owner, John Pickett, who will now look to sell the team again, again to someone who will keep them on Long Island. My reputation went from savior to devil, John Spano told Sports Illustrated after the deal fell through. The failed owner became a bigger joke than the Gordon's Fisherman logo the team was just now getting off its chest. All that promise, all that hope, gone in an instant.
Thus the life of an Islanders fan. We'll be back with lots more right after this. John Spano's failed attempt to buy the New York Islanders spiraled into federal court today where the 33-year-old businessman was arraigned on fraud charges on Long Island. Spano has until Monday to post a $3 million bond. He lost control of the Islanders nine days ago after he missed a $17 million payment.
About a week after John Spano agreed to return the New York Islanders, federal authorities knocked on the door of his Dallas home. John wasn't there. He was in the Cayman Islands, staying at a luxury resort. John agreed to return to the States and turn himself in. He's on the way back to the country and he intends to enter his plea of not guilty and he maintains his innocence.
On July 20, 1997, John Spano appeared in court for bank and wire fraud charges. The Assistant United States Attorney for the Eastern District of New York described Spano's dealings as a "tangled web of lies and promises." He had lied about his wealth and forged documents to convince major banks and the NHL that he was worth more than $230 million. In reality, John Spano was worth about a million.
I set it up so other people couldn't talk to other people, or they didn't have enough knowledge to put two and two together," John Spano later told ESPN. "The guy at the bank knew one thing. The guy at the NHL knew another. My attorney knew something else. If they would have all got together, they would have realized something wasn't right."
Instead, Fleet Bank of Boston loaned John Spano $80 million based on documents he provided that misrepresented his net worth. The bank never confirmed the legitimacy of those documents. The Fleet Bank executive who approved the loan later resigned.
John Spano put off the same scheme with Comerica Bank in Dallas. Joseph Lynch, the bank's senior vice president, said he approved $8 million in loans to Spano based on three documents: a financial report listing his net worth as $55 million, a statement from a bank in the Cayman Islands detailing $39 million in assets, and a letter from Clive Jones and Lloyd Bank's trust department confirming the existence of a $107 million trust account.
Unfortunately, Lloyds Bank does not have a trust department, a spokesperson told Newsday. And no one named Clive Jones worked there. Joseph Lynch would have discovered this information on his own had he bothered to independently verify the documents. But just like Fleet Bank in Boston, Comerica Bank approved the loan without asking questions, assuming someone else had already done the dirty work. Joseph Lynch would later resign.
But not before John Spano found another use for him. Spano allegedly borrowed Joseph Lynch's letterhead and signature without his knowledge to confirm in a letter to Islanders owner John Pickett that a $17 million check was on its way. John Spano also fabricated phony financial statements from a brokerage firm in a similar manner. Prosecutors traced both faxes back to the Bison Group's fax machine. Plus, Spano had used the wrong font.
Nevertheless, John Spano used these fraudulent statements to convince his very Texas-sounding lawyer, T. McCulloch Strother, that he was sitting on a fortune. His lawyer also trusted the documents at face value and had not bothered to verify. Strother was then happy to confirm his client's net worth in letters to the National Hockey League, which the National Hockey League also did not verify.
"We're not the CIA, but we have tools, investigative procedures," NHL Commissioner Gary Bettman said during a news conference at the league's offices. "And if you ask me what the true story is with John Spano, only John can answer it. We were dually diligent. We'll have to look and re-examine the procedures." By dually diligent, Gary Bettman was referring to former FBI agent Ben C. Nix, who the league hired to dig into John Spano's background.
Nix found nothing. He was reportedly paid between $500 and $750 for his effort. And that was it. The sale was approved. But the NHL wasn't about to take the bulk of the blame. "'There's no doubt that I confirmed to John Pickett that John Spano was interested in the club,' Bettman said. "'I'm not sure when a married couple gets divorced that you blame the person who introduced them. I'm not running from this. It happened. It's unfortunate. I wish this never happened. I'm not the one who caused him not to make the payment.'"
Bettman is correct. Only John Spano's inability to come up with the other half of the purchase price caused him not to make the payment. Otherwise, who knows? John Spano might still own the Islanders today. Instead, John Spano was facing prison time. In addition to the federal charges on Long Island, he had been indicted by a grand jury in Fort Worth on unrelated charges and was eventually charged in Boston for fraudulently obtaining the $80 million loan from Fleet Bank.
Ultimately, the cases were consolidated. John Spano's bond was set at $3 million. His parents and sister put up their homes for collateral to bail him out on July 28, 1997, about a week after he had turned himself in. Free until his trial, John Spano started talking.
The only guy who lost money in all this was me, he told the New York Times. I put $2.5 million into the team to meet their payroll before I even closed. I've got legal fees of about $600,000. Meanwhile, Pickett is selling the team for more money, and the league has a stronger franchise, and the bank has a bulletproof loan. I'm scared of jail, Spano admitted.
"I can understand about making a deal," he said in regard to the possibility of taking a plea. "You want it to all go away. The league led me to believe that it would all go away if I was man enough to walk away from the team, and I did." "That's right. John Spano was man enough to walk away from the disaster he had created." Soon after, Shelby Spano walked away from the disaster her husband had become. She divorced John and sold the house.
I don't know what happened to her, but afterward John Spano moved to Philadelphia, picked up a drug addiction, and tried to pay his rent with bounced checks and botched wire transfers. Spano's landlord filed a report and his bail was revoked. John Spano sat in jail until he pleaded guilty to mail fraud, wire fraud, and bank fraud charges. On January 13, 1998, he was ordered to pay total restitution of more than $11 million and he was sentenced to about six years in prison.
"I made a terrible mistake," John Spano said in court. "My judgment has been incredibly poor. I don't know what came over me to do what I did. I'm sorry for the people I've hurt. I'm sorry for the people of Long Island who believed I was going to do something for the team. That's okay. The team was doing just fine."
Just kidding, no they weren't. By the time Spano was sentenced, the New York Islanders had been sold to two businessmen named Howard Milstein and Steve Gluckstern for $195 million.
John Spano had actually increased the value of the Islanders for the few months that he owned them by extending the team's cable contract, which is still one of the best in the league. We know we have been entrusted with an extraordinary legacy. We pledge to fill that empty place in every fan's heart with a fifth Stanley Cup.
Don't worry. As part of the league's increased due diligence efforts, the NHL had thoroughly investigated Milstein and Gluckstern before handing over the reins. The league hired an international accounting firm and a prestigious law firm to evaluate the prospective buyers. They never wanted a situation like John Spano to happen again.
Other than that, not much changed. The New York Islanders still sucked. The new owners threatened to move the team because of the dilapidated arena where they played. Sounds familiar. And as tradition, the Islanders front office refused to pay for repairs or talented players. So, the team languished at the bottom of the league.
What was new was old already. Elsewhere in the news, the New York Islanders have relieved Rick Bonas of his head coaching duties. General Manager Mike Milbury returns behind the Islanders bench just 14 months after relinquishing the head coaching position. During the 1998-99 season, General Manager Mike Milbury fired the man who replaced Coach Mike Milbury only to replace him with Coach Mike Milbury who also remained General Manager Mike Milbury.
Unsurprisingly, it was a disaster. Milbury finished his career as the Islanders coach in 2000 with twice as many losses as wins and zero playoff appearances. Yet amazingly, he remained the Islanders general manager for another six years. Milbury survived his third ownership change in five years.
Charles Wong and Sanjay Kumar bought the team for $190 million in the year 2000. What I want to do is keep the team here. Long Island needs the Islanders. We are Long Island's Islander team. Charles Wong was a local software billionaire who co-founded Computer Associates. He and Sanjay Kumar, who replaced Wong as CEO of the company, vowed to return the New York Islanders to their glory days.
Wong is credited with ensuring the team stayed on Long Island by negotiating a deal to play in Brooklyn until a new arena was built, which eventually happened in 2021. Under Charles Wong, the Islanders returned to the playoffs for the first time in seven years. As you might have noticed, co-owner Sanjay Kumar, who admitted to reading hockey for dummies soon after buying the team, is rarely mentioned when people talk about this era.
probably because Charles Wong bought Sanjay Kumar's share of the team in 2006 after Kumar was sentenced to 12 years in prison for his role in a massive accounting fraud at Computer Associates.
The company got caught backdating more than $2 billion in sales contracts to meet Wall Street forecasts. Sanjay Kumar, who orchestrated the scam, said his predecessor, Charles Wong, had personally directed improper accounting practices since the company's inception. Charles Wong denied any knowledge of such acts and was never charged, but he was losing in other ways.
After more than 15 years of ownership, it is estimated that Charles Wong lost as much as half a billion dollars keeping the Islanders afloat. He finally sold the majority stake in the team in 2016 to John Ledecky and Scott Malkin. Charles Wong died two years later.
By then, John Spano had resurfaced. He had been released in June 2004 after serving more than five years, but went right back to prison eight months later when he was charged with setting up a financial services company that he used to scam over a dozen companies out of tens of thousands of dollars. Spano would fly around the country in a rented jet, promising to obtain business loans for companies, pocket the fees, and then never deliver.
John Spano pleaded guilty to fraud charges and was imprisoned for another four years. He was re-released on April 3rd, 2009. He was now 45 years old.
The same year Spano was freed, two more familiar faces from the Islanders' blunder years found themselves in trouble. Stephen Walsh and Paul Greenwood, two members of the infamous Gang of Four minority ownership group that approved the Fisherman logo back in 1995, were arrested for operating a massive investment scheme of their own.
From 1996 to 2009, 64-year-old Stephen Walsh and 61-year-old Paul Greenwood collected more than $7.5 billion from charities, universities, and pension plans for investment management. Incomprehensibly, Walsh and Greenwood's investment strategy was worse than their hockey team. The duo had to issue bogus promissory notes to investors to conceal their losses until they could fill the hole, but they never did.
After the stock market plunged and Bernie Madoff was busted, investors panicked and asked for their money back, but much of it was gone. In addition to the investment losses, Stephen Walsh had reportedly used his clients' money to fund businesses for his children and finance his divorce. On the other hand, Paul Greenwood used the investors' funds to buy expensive horses for his wife and the world's largest collection of antique German teddy bears.
"I couldn't have been more surprised if I found out Mother Teresa was running a protection racket in Calcutta," a longtime associate of Paul Greenwood told the Associated Press. Paul Greenwood and Stephen Walsh were arrested on February 24, 2009 and charged with defrauding investors out of $554 million. Both men pleaded guilty. Paul Greenwood was sentenced to 10 years in prison. Stephen Walsh was sentenced to 20.
The Manhattan U.S. District Judge who presided over Greenwood and Walsh's case was Miriam Goldman Cederbaum, best known for sending Martha Stewart to prison. It was Judge Cederbaum's first case back after an eight-month recovery from a stroke. Paul Greenwood's lawyer appealed the harsh sentence on the grounds that the judge was cognitively impaired.
For example, during sentencing, Judge Cederbaum referenced all of the people who had been financially hurt by the defendant's actions when in reality, all of these stolen funds were recovered and returned. Both Paul Greenwood and Stephen Walsh were re-sentenced the time served in 2019 and released after only spending about four and a half years behind bars. Meanwhile, John Spano had re-entered the public eye once again and not by choice.
In 2013, ESPN produced a documentary about his failed bid to buy the New York Islanders called Big Shot. It reopened old wounds for Spano.
but the documentary was lighthearted enough for him to want to participate and to feel comfortable talking to the media. So what's John Spano doing now? What are you up to these days, John? Just working for some people, making investments in businesses, and trying to keep a low profile, really. I knew this thing would probably get some attention when it came out, but I'm hopeful that this storm will blow over and just go back to being...
At 50 years old, John Spano had been hired as a delivery and pickup driver for a company in Ohio called Image First that provided laundry services to outpatient medical facilities. After a while, Spano was promoted to salesman, and that's when the John Spano we all know returned.
From June 2011 to July 2013, John Spano allegedly created fake customer accounts to record fake sales to collect real commissions, up to $150,000 worth. Spano reportedly ran his phony sales operation from an office he set up inside of a storage unit so no one around him would know. John Spano pleaded guilty to 16 counts of forgery on May 19, 2015. He was sentenced to 10 years in prison.
The con man who almost bought the Islanders decades ago has been sentenced to 10 years in prison for a different fraud case. I never meant to harm you or the company, Spano told the owner of Image First in court before his sentencing. I needed that job, and we became friends. You gave me a job, and I wanted to keep it. You were, uh, gave me a chance. You're, you're good to me.
I never wanted it to come to this. I never wanted us to get to this position. You were my friend. You were my... I respected you. You were my... What you accomplished, as I told you numerous times, you were... Role model, you were my friend. You were someone that I talked to outside of work where it wasn't about work. It was just about what we had done in our lives.
I never meant to harm you, the company. I made no money doing it, which may be an issue. I did my best to do what I could outside of selling to make the company grow and make it better. John Spano claimed he created fake customers to help the company appear more profitable.
He didn't make a dime off of it, said his defense attorney. This one he didn't try to make money. This one he didn't try to take money. This one he was just plain stupid. John Spano was scheduled for release in November 2024. Go Islanders. Swindled is written, researched, produced, and hosted by me, a concerned citizen. With original music by Trevor Howard, a.k.a. Deformer, a.k.a. Fish Sticks.
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