Ex-business manager indicted in $7M defrauding of former UA standout Richard Jefferson
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A federal grand jury in Tucson has indicted the ex-business manager of Richard Jefferson, a Cleveland Cavaliers player and former University of Arizona basketball standout, on charges of defrauding Jefferson of $7 million.
Theodore Kritza is charged with 22 counts of bank fraud, wire fraud, and aggravated identity theft, according to a June 14 indictment filed in U.S. District Court in Tucson. He is scheduled to be arraigned Friday morning, June 30.
Kritza forged Jefferson's signature on bank documents in 2005 to give himself power of attorney over Jefferson's finances, according to the indictment. Kritza made legitimate payments for Jefferson's bills, but also used millions of dollars for his own benefit.
Jefferson discovered the alleged fraud in 2012 when he bought a home and learned of an outstanding loan and several other loans initiated without his knowledge, according to the 30-page indictment.
Prosecutors said Kritza used his fraudulent power of attorney to renew lines of credit, open new lines of credit, transfer money from Jefferson's accounts into his accounts, and take out a business loan in Jefferson's name.
The indictment said Kritza fraudulently transferred $6.99 million from Jefferson's accounts to his own accounts from 2004 to 2013, when Jefferson froze the accounts. If convicted of the wire fraud charges, prosecutors asked the court to force Kritza to forfeit those funds. They also ask that Kritza forfeit $3.8 million if convicted of the bank fraud charges.
The indictment said Kritza asked Jefferson in 2004 to allow him to use a line of credit, with Kritza's house as collateral. Jefferson gave Kritza verbal permission, thinking Kritza, who was a business partner and friend, would make the payments until the scheduled end of the line of credit.
Instead, Kritza renewed the line of credit without Jefferson's knowledge, and used it for his own personal gain. He did not use his house as collateral, the indictment stated.
As part of the scheme, Kritza deposited millions of dollars obtained from the lines of credit into Jefferson's bank accounts, but then distributed the money among his own bank accounts, according to the indictment.
Kritza also used $980,000 from Jefferson's bank accounts to make payments on American Express Platinum cards in the names of Kritza and his wife between 2009 and 2013, according to the indictment.
The business relationship between Jefferson and Kritza described in the indictment began in 2001, when Jefferson was preparing for the NBA Draft after leaving school a year early. Jefferson hired Scottsdale-based Stratosphere Sports, where Kritza worked, to represent him.
Jefferson gave an agent with Stratosphere Sports, identified in the indictment only by the initials "TE," power of attorney a few months later. He did not give Kritza power of attorney, but Kritza was responsible for organizing Jefferson's finances, paying his credit card bills, and helping him buy cars, among other day-to-day duties.
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Kritza started his own company, the Gilbert-based Stratosphere Management, in 2005. Jefferson kept TE as his agent and continued to pay Stratosphere Sports.
Jefferson also agreed to pay Stratosphere Management between $90,000 and $250,000 annually for Kritza’s services in organizing Jefferson's financial accounts and ensuring his bills were paid.
Kritza helped Jefferson open checking and money market accounts at the Tucson branch of Alliance Bank of Arizona. Kritza also opened 18 accounts at Alliance Bank, Bank of America, Mutual of Omaha, and JP Morgan Chase that prosecutors said he used to conceal the fraud scheme.
A public defender is scheduled to appear at Kritza's arraignment Friday, according to the court calendar. The Federal Public Defender’s Office declined to comment. Kritza did not respond to a voicemail and email from the Arizona Daily Star.
Jefferson declined to comment for this story.
The indictment names the victim as "RJ." Jefferson and Kritza have been involved in civil litigation over allegations of multi-million dollar fraud since 2014, state and federal court records show.
Western Alliance Bank sued Jefferson in 2014 in Maricopa County Superior Court for not paying $455,000 owed from a line of credit Jefferson took out with the bank.
In a counter claim filed after the case was removed to federal court in Phoenix, Jefferson said he had no knowledge of the line of credit and alleged Kritza forged his signature. The lawsuit remains ongoing.
The alleged fraudulent activity occurred just as Jefferson’s NBA career was becoming more lucrative. Jefferson earned about $4.5 million over his first three seasons under the NBA’s rookie salary scale, then signed a six-year, $78 million contract extension with the Nets before the 2004-05 season.
Jefferson went on to earn seven-figure salaries for seven seasons in the NBA. He has made $112 million in earnings while playing 15 seasons for seven different teams. Now a 37-year-old veteran, Jefferson remains under a guaranteed contract with the Cavaliers that will pay him $2.5 million next season.
Jefferson averaged 11.2 points, 5 rebounds and 2.8 assists per game over three seasons at the UA, and played in the 2001 national championship game.
He remains a popular figure around campus. Arizona's basketball and volleyball teams practice in the Richard Jefferson Gymnasium, which carries his name after he donated $3.5 million to its construction. Jefferson is a Phoenix native who attended Moon Valley High School.
