- By Amy Castor and David Gerard
Arizona businessman and sports investor Reggie Fowler spent decades talking himself out of sticky situations. But in a Manhattan courtroom on June 5, reality finally caught up to him.
US District Judge Andrew Carter sentenced Fowler, who is 64 years old, to 6 years and 3 months in prison for his role in hiding cryptocurrency transactions on behalf of shadow banking operation Crypto Capital and the disappearance of hundreds of millions of dollars. Fowler will surrender in Phoenix at 10 a.m. on June 30, giving him three weeks to get his affairs in order and rehome his dog.
Inner City Press attended the sentencing. [Twitter; Inner City Press; SDNY press release]
Fowler has agreed to pay $53 million in restitution to the defunct Alliance of American Football (AAF), an alternative football league that he defrauded as one of its investors. Inner City Press tells us that the judge also ordered Fowler to forfeit the full $740 million prosecutors had asked for, dismissing Fowler’s argument that this was so high as to violate the 8th Amendment. [Order of restitution, PDF]
Fowler’s crypto frauds were the beginning of the more recent frauds in the crypto space, and the failures of the Silvergate and Signature banks, prosecutors said in court.
“I have harmed the people of the AAF and my family,” sobbed Fowler. “I am embarrassed and ashamed.” Poor fellow.
Just a little off the top
Crypto Capital was a Panama-incorporated money transmitter that served as a shadow bank for many US and Canadian crypto exchanges, including Bitfinex and the failed QuadrigaCX — because they had enormous trouble getting proper banks to talk to them.
Throughout 2018, Fowler was Crypto Capital’s US contact. He set up a network of bank accounts in the US and abroad so that Crypto Capital could process payments for its customers without worrying about all those tedious anti-money-laundering laws.
Fowler lied to the banks, telling them that the accounts were for his real estate business. His scheme ran internationally and received over $740 million just in 2018. Most of this was Bitfinex customer money. A “Master US Workbook” listed more than 60 bank accounts around the world, which totaled over $345 million by January 2019. [Decrypt]
Fowler didn’t worry too much about separating Crypto Capital or Bitfinex money from his own funds. He and his co-conspirators set up a “10% Fund,” skimming from client deposits for themselves.
In the original indictment, and again at today’s sentencing, prosecutors detailed “additional criminal conduct” Fowler seemed to be involved in — though he wasn’t charged on these.
Fowler allegedly tried many times to get bank loans using fraudulent bond certificates, valued in the billions, as collateral. He tried to use funds from the Crypto Capital scheme as collateral for loans. He was caught with $14,000 in sheets of counterfeit $100 notes right there in his office.
Fowler was arrested in Chandler, Arizona, on April 19, 2019.
Prosecutors piled on more charges in a superseding indictment in February 2020 after they discovered Fowler had been using Crypto Capital money to fund the AAF. That funding fell through after the Department of Justice seized $68 million from Fowler’s bank accounts at HSBC in late 2018.
Fowler, who had fumbled an opportunity for a plea deal in January 2020, pleaded guilty to all five counts against him in April 2022, throwing himself at the mercy of the court. He has remained out of jail since his initial arrest on $5 million bail.
A respectable businessman of flawless repute
Fowler’s lawyer Ed Sapone wrote a letter to the judge on April 10 asking for clemency for his client — that is, no jail time at all.
Sapone argued that Fowler had lived a hard life, growing up in the South without parental support, and had never broken the law before. At least not in any way that landed him behind bars. [Doc 124, PDF]
Never mind that Fowler was a fully-grown 59-year-old man at the time of his crimes with a long career as a (cough) sharp businessman behind him.
Sapone also neglected to mention that Fowler had been sued 36 times in the past, mainly for just not paying people — and had even stiffed his previous lawyers in this very case for $600,000. [ESPN, 2005]
In a sentencing submission, prosecutors said that they didn’t appreciate that Fowler had blown $200,000 gambling in casinos since his guilty plea, rather than using those funds to pay back his victims. [Doc 125, PDF]
Prosecutors also noted that in December 2016, Fowler was stopped at the Canadian border with items associated with a “black money scam” — a scheme where a con artist claims to have stacks of US bills dyed black to avoid detection. The bills will come clean if you just purchase this expensive “special chemical.”
Hard work and perseverance
Fowler’s story reads like an episode of American Greed — where money seduces and power corrupts.
Before his path crossed that of Crypto Capital, Fowler’s main business was Spiral Inc. — a holding company for about a hundred different businesses, including ice rinks, car washes, and a foam food tray manufacturer company. Most of the businesses were located between Arizona and Colorado.
Fowler was also a pilot and owned two jets — a Cessna Citation CJ2 and a CJ3, which he flew for business and loaned out.
He touched many lives including friends in the sports world and those who depended on him for their livelihood. Because Amy wrote about Fowler regularly, people who knew him contacted her. Sources described Fowler as well-read, charming, and a “fantastic salesperson, overbearing and confident.” He was not a gambler, at least not before his indictment, said a source. He never drank and worked out at the gym religiously.
What Fowler was not good at, however, was shedding businesses that were dogs — like his “Shammy Man” carwashes in Arizona, which he co-owned with a partner who served time in federal prison — or putting money into the ones that were doing well.
His firm Styro-Tech in Denver was making money hand over fist, but Fowler couldn’t seem to invest in better equipment and he was always hiring illegal immigrants cheap. “He could never pay anybody what they were worth,” said one source. “I don’t know how many times he got caught hiring illegals.”
Fowler was a football player in his youth and remained an obsessive fan. His obsession with the game played no small part in his downfall.
He kept a Cincinnati Bengals helmet in his office and gave people the impression that he had played professionally for the Bengals — though he had only attended training camp.
In 2005, Fowler tried to purchase the Minnesota Vikings from Red McCombs in a $600 million deal. “He was 100 percent committed to getting it done,” McCombs said. “He was very straightforward. He said, ‘I am going to buy your football team.’” Fowler would have been the NFL’s first Black owner. [LA Times, 2005]
But the deal led to financial scrutiny, and the Star Tribune uncovered several outright lies in Fowler’s resume, so Fowler pursued a limited partnership instead. The cash he put up for the 3% ownership in the Vikings got him into financial trouble. [Minnesota Public Radio, 2005]
Things went from bad to worse, and Fowler went deeper into debt. He refinanced Spiral in 2006, landing him $65 million in debt. The credit crisis followed in 2008, and Spiral never recovered. By 2013, the company was in receivership, and Fowler lost control of all his businesses. By October 2014, Fowler no longer had a stake in the Vikings. [Resolute, 2022; Star Tribune, 2014]
At some point over the following years, a debt-saddled Fowler crossed paths with the people at Crypto Capital — Oz Yosef and his sister Ravid. The Yosefs were both later indicted for their part in Fowler’s fraud, but remain at large.
Crypto had an interesting year in 2017. Bitfinex, the largest crypto exchange at the time, lost its ties to the traditional banking system when its Taiwanese banks were cut off from correspondent banking by Wells Fargo. Short of real dollars, and trying to recover from a $72 million hack in 2016, Bitfinex and its sister company, stablecoin issuer Tether, began pumping out tethers at a pace unlike anything before — frequently with no dollars backing them at all. (Just like the salty nocoiners told you at the time.)
Fueled by these unbacked fake dollars pouring into the crypto markets, the price of bitcoin climbed to new highs. A year later, Fowler found himself in control of bank accounts with hundreds of millions of dollars flowing through them. And then football called to him again.
AAF: the Fyre Festival of football
Alternative football leagues have a long history of dismal failure. In 2017, TV producer Charles Ebersol came up with an idea for a springtime football league that would be a feeder for the National Football League.
Somehow “millions” of fans would have an interest in watching football after the Super Bowl. The Alliance of American Football would even come with a killer app that promised to change sports gambling as we know it.
Ebersol and AAF co-founder Bill Polian, an NFL executive, attracted some seed capital. In June 2018, Willie Lanier, a former Super Bowl champion, introduced Ebersol to Fowler. Fowler offered to be a lead investor, committing $170 million — a $50 million line of equity and a $120 million line of credit. Prosecutors wrote in their letter to the court:
During a June 2018 meeting with AAF executives, including AAF co-founder Charlie Ebersol, Fowler showed the AAF corporate team printouts of bank account information purporting to show that Fowler had hundreds of millions of dollars in foreign bank accounts. Fowler would not let anyone take the printouts after the meeting. Fowler told Ebersol that Fowler’s wealth, which he said was largely in cash, came from real estate holdings and an aviation business that built drones in Germany for U.S. Government contracts. During an October 2018 meeting, one of Ebersol’s associates took a picture of a bank account printout that Fowler presented. That printout showed roughly $60 million in an HSBC account.
That HSBC account would be one of the accounts that was frozen by the Department of Justice in that very month.
Ebersol claims in an affidavit that he did his due diligence on Fowler — though clearly he did not. All Eberson would have had to do was look up all the multiple lawsuits against Fowler. Peter Thiel also invested in AAF through his Founders Fund.
The league kicked off in February 2019 — with eight teams and more than 400 players — but after eight weeks of play, the dream unraveled when Fowler missed a $28 million payment because all his money had been frozen. [Affidavit, PDF; CNBC, 2018]
The AAF disintegrated into the football version of the Fyre Festival. They missed payroll in the first week one, blaming it on a computer glitch. Players had been booted out of their hotels and had to pay cash for their flights back home.
Another investor, Tom Dundon, took over the league, but he soon gave up throwing money into the pit as well. The AAF declared bankruptcy on April 17, 2019 — and multiple lawsuits against its founders ensued. [Twitter, archive; Twitter, archive; Sports Illustrated]
End of the linebacker
What can we learn from Reggie Fowler? Mostly that pigs get fat, but hogs get slaughtered.
Fowler spent decades doing sharp business that didn’t quite get him in trouble with the law. Then he got in a bind and let his hubris do the thinking for him. Like so many in crypto, he found out that this works until it doesn’t.
By the time he gets out of jail, Fowler will be 70. In the four years between his arrest and today’s sentencing, he spent his time just going to work every day. We predict he’ll get out of jail and just get back into running businesses until the day he drops. Hopefully less flagrantly illegal ones.