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Federal fraud conspiracy trial for NHL scammers set to start

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Phil Kenner stands accused of misusing funds which cost several NHL players millions.Handout

Phil Kenner stands accused of misusing funds which cost several NHL players millions.

CENTRAL ISLIP – Forged signatures on bank documents, secret recordings taped in prison, a plot to hijack a heralded golf development on the blue waters of Baja – all of this and more will feature in a federal fraud conspiracy trial beginning Monday in the Eastern District of New York.

A group of current and former NHL players are among those the government says saw their life savings go missing in a series of bait-and-switch investment schemes.

Phil Kenner and Tommy Constantine stand accused of crimes that stretch back nearly a decade and involve at least $ 30 million. Arrested in late 2013, the duo pleaded not guilty to charges that they diverted millions of investors’ dollars toward personal debts, luxurious lifestyles that included private planes and lavish homes, and other interests.

More than a dozen hockey players are thought to have been impacted in the case, including former Rangers and Islanders, as well as several cops and others living in the New York area.

On Monday, a 12-person jury will hear opening statements in a courtroom on the 10th floor of the Alphonse M D’Amato United States Courthouse. The trial, being overseen by U.S. District Court Judge Joseph Bianco, is estimated to last about five weeks.

The government alleges that Kenner and Constantine promised their investors their funds would be steered toward projects like a golf resort near Cabo San Lucas, a prepaid credit card company called Eufora, and a fund intended to wrest the golf course from Kenner’s former partner, Ken Jowdy, who has cooperated with the government’s investigation since 2009 and ‘s a witness for the prosecution.

When investors became suspicious in 2009, Kenner convinced them that their money was unavailable because it was being squandered by Jowdy. As the Daily News began reporting that year, that was when Kenner launched a bizarre scheme called the “Global Settlement Fund” – a purported legal defense fund that the players were told was their last, best chance to retrieve their money from Jowdy. Kenner and Constantine crisscrossed North America raising money for the fund from players.

Money deposited in the GSF was almost immediately withdrawn by Constantine and spent in part on other things, according to a streamlined indictment that lays out the alleged crimes in fairly simple terms – a money trail prosecutors plan to present to jurors through bank records and testimony of bank executives.

Witnesses will likely include former New York Islanders forward Michael Peca and his wife, Kristin; former Bruins and Capitals center Joe Juneau; former Rangers defenseman Bryan Berard; former New York police officer John Kaiser; and banker Aaron Mascarella, a former vice president of Northern Trust, a bank and financial services company through which some of the disputed funds moved. The government filed papers Friday alerting the defense to its intention to call a hand-writing and forgery expert to the stand.

Court documents suggest that what is left of the investors’ money may be locked up in private jets, fancy homes and the Mexican golf resort, which has since opened and which features an adjacent course designed by Tiger Woods, who also has a home in the development.

Kenner and Constantine were arrested in November 2013 and charged with wire fraud and money laundering. Both pleaded not guilty. The FBI and IRS have been investigating the pair for years, interviewing a wide range of witnesses and picking through a mountain of documents and the endless civil litigation the parties have levied at each other.

The men are accused of steering investor deposits toward personal debts and pet projects. Kenner allegedly used his investors’ money for a stake in a tequila company, according to the government. Prosecutors say that Constantine used investor funds to buy race cars and hire Playboy models to attend car races.

Two weeks ago, the government also revealed that Kenner, deemed a flight risk and held in jail since his arrest, is the subject of an ongoing obstruction of justice inquiry based on a secretly-recorded jailhouse conversation. The same day the existence of the recording was revealed, Kenner was moved from the prison in Queens where he had been held to the Metropolitan Detention Center in Brooklyn. (Constantine has been free on bail for more than a year now.)

Kenner, a native of Buffalo’s suburbs, attended Rensselaer Polytechnic Institute, where he was a close friend of Juneau, who is expected to be one of the government’s first witnesses and may take the stand as soon as Monday. After RPI, Kenner went into finance, working at the same Boston firm as former Bruins great Derek Sanderson.

Kenner amassed a client list that grew to include as many as 20 pro hockey players, and started his own independent firm in 2003. He was friendly with his clients, partying with them and calling himself a “lifestyle coach” as he set them up with flashy investments that included real estate development projects.

Around 2008, Kenner ran into legal trouble, as several of the players who had invested with him filed legal actions against him. When NHL journeyman Owen Nolan launched an arbitration proceeding against him, Kenner lost; the arbitrator awarded more than $ 2 million to Nolan.

Then, in 2009, Kenner persuaded a group of players to sue Jowdy. The players alleged that Jowdy had squandered their investments using the money to hire porn stars and escorts to entertain famous athletes, including Jowdy’s close friend, Roger Clemens.

The lawsuit, filed by California attorney Ron Richards, quickly crumbled as it became clear that Jowdy’s golf development had the confidence of big banks. Some of the investors visited the sparkling resort near Cabo, now ranked as one of the top new courses in the world, and discovered that Kenner had misrepresented the progress of the project.

Now, Kenner and Constantine have the chance to convince a jury that their dealings with the hockey players and other investors were legitimate, and that one or both of them were the true victims. The lead prosecutor on the case, assistant U.S. Attorney James Miskiewicz, who is joined by fellow prosecutor Saritha Komatireddy, is sure to tell a very different story, one of lost investments intended to ease the retirements of hockey players and others.

Among their chief witnesses is Berard, the former All-Star defenseman and No. 1 draft pick, best known for returning to the New York Rangers after losing his eye in a grisly on-ice accident in 2000. He has spent the last five years poring over his financial records and communications with Kenner and Constantine.

“Many of the players are either broke or don’t want to spend any more money on legal fees,” Berard told the Daily News in 2013. “I’m trying to figure out where the money is and how it was taken.”

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