Finra has barred a former UBS broker in Minnesota a few years after he was accused of diverting assets from a former NFL player by putting his money into risky investments in small companies owned by his wife.
The barred broker, Paul Ronald Koch of Wayzata, Minn., Is also under investigation by the US Secret Service for financial misconduct, according to his BrokerCheck page.
In 2019, retired NFL football player Charles Johnson, a North Carolina resident and former defensive end with the Carolina Panthers, said in a federal lawsuit that Koch had directed him and his company to put millions in a variety of small businesses run by Koch’s wife Michelle Koch and her firm MNK Holdings LLC (as well as firms run by a relative). Much of this money was then siphoned off from these ventures in improper distributions, Johnson claimed.
Johnson and the company that runs his business interests, Randy Watson Holdings, sued Michelle Koch in the US District Court for the District of South Carolina, Columbia Division, in 2019. He also reportedly sought $ 10 million from UBS. In addition, he sued the Barner Group, run by Reginal Barner, the relative of the mother of Johnson’s child, court documents said. These parties were aware of the “complete control Paul Koch had over Charles Johnson’s finances,”The documents said. With that control, Koch breached his fiduciary duty, Johnson argued.
Paul Koch was not named as a defendant in the federal lawsuit, but according to the lawsuit against Michelle Koch, she and her husband and Barner used moneys to establish a series of ventures, including second-hand clothing stories, janitorial businesses, hair salons and property companies, siphoning money from these businesses for their personal gain and setting up distributions to themselves using funds from bank accounts belonging to Johnson and his company, which Paul Koch had access to.
Besides the numerous six-figure checks being written for a variety of investments in companies like High Point Place and Fermented Feed Group, money sometimes went missing, the lawsuit said. Some $ 1.5 million in withdrawals from his company’s Wells Fargo account went unaccounted for, Johnson’s federal lawsuit said.
Johnson claims he didn’t know about the financial relationships between Koch and the various business ventures, which had names like Chamire Holdings., CMR Partners, JKB Holdings, MPX 360, My-T-Sharp Holdings, VRE III, Warren Mill and Perrymanco .
The defendants “would make themselves partial owners of said entities without any financial investment,” Johnson’s lawsuit said. “This fact was not disclosed to Charles Johnson who was led to believe that [the] defendants were investing their own monies. ” Johnson said in his court documents that the questionable transactions stretched from 2011 to 2018, and claimed that even though Paul Koch was prohibited by UBS from doing business with clients, he was able to circumvent that restriction with his wife’s help.
Much of the suit against Michelle Koch and Barner has been settled, though there are still outstanding complaints and cross-claims. (She and Barner argued in court documents that they were not always privy to each other’s various business dealings or Johnson’s dealings with them or were otherwise not in control of certain LLCs and could not be accountable for certain transactions. Michelle Koch claimed in one document that she was undergoing Stage 4 cancer in 2016 and was not made party to some business arrangements made by Johnson and Barner.)
In May 2019, UBS settled a claim for $ 3.75 million with a client understood to be Johnson. Finra said on Koch’s BrokerCheck profile that the “FA recommended risky and unsuitable investments in various outside business ventures where his wife di lui was a partial owner.”