- Lester Munson, Legal Analyst
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For 25 years at Super Bowl sites across the country, one of the feature attractions during the week leading up the game was Leigh Steinberg's mammoth "Charity Bash," a glittering extravaganza that gathered NFL team owners, general managers, athletes, celebrities, politicians, business leaders and even a few sportswriters.
With as many as 5,000 in attendance, it was the perfect metaphor for Steinberg and his success as one of the leading sports agents in the industry, combining his connections to people of importance and his drive to do good for people in need. Last year in Dallas, he paid homage to his friend, former U.S. Rep. Gabby Giffords, who had been shot only a few weeks before the party. And, in 2009, Steinberg exhorted his guests to contribute to the purchase of cutting-edge clean water machines for Haiti in the wake of the terrible earthquake there.
But there is no Steinberg party in Indianapolis during Super Bowl XLVI week. Steinberg's next public gathering will be 16 days after the game, when he and his attorneys will come together in the U.S. Bankruptcy Court in Santa Ana, Calif., to face a court-ordered meeting with his creditors.
The court session is the next step in the bankruptcy that Steinberg filed on Jan. 11, the product of a decade-long, alcohol-fueled descent into a quagmire of debt and litigation that has cost him his certification as an NFL agent. Once considered the go-to agent-to-the-star-quarterbacks with a client list that included NFL greats such as Troy Aikman, Warren Moon, Ben Roethlisberger, Steve Young and many others, Steinberg is no longer allowed to represent NFL players.
His decision to file for bankruptcy came after several unsuccessful attempts to manage a mountain of debt.
"I did not want bankruptcy. I fought it, and I wanted to pay what I owed," Steinberg, 62, told ESPN.com.
Steinberg says he struggled with alcohol for nearly 10 years, a battle that resulted in several run-ins with the law that included a DUI arrest in 2007 and a drunk-in-public arrest in 2008. Though he says he has been sober now for almost two years, the connection between his drinking and his financial problems is clear. As his drinking increased, he admits now, he failed to pay personal and business bills, and failed to respond to lawsuits seeking to collect overdue debts, leading to a series of court judgments against him.
"There came a time when I discovered that I could drink during the daylight hours," he says. "It began a continuous descent. I had days when I completely checked out and drank all day."
In March 2010, according to Steinberg, he realized that "my drinking was hurting me and was hurting others. I knew I had to take a break and do something about it. I was at rock-bottom."
In his search for help, Steinberg applied for admission into a rehab center for indigent alcoholics, but the center had no available spaces. "It was the ultimate ignominy -- rejection at a place for poor alcoholics."
He then entered a facility known as "Sober Living," one of many houses for recovering alcoholics and addicts in Orange County, Calif., which is known in the rehab community as "the capital of recovery."
A Sober Living facility features an introduction to the 12-step program of Alcoholics Anonymous and guidance for one-day-at-time abstinence from alcohol, concepts of treatment that have saved millions from alcoholism and addiction since the legendary Bill Wilson formulated the program in the 1930s. The first of the 12 steps states this: "We admitted we were powerless over alcohol -- that our lives had become unmanageable."
There was no doubt, Steinberg says, that he qualified for what he calls this "unique fellowship." His drinking had disrupted his family and was destroying his business, and he was "powerless" to stop it until he entered the Sober Living facility.
His "unmanageable" life had descended in 2009 and 2010 into a series of battles of over debts, battles that he could not win.
"Banks continued to lend me money without any security for their loans. But the time came when they were demanding payment that I could not make," he says.
In the bankruptcy filing last month, Steinberg reported assets of less than $500,000 and debts of more than $3.1 million, a figure that is likely to increase as the case progresses.
The most vexing of the debts for Steinberg is what he describes as a loan of $425,000 from former NFL wide receiver and kick returner Chad Morton, who is now on the coaching staff of the Green Bay Packers. Steinberg insists that a former employee borrowed the money from Morton in 2003 in violation of the rules governing agents for NFL players that prohibit "borrow(ing) directly or indirectly" from any player.
A forensic examination of the loan papers under the direction of David Cornwell, who represented Steinberg at this point in the dispute, apparently showed that Steinberg's signature on the agreement was a forgery. But Steinberg undertook to pay the debt when he discovered it.
"My name is on the door; and we are in business to help players, not to hurt them," he says.
After several settlement attempts with Morton fell apart, Morton and his lawyers reported the loan to the NFL Players Association, which certifies agents. When Steinberg's certification ended in 2008, he says, he did not re-apply, knowing it would not be granted. The union, then, formally revoked his certification.
Steinberg insists he was trying to pay the Morton loan, but court papers filed in the Superior Court of Orange County and interviews with other creditors and their lawyers tell a different story. Because of the pending litigation, these sources insisted on anonymity when they spoke with ESPN.com.
Steinberg agreed to pay $900,000 (the loan plus interest and other damages), the court papers show, but he failed to deliver any of the installments to which he'd committed. Even after changes in an installment payment scheme, Steinberg paid nothing. Finally, in 2009, several months after the settlement agreement, Morton and his attorney obtained a court judgment against Steinberg for the entire $900,000. Under California law, the judgment earns 10 percent interest annually.
The court papers describing the judgment include statements that Steinberg is guilty of a "fraud" against Morton and of a "breach of a fiduciary duty." These court rulings are important and will be a problem for Steinberg in his bankruptcy.
In addition to his failures to make any payments to Morton, court papers filed on Morton's behalf include accusations that Steinberg took elaborate actions to avoid Morton's collections efforts. With the help of an "executive assistant" named Ellen Goodman and a onetime girlfriend, attorney Amy Stoody of Newport Beach, Calif., the documents say, Steinberg established new bank accounts in their names to hide income from Morton.
When Morton and his attorney, Laura Sullivan of Newport Beach, learned of the maneuvers, they filed another lawsuit accusing Steinberg of "fraudulent conveyance," the legal term for efforts to hide assets from creditors.
Stoody quickly made a financial settlement with Morton, but the terms are hidden by a confidentiality clause. In response to an inquiry from ESPN.com, Stoody declined to discuss the situation, writing in an email only that "I have no association with Leigh Steinberg and no further involvement with the Morton case."
As the trial approached -- it was scheduled for Feb. 21 -- on the fraudulent conveyance charges, Steinberg filed for bankruptcy, an action that stops the trial, stops all collection efforts by all creditors, and gives him some time to work his way out of his predicament.
Bankruptcy is designed to give people in debt a chance to start over with a clean slate. Credit card debts and other routine obligations are "discharged," the legal term for eliminating the debtor's (Steinberg) obligation to pay.
But under bankruptcy law, Steinberg will have substantial difficulty discharging the debt to Morton. The court findings of "fraud" and "breach of fiduciary duty" normally prevent discharge of the debt. Morton in all likelihood will file what is known as an "adversary proceeding" to stop the discharge of the $900,000 obligation, and he is likely to be successful. Numerous attempts to reach Morton were unsuccessful.
Even the forged signature will not help Steinberg in discharging the debt, because the dispute was resolved and concluded in a judgment against him. The judgment eliminated any chance Steinberg had to use the forgery as a way to avoid paying the debt. The bankruptcy judge will look only at the judgment and cannot look behind it into the validity of the loan or the signature.
Steinberg should be successful in eliminating credit card debt and personal loans of more than $1 million; but when the bankruptcy process is concluded, he will still face the Morton judgment of $900,000, an obligation that has now reached nearly $1.2 million.
Steinberg insists he will succeed in discharging the Morton debt, but he acknowledges it will be difficult for him to resume what was once one of the nation's most successful sports agent businesses. (He was, for example, generally considered to be the inspiration for the movie "Jerry Maguire" and served as a consultant for it and appeared in it.)
"I am now a kind of hostage. I want to work to pay the debt and my other debts, but I cannot work because I cannot obtain certification until I pay the debt," he says.
Steinberg believes that Morton's relentless pursuit of repayment is part of a vendetta against him that began when Steinberg sued agent David Dunn as Dunn was leaving Steinberg's firm and establishing his own agent business. Steinberg won a jury verdict of $44 million against Dunn, but the verdict was later reversed in the U.S. Court of Appeals for the 9th Circuit. The dispute ultimately was settled, but hard feelings remain; and Steinberg attributes Morton's actions to attorneys who are representing Morton and represented Dunn in the earlier dispute (Sullivan and Mark Humenik).
Contacted by ESPN.com, both Sullivan and Humenik refused to comment.
"I was not legally obligated to pay the loan from Morton, but I felt morally obligated," Steinberg says. "They are using it to prevent me from returning to my business."
If the bankruptcy proceeds well for him, he says he has hopes that he will be able to pursue business opportunities in film, video and other sports. But it isn't likely that he will be able to return to representing NFL players anytime soon.
The legal and financial problems aside, Steinberg is also still facing the wreckage that resulted from his drinking. Like any recovering addict or alcoholic, he must choose what to accept and what he can try to change.
He could have pursued recovery under the protections of AA's tradition of anonymity, but he says he went public with his recovery in the hope that he can not only help himself but also "help some others along the way."
Although his next public appearance will be the creditors meeting on Feb. 21, he says a more important date will be March 10, when he will celebrate two years of continuous sobriety.
Bankrupt and barred from NFL work, there is no Leigh Steinberg Super Bowl party this year, but it sounds as if the party is far from over for him. Continuing sobriety and application of his considerable skills as a negotiator and a promoter into other aspects of sports marketing could produce a new career for the former agent. The literature of recovery includes a series of "promises" of things that can and will happen -- things like a "new freedom" and a "new happiness" and something Steinberg has always wanted: a recognition of how his "experience can benefit others."
It might not come in the form of a Super Bowl extravaganza, but perhaps it can still arrive in the form of a life well-lived.
Lester Munson, a Chicago lawyer and journalist who reports on investigative and legal issues in the sports industry, is a senior writer for ESPN.com.
The party's over for former super-agent Leigh Steinberg, who lost his business and his fortune to alcoholism. But the man who inspired the movie "Jerry Maguire" is battling back.