MONTGOMERY, Alabama - Tommy Tuberville has been listed in a federal suit that alleges the former Auburn coach and his partner defrauded investors out of more than $1.7 million.

The complaint, filed Friday afternoon in the in U.S. District Court in Montgomery, claims Tuberville and TS Capital co-founder John David Stroud "employed devices, schemes, and artifices" to commit fraud. Seven plaintiffs from Alabama and Tennessee are seeking damages against the Auburn-based investment company.

Tuberville has served as head football coach at Texas Tech since Jan. 9, 2010. Tuberville, who coached Auburn to a 13-0 record in 2004, resigned after the 2008 season.

By July 2009, Tuberville was the subject of a Birmingham News story that touted him as an "amateur stock guru." In the story, Tuberville is reported as working at TS Capital Partners, looking to "drum up a little business for a big-time hedge fund run by Stroud Capital."

Both TS Capital Partners and Stroud Capital are listed among the eight entities associated with Tuberville and Stroud in the complaint. Stroud did not respond to an email request for comment from The Times.

Vic Hayslip, Tuberville's attorney, issued a statement Tuesday saying that Tuberville was surprised to learn of the suit and "categorically denies any wrongdoing which has been attributed to him in this suit."

The 32-page suit alleges Tuberville and Stroud mixed their clients' assets with their own, failed to file tax returns, falsified client statements, falsified fund performance reports and "generally disregarded and violated customary practices and procedures followed in the hedge fund and security investments industry."

Several plaintiffs, including at least one former employee of TS Capital, have demanded their money be returned, yet, according to the complaint, none of the money invested has been accounted for. The suit also states that investors listed "have reason to believe that most, and possibly all, of their invested funds have been misappropriated, improperly converted and/or squandered."

The suit lists 16 complaints against Tuberville and Stroud, including "negligence or wantonness," "fraudulent misrepresentation" and "fraudulent suppression."

The plaintiffs' attorneys declined comment when reached by The Times on Tuesday morning.

The statement from Tuberville's attorney, quoted in national media Tuesday evening, says that Tuberville "has never even met or spoken with most of the plaintiffs and he is acquainted minimally with the few other plaintiffs only because they were employees at TS Capital Partners, LLC."

"Coach Tuberville absolutely never solicited any investment from any of these or other individuals. It is important to note that Coach Tuberville himself invested significant funds and has never received any return from his own investment."

According to documents from financial regulatory agencies, signs of trouble for TS Capital began Oct. 12, when the National Futures Association was contacted by a former employee who had invested his life savings - more than $500,000 - with Stroud.

According to a 15-page NFA report dated Oct. 26, the employee had been requesting the full balance of his investment for several weeks but no funds were returned. He was instead assured by Stroud that the TS Fund contained more than $6.7 million in capital.

The former employee provided NFA with a purported bank statement he received from Stroud in June 2011 that showed the TS fund contained a balance of $6.79 million.

The NFA report goes on to state: "To date, the NFA has been able to confirm that TS Management and its affiliated entities have in aggregate less than $3,500 based upon bank and brokerage account records produced by Stroud to the NFA."

On Oct. 27, 2011, NFA announced it was taking "emergency enforcement action" against TS Capital Management after it failed to cooperate with an NFA audit. NFA reported that TS Capital Management was affiliated with several unregistered entities operated by Stroud and ordered the company to cease trade the solicitation of funds.

It also required TS Capital Management to immediately provide a copy of the NFA notice to its investors. The plaintiffs state in their complaint that they never received the notice.

According to the NFA report, representatives of TS Capital Management, after delaying the audit request, admitted in an Oct. 24 email to NFA that several of the statements Stroud had made "concerning deposits and wire transfers were false."

Three employees were fired by Stroud in late September after reaching out to Tuberville to discuss TS Fund's operations, according to the NFA. One of the three told NFA that Stroud had more than $200,000 in unpaid bills at the time of his termination.

In the complaint, the plaintiffs claim Stroud stopped managing the hedge fund after the Financial Industry of Regulatory Authority suspended his registration in April 2011. The investors allege that Stroud also did not disclose this fact to them.

The NFA report states that Stroud's suspension in 2011 by FINRA "was apparently based on his failure to pay two FINRA arbitration awards" against him for a combined $840,000.

The statement from Tuberville's attorney concluded that Tuberville "has cooperated with every regulatory inquiry and not a single one has asserted that he was involved in any wrongdoing. He intends to vigorously defend the allegations made against him and is confident he will be exonerated."

Times Staff Writers Challen Stephens and Brian Lawson contributed to this report.

Updated at 6:55 p.m. to include a statement from Tommy Tuberville.



Updated at 7:48 p.m. to correct a date.

Updated at 8:30 a.m., Feb. 29, to correct Auburn's 2004 record.





