If Mark Cuban thinks bumping heads with David Stern is frustrating, wait until he tries it with the feds.
They have all the resources any lawyer could want – and absolutely no sense of humor.
Fines and a few hours of community service behind the soft-serve machine at Dairy Queen is not their idea of punishment. Putting people who mess with them in jail, as with Martha Stewart, is.
So when Cuban says he’s innocent of insider trading charges and intends to prove it, he better be right. Settling the case would almost certainly be less trouble, less risky and a lot cheaper in the long run – even if that’s not Cuban’s style.
The Dallas Mavericks owner is accused by Securities and Exchange Commission regulators of using confidential information to dump a 6 percent ownership stake in an Internet search engine business in June, 2004 – just before it announced a stock offering that would dilute the value of all existing shares. Had the Justice Department added criminal charges to the SEC complaint – unlikely, but still a possibility – the stakes would be considerably higher.
the hook for nearly $3 million if found guilty. That’s three times the $750,000 he saved himself by unloading the stock when he did, plus penalties and interest. It’s also roughly the same amount he’s paid out in recent years to cover his fines from the NBA, along with matching each fine with a contribution to a charity of his choice.
Taking into account that Cuban has only been charged, not convicted, and the legal entanglements that have snared fellow NBA owners Donald Sterling, James Dolan and George Shinn in the past, no further discipline is expected from Stern and the league.
But the case could wind up costing Cuban plenty.
A month ago, he was head of the front-running ownership groups seeking to buy the Chicago Cubs from fellow billionaire Sam Zell. Two weeks ago at baseball’s winter meetings, an anonymous MLB source told the Chicago Sun-Times there was “zero chance” that commissioner Bud Selig and his cartel would approve a sale to Cuban, despite an offer reported to be worth as much as $1.3 billion for the ballclub, Wrigley Field and a share of the Cubs’ TV partner.
oups.
Cuban’s competition was already pushing rumors that he was having trouble raising the cash to back his bid. The lack of criticism from those same quarters following Monday’s announcement of the charges is being interpreted to mean that either way, Cuban’s ownership bid is DOA.
Forbes estimated his net worth at $2.3 billion only last March, which raises the question of why Cuban would risk so much heartache to save $750,000.
He’s also the majority owner of a Web site called Sharesleuth.com, which describes its mission as an independent source of “reporting aimed at exposing securities fraud and corporate chicanery.” So it’s not like he didn’t know plenty about the reality, let alone the appearance, of insider trading.
The Dallas Morning News offered this rationale in an editorial: “Martha Stewart was just as rich and just as smart – and risked everything to save $45,000 via insider trading. Greed can make you stupid.”
The dumbest trade Cuban made before this one arguably was the deal that brought Jason Kidd from New Jersey to Dallas earlier this year. The Mavericks’ slow start this season, with new coach Rick Carlisle giving Kidd more freedom and a full training camp to adapt, suggested they still haven’t adapted to the fast-break style Kidd’s arrival was supposed to herald.
the time and aggravation he’ll have to expend mounting his legal defense will cut into his involvement with the day-to-day affairs of the ballclub.
Cuban was in a familiar courtside seat Tuesday night in Charlotte as the Mavericks steamrolled the hometown Bobcats, as animated as ever. As Dallas built a 68-46 lead near the midpoint of a forgettable second half, a fan shouted, “Put Cuban in!”
For the moment, we’ll assume he meant the game.
A few months from now, if and when details of the SEC charges against Cuban start making headlines, he might not get the benefit of the doubt.
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Jim Litke is a national sports columnist for The Associated Press. Write to him at jlitkeap.org
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