Jack Johnson Files for Bankruptcy

[Johansen2Foligno]

So dad goes from making $100k (in 2006-07) to $15k per year when his son makes the NHL? Get a levy on his future earnings and move on from the father, if he's satisfied sitting back and doing odd jobs there isn't a lot you can do.

Where did the $20M go? Are there no assets at all left? That takes a certain level of stupidity to waste that much. That's not buying a $1M house that you can only sell for $250k.

And his cutback on housing isn't much - he chose to live in a penthouse downtown. That cost $4k per month, there are other 2 bedroom units in same building he could likely rent for that same amount. I'm going to assume it had to do more with the girl he got married to - her family is in Dublin.

Just hard to have pity on a guy making that much that gave it all away, parents or not.

I was wondering this as well. It sounds like all the properties they bought were foreclosed and I imagine they were underwater on all of them. I can only imagine any investments made went belly up as well. The interest rates on some of those loans were considered usurious, so I imagine a lot of $$$ was servicing debt. Also, his earnings were pledged as collateral so before he declared bankruptcy I am sure he was paying out a lot of cash.

Just a sad state of affairs.

 

[DarkandStormy]

I had to re-read it myself because when I got to the end it said he owned three BMWs and one Ferrari. It then hit me that Mr. Johnson, in this case, was Jack's father.

I am still confused. Why can't they say Jack Sr. and Jack Jr.??

 

[DarkandStormy]

\
Just hard to have pity on a guy making that much that gave it all away, parents or not.

His parents gave it all away (and then some) after he trusted them to help make financial decisions with his money. How could you not trust your parents?

 

[JacketsDavid]

His parents gave it all away (and then some) after he trusted them to help make financial decisions with his money. How could you not trust your parents?

You're assuming he knew nothing about it (again I think there are concerns he may not be as distanced as he wants to be, especially since he signed a few of the docs himself, even if he argues he just signed he didn't read it).
Also no matter what you do or who you do it with you trust but verify. He gave them POA which was a mistake, then he didn't follow-up on the status of the money/investments, then he was ok with his dad not working. Just a lot of funny things in there.
I'm assuming most pro athletes use an agent whose fees will usually include a business manager. For whatever reason JJ decided to have his family handle it.

I trust my parents with a lot of things - but if I won a lottery for $10M you bet I wouldn't sign a POA given them full access and tell them to manage it. THey may be nice people but they are not professionals.

If you won $10M would you sign an unlimited POA and give your parents access to managing it as they saw fit?

 

[DarkandStormy]

You're assuming he knew nothing about it (again I think there are concerns he may not be as distanced as he wants to be, especially since he signed a few of the docs himself, even if he argues he just signed he didn't read it).
Also no matter what you do or who you do it with you trust but verify. He gave them POA which was a mistake, then he didn't follow-up on the status of the money/investments, then he was ok with his dad not working. Just a lot of funny things in there.
I'm assuming most pro athletes use an agent whose fees will usually include a business manager. For whatever reason JJ decided to have his family handle it.

I trust my parents with a lot of things - but if I won a lottery for $10M you bet I wouldn't sign a POA given them full access and tell them to manage it. THey may be nice people but they are not professionals.

If you won $10M would you sign an unlimited POA and give your parents access to managing it as they saw fit?

No, but I have a good understanding of finances and POAs. A 19 year old kid playing hockey? Probably not as much. Obviously that is where he went wrong, but it's hard to blame him if he didn't understand how all of that worked.

 

[blahblah]

His parents gave it all away (and then some) after he trusted them to help make financial decisions with his money. How could you not trust your parents?

I don't know, my Mom stole 3k from me. I trust her with everything but my money. lol

 

[Johansen2Foligno]

IIRC, he had an agent but then fired him and then negotiated his own contract. I don't know if it was to save money, but oh boy, that did not work out as intended.

At least that agent, and a lawyer, are in the fold again now.

 

[DarkandStormy]

I don't know, my Mom stole 3k from me. I trust her with everything but my money. lol

We are all Jack Johnson.

That sucks though.

 

[pete goegan]

I trust my parents with a lot of things - but if I won a lottery for $10M you bet I wouldn't sign a POA given them full access and tell them to manage it. THey may be nice people but they are not professionals.

If you won $10M would you sign an unlimited POA and give your parents access to managing it as they saw fit?

If I was young and totally immersed in a professional sports career, yes, I certainly would have. Of course, my father would have more than doubled it and guaranteed prosperity for all our family for generations!

 

[blahblah]

If I was young and totally immersed in a professional sports career, yes, I certainly would have. Of course, my father would have more than doubled it and guaranteed prosperity for all our family for generations!

Not a chance. I could have trusted my Dad not to rape it, but no one would have PoA to the money. A full time job doesn't justify ignoring your finances.

There is only one person in the world I would give PoA to my accounts to and it's no one in my family. It's only because there is no one in this world I trust more.

 

[Forepar]

The point is that at 19 yrs old (which is difficult for most of us to remember it has been so long), the one or two people you do have that level of trust in is your parents. At least that's what my soon-to-be 19 yr old child tells me. They love their friends but don't trust them yet. They aren't old enough to understand or build trust with professional advisors (some of whom are piranhas as well). Many kids (technically adults, but still kids), see their parents as the dumbest people on the planet when it comes to social issues/logical thinking (at least until the kid turns 27, lol), but that same group trusts that their parents will not do things that would harm them. We think these pro athletes have the smarts or the resources to figure out who to trust. Why? Our own college-age kids come to whom for advice? Their parents.

Not saying Jack Jr is completely off the hook here. But to complain that he should have never signed a POA in favor of a parent? Who else would it have been? Maybe should have been limited, maybe should have been a POA that only arose upon a disability, but the likelihood here is that parents were paying the bills, etc...much like a high-end agent's office would do, only they didn't cost so much.

The way it usually works for a 19-yr old is exactly the opposite. We set up a checking account for a college age kids, fund it every month with enough to cover rent, utilities, help them set up a budget that includes use of their own earnings from the summer, etc... 99.9% of kids don't have their own multi-million dollar contracts that is their own money. 99.9% of kids don't have enough to lose to worry about. We expect pro athletes to not be kids...

It's sad; 90% of the blame on parents here. 10% of blame on Jack for naivete, and for not following up with questions in succeeding summers. But my 19 yr old, with a 4.0 gpa within the protective and hopefully instructive walls of a 4-yr university, would have done close to the same thing - trusted her parents, whether she had $5 or $5M, and tried to learn from them how to manage money.

 

[Double-Shift Lasse]

The point is that at 19 yrs old (which is difficult for most of us to remember it has been so long), the one or two people you do have that level of trust in is your parents. At least that's what my soon-to-be 19 yr old child tells me. They love their friends but don't trust them yet. They aren't old enough to understand or build trust with professional advisors (some of whom are piranhas as well). Many kids (technically adults, but still kids), see their parents as the dumbest people on the planet when it comes to social issues/logical thinking (at least until the kid turns 27, lol), but that same group trusts that their parents will not do things that would harm them. We think these pro athletes have the smarts or the resources to figure out who to trust. Why? Our own college-age kids come to whom for advice? Their parents.

Not saying Jack Jr is completely off the hook here. But to complain that he should have never signed a POA in favor of a parent? Who else would it have been? Maybe should have been limited, maybe should have been a POA that only arose upon a disability, but the likelihood here is that parents were paying the bills, etc...much like a high-end agent's office would do, only they didn't cost so much.

The way it usually works for a 19-yr old is exactly the opposite. We set up a checking account for a college age kids, fund it every month with enough to cover rent, utilities, help them set up a budget that includes use of their own earnings from the summer, etc... 99.9% of kids don't have their own multi-million dollar contracts that is their own money. 99.9% of kids don't have enough to lose to worry about. We expect pro athletes to not be kids...

It's sad; 90% of the blame on parents here. 10% of blame on Jack for naivete, and for not following up with questions in succeeding summers. But my 19 yr old, with a 4.0 gpa within the protective and hopefully instructive walls of a 4-yr university, would have done close to the same thing - trusted her parents, whether she had $5 or $5M, and tried to learn from them how to manage money.

Well said.

 

[We Want Ten]

There is probably much to this story that we don't know.
What we do know is just sad and unfortunate.

 

[Cyclones Rock]

What Forepar said.

 

[JacketsDavid]

The point is that at 19 yrs old (which is difficult for most of us to remember it has been so long), the one or two people you do have that level of trust in is your parents. At least that's what my soon-to-be 19 yr old child tells me. They love their friends but don't trust them yet. They aren't old enough to understand or build trust with professional advisors (some of whom are piranhas as well). Many kids (technically adults, but still kids), see their parents as the dumbest people on the planet when it comes to social issues/logical thinking (at least until the kid turns 27, lol), but that same group trusts that their parents will not do things that would harm them. We think these pro athletes have the smarts or the resources to figure out who to trust. Why? Our own college-age kids come to whom for advice? Their parents.

Not saying Jack Jr is completely off the hook here. But to complain that he should have never signed a POA in favor of a parent? Who else would it have been? Maybe should have been limited, maybe should have been a POA that only arose upon a disability, but the likelihood here is that parents were paying the bills, etc...much like a high-end agent's office would do, only they didn't cost so much.

The way it usually works for a 19-yr old is exactly the opposite. We set up a checking account for a college age kids, fund it every month with enough to cover rent, utilities, help them set up a budget that includes use of their own earnings from the summer, etc... 99.9% of kids don't have their own multi-million dollar contracts that is their own money. 99.9% of kids don't have enough to lose to worry about. We expect pro athletes to not be kids...

It's sad; 90% of the blame on parents here. 10% of blame on Jack for naivete, and for not following up with questions in succeeding summers. But my 19 yr old, with a 4.0 gpa within the protective and hopefully instructive walls of a 4-yr university, would have done close to the same thing - trusted her parents, whether she had $5 or $5M, and tried to learn from them how to manage money.

So does the NHL do the little camp like they do for NFL players where it tells them the do's and dont's? IE hire a certified agent with the league, don't loan money to anyone (including family), use condoms, how to invest, what not to buy, etc. If the NHL doesn't do that, they should. Too many ex athletes that are dead broke that made a lot of money at one time.

Also you're assuming all this happened in one year. it didn't his parents leveraged his future earnings of his second contract (meaning he had been in the league 3-4 years). So majority of the losses likely came (because rookie contracts aren't crazy money, it's the bonus on his second deal with Kings where he lost it all somehow).

 

[Viqsi]

The point is that at 19 yrs old (which is difficult for most of us to remember it has been so long), the one or two people you do have that level of trust in is your parents. At least that's what my soon-to-be 19 yr old child tells me. They love their friends but don't trust them yet. They aren't old enough to understand or build trust with professional advisors (some of whom are piranhas as well). Many kids (technically adults, but still kids), see their parents as the dumbest people on the planet when it comes to social issues/logical thinking (at least until the kid turns 27, lol), but that same group trusts that their parents will not do things that would harm them. We think these pro athletes have the smarts or the resources to figure out who to trust. Why? Our own college-age kids come to whom for advice? Their parents.

Not saying Jack Jr is completely off the hook here. But to complain that he should have never signed a POA in favor of a parent? Who else would it have been? Maybe should have been limited, maybe should have been a POA that only arose upon a disability, but the likelihood here is that parents were paying the bills, etc...much like a high-end agent's office would do, only they didn't cost so much.

The way it usually works for a 19-yr old is exactly the opposite. We set up a checking account for a college age kids, fund it every month with enough to cover rent, utilities, help them set up a budget that includes use of their own earnings from the summer, etc... 99.9% of kids don't have their own multi-million dollar contracts that is their own money. 99.9% of kids don't have enough to lose to worry about. We expect pro athletes to not be kids...

It's sad; 90% of the blame on parents here. 10% of blame on Jack for naivete, and for not following up with questions in succeeding summers. But my 19 yr old, with a 4.0 gpa within the protective and hopefully instructive walls of a 4-yr university, would have done close to the same thing - trusted her parents, whether she had $5 or $5M, and tried to learn from them how to manage money.

Thank you. You get a cookie.

* * *​

So does the NHL do the little camp like they do for NFL players where it tells them the do's and dont's? IE hire a certified agent with the league, don't loan money to anyone (including family), use condoms, how to invest, what not to buy, etc. If the NHL doesn't do that, they should. Too many ex athletes that are dead broke that made a lot of money at one time.

The Jackets have had programs like that in the past, but obviously we couldn't have helped here as he wasn't our draftee. I don't think the NHL provides one.

 

[Nanabijou]

Story update: JJ trying to sell Michigan house parents are living in.

http://www.tsn.ca/bankrupt-nhler-in-fight-with-parents-over-family-home-1.441730

 

[JacketsDavid]

Story update: JJ trying to sell Michigan house parents are living in.

http://www.tsn.ca/bankrupt-nhler-in-fight-with-parents-over-family-home-1.441730

50 year rent free lease on a $575k piece of property? Sign me up too!

 

[MainDotC]

What a horrible rift being driven between JJ and his family.

 

[CBJSlash]

50 year rent free lease on a $575k piece of property? Sign me up too!

I could understand it if he bought it outright, but the article still says he owes 512K on it.

While we all know his parents are rare types of idiots, this reaches an all new class. With everything that has happened, they STILL think they are entitled to live rent free while JJ foots the bill. Not only do they think they are entitled to it, they are going to fight over it.

Absolutely nuts.

 

[WannabeFinn]

I couldn't imagine being blood related to such slime.

 

[ReggieRed]

Story update: JJ trying to sell Michigan house parents are living in.

http://www.tsn.ca/bankrupt-nhler-in-fight-with-parents-over-family-home-1.441730

“[Jack] was fine with it,†the Johnsons wrote. “The same day he signed an updated [power of attorney], which was notarized. He may say he does not remember any of this, but there is a record of the notarized document in Manhattan Beach, California. We handed him $10 for each lease, and he joked about it. He offered to buy us lunch with it, and we went to The Corner Bakery in Manhattan Village, where he found a dead fly in his salad. He might remember that, it was very disturbing to him.â€

WTF? This story continues to spiral down and down...

 

[Forepar]

WTF? This story continues to spiral down and down...

http://www.tsn.ca/bankrupt-nhler-in-...-home-1.441730


The article quotes Jack's parents as stating that they sold the property to their son in September 2007 and “continued our life as it had always been as a family of four in the home following the sale of the house to Jack.”

Jack Jr was all of 20 years old in 2007. What an unbelievable set of parents those 2 have been. I get the house/leaseback issue (see below), but not the rest of this.

Yes, Jack Jr's ability to deduct mortgage interest would be of greater economic value to him than to his parents given his higher tax bracket; what was done was not improper from a legal perspective, and shifting income/deductions is done often with wealthy families in a family business in which all have a stake. However, Jack Jr's hockey career is not the family business, and Jack's parents brought no financial strength to the table.

Who borrowed the money to purchase the property from the parents?-- apparently Jack Jr. Who is liable on the promissory note? - presumably Jack Jr, not his parents. Apparently Jack Jr's parents presumed that because they had moved to Michigan (purportedly for Jack Jr), and had "sacrificed" for him that somehow they were entitled to Jack Jr's income and credit for life. Jack Jr's contract/talent were viewed as Johnson family community resources forever. Many top-level athletes buy their parents a nice home and even gift it to them outright or permit them to live in the home rent-free. But Jack's contract was not then at a top-level when compared to NBA, MLB, NFL equals. Further, they had Jack Jr BORROW the money; he did not have enough cash at that time to buy a $500K+ home from them (or for them) without a loan.

What's interesting is that the mortgage holder, upon default (and with relief from stay in the bankruptcy court) could simply foreclose. The foreclosure would likely bring significantly less than the $512K owed on the mortgage. If Jack Jr has been able to find a buyer for $575K, that will pay off the mortgage, realtor fees, and other closing costs, with little if anything left for Jack's bankruptcy estate (notice that any surplus goes to the bankruptcy estate, not Jack Jr). I am surmising that Jack Jr has continued to pay the mortgage payments during the bankrutptcy, even after his parents' misdeeds became public; otherwise the mortgageholder would be foreclosing on the property. Jack Jr isn't profiting off the sale - the purpose of selling isn't to put new cash in Jack's pocket, but to get the continuing cash flow to that mortgage cutoff. My guess is that under the circumstances it has taken months if not a year, to locate a buyer willing to A) have the contract go through the approval process in Bankruptcy Court as a public record; and B) deal with delays that might be caused in that process by Jack's parents doing exactly what they've done here by objecting to the sale; and C) deal with whatever issues remain as to "evicting" Jack's parents prior to sale. The Buyer could have simply told Jack's lawyers to engineer the mortgageholder taking the property to foreclosure, at which auction sale they likely would have paid less.

The rent-free lease wouldn't be such an issue to me, even if done at age 20, if the parents hadn't pillaged Jack Jr's other finances. I don't advise a client in Jack Jr's situation to lease or buy a house for parents at age 20 given the ELC parameters, not even on the expectancy of the next contract, but I get it. It wasn't best for Jack Jr but I get it. However, these 2 PARENTS apparently started looking at Jack's finances as their own from the get go, and it only grew worse as time went on as they saw additional opportunities (and then later saw the hole getting deeper and deeper). They were over their heads, and any mainstream lender would not have done the deals that were done here - and thus why the exorbitant interest rates and loan amounts.

An agent losing it "all" has happened to some athletes and will continue to happen - it's life that some people are greedy or fraudulent and willing to take advantge of others. However, the biggest hit here is not the money, it is the fact that it is Jack's parents who caused this. Whether out of greed, out of "repayment" or "entitlement" to them for their sacrifice, whether it started innocently enough as getting a house for mom & dad, whether they later tried to stop the train but it was too far down the track...none of those reasons or facts matter at this point as it relates to Jack Jr's relationship with his parents. He cannot ever trust them again, and his bankruptcy case puts them even more at odds on several issues (some technical), and makes the dispute public. Could you imagine if the house at issue was in Upper Arlington or Dublin - Jack would be looking for a trade out of Columbus. At least there is some geographic distance. As I've written before, while Jack Jr gets some blame for being naive, this train started rolling at or before age 19 with his parents squarely seated in the engineer's seat. Hopefully the Bankruptcy Code's theory of a "fresh start" ultimately works for Jack Jr, beyond just the dollars.

 

[Tulipunaruusu*]

I couldn't imagine being blood related to such slime.

The Jack Johnson files have been re-opened. We all share dna with Jack Johnson.

 

[Double-Shift Lasse]

http://bluejacketsxtra.dispatch.com...ohnson-settles-with-most-of-his-credtors.html

More than two years after news of his personal financial crisis rocked the sports world, Blue Jackets defenseman Jack Johnson has reached a settlement in bankruptcy court with six of his eight creditors.
Johnson, 29, has liquidated two homes – one in Ann Arbor, Mich., the other in Manhattan Beach, Calif. – as well as a Ferrari valued at $125,000, and he’ll be, according to one creditor, “the lowest paid player in the NHL for the next two seasons.â€
As part of the agreement, filed by Judge John E. Hoffman, Jr., on Thursday, Johnson will turn over most of his $5 million salary from the Blue Jackets both this season and next, keeping only a negotiated sum for “living expenses.â€
The two other creditors continue to seek an agreement with Johnson, or the court may decide the outcome.