Diamante Cabo San Lucas Lawsuit: Fraud, Appeal, and Forfeiture

The Diamante Cabo San Lucas lawsuit most people ask about is the 2009 civil case in which nineteen NHL players accused resort founder Ken Jowdy of misappropriating roughly $25 million of their investment money. That suit was withdrawn in February 2010 after several plaintiffs failed to appear for depositions. The larger and more consequential litigation came later: a federal criminal prosecution in New York that convicted financial adviser Phillip Kenner and his partner Tommy Constantine of running a multi-scheme fraud that used Diamante as bait, ending in prison sentences of 17 and 10 years and millions in forfeiture.

The 2009 NHL Players’ Civil Suit

In June 2009, nineteen current and former NHL players sued Ken Jowdy in Los Angeles County Superior Court. They alleged he had misappropriated about $25 million they had invested in two Mexican resort developments, one of them Diamante Cabo San Lucas, and they sought the $25 million back plus $15 million in damages.¹² The named plaintiffs included Sergei Gonchar, Bryan Berard, Michael Peca, Mattias Norstrom, Glen Murray, Jozef Stumpel, Jason Woolley, Chris Simon, Jay McKee, and Darryl Sydor.

The players’ attorney, Ronald Richards, said Jowdy had steered investor money to “lavish parties that included various female porn stars, escorts, strippers and party girls,” along with private jets, luxury hotels, and golf outings.³ The complaint further alleged falsified financial statements, projects years behind schedule, and $2.5 million in labor liens. Some contemporaneous reports said Jowdy faced fraud charges and an arrest warrant in Mexico.⁴

Jowdy denied all of it. He called the suit “meritless,” said there was “not one statement of fact” in it, and later insisted he had never met most of the players and that no arrest warrant had been issued for him in Mexico.⁵³

The complaint was amended three times. Four plaintiffs did not appear for court-ordered depositions, and the case was withdrawn on February 19, 2010. In April 2010, Jowdy responded with a $5 million malicious prosecution suit in California against the players, Richards, and two other men who would soon become the real story: Phillip Kenner and Tommy Constantine. Jowdy accused them of a “coordinated scheme to knowingly disseminate false information” and a “media smear campaign” designed to seize his stake in Diamante, which he valued at $450 million.³

What the Players Were Actually Caught Up In

Federal investigators concluded the players had not simply made a bad real estate bet. They had been defrauded by Phillip Kenner, a financial adviser who managed money for many of them, and by his business partner Tommy Constantine, a part-time race car driver. Kenner and Constantine used a web of holding companies to move client money, and Diamante figured into the pitch as a lucrative opportunity worth fighting for.⁶

Prosecutors described three interlocking schemes:

The Hawaii Project. Kenner persuaded players to invest $100,000 each and open personal lines of credit that together totaled at least $10 million, ostensibly for a luxury estate development in Hawaii. He diverted the funds to unrelated Hawaii and Mexico real estate and to Constantine, and used some of the money to acquire a 39 percent personal stake in Diamante Cabo San Lucas.⁶
Eufora LLC. Between 2008 and 2009, the pair took in about $1.4 million from players for a prepaid debit card company and used it to pay their own mortgages, credit cards, and personal debts.⁶
The Global Settlement Fund. When investors began asking questions in 2009, Kenner set up a fund he said would pay for litigation against Jowdy to take control of Diamante. Players contributed more than $2.9 million. Only $225,000 went to legal costs. The rest paid to bring Constantine’s home out of foreclosure, cover Kenner’s legal bills tied to a tequila company, defend Constantine in a Florida race car sponsorship suit, and pursue an attempt to acquire Playboy Enterprises. Prosecutors said the $25 million Jowdy loan that supposedly justified the fund never existed.⁷

Victims included NHL players Bryan Berard, Michael Peca, Darryl Sydor, Bill Ranford, Sergei Gonchar, Joe Juneau, and Owen Nolan, along with Long Island police officers and their families. Peca alone lost more than $1.8 million when bonds he had put up as collateral were wiped out after Kenner defaulted on a line of credit.⁸ Berard later estimated Kenner had stolen more than $50 million from players in total.⁹

Federal Charges, Trial, and Appeal

Kenner and Constantine were arrested in Scottsdale, Arizona, in November 2013 and charged with wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering.¹⁰ Kenner was held as a flight risk and stayed in federal custody from then on.⁹ Jowdy cooperated with the government as a witness starting in 2009 and was never charged.

The trial began in May 2015 in the Eastern District of New York before Judge Joseph Bianco and ran roughly nine to ten weeks, with 39 witnesses including several defrauded players. On July 9, 2015, the jury convicted both men. Kenner was found guilty on six of nine counts. Constantine was convicted on all seven counts he faced.¹¹⁷

In October 2017, Judge Bianco denied post-trial motions for acquittal or a new trial.⁸ Constantine appealed to the Second Circuit, arguing the government had improperly withheld thousands of text messages from Kenner. On March 30, 2022, the court of appeals affirmed the conviction, finding the undisclosed messages were not material and would not have changed the outcome.¹²

Sentences, Forfeiture, and Player Recoveries

Sentencing came more than five years after the verdict. On October 5, 2020, Kenner received 17 years in federal prison, with restitution reserved for a later proceeding.¹³ On November 10, 2020, Constantine was sentenced to 10 years, ordered to pay $5.2 million in restitution, and required to forfeit approximately $8.5 million, along with an oceanfront resort property in Mexico, real estate in Hawaii, and a Falcon 10 jet.¹⁴ The court held both men jointly and severally liable for $8,554,853 tied to the money-laundering conspiracy, and Kenner individually responsible for an additional $9,151,542 connected to the fraudulent lines of credit.¹⁵

Three of the victimized players, Bryan Berard, Michael Peca, and Owen Nolan, separately reached civil settlements with Northern Trust, the bank through which Kenner had opened lines of credit in their names. Together they received $1.4 million.¹⁶

Where Diamante and Ken Jowdy Stand Now

The resort itself was not a defendant in the criminal case, and Jowdy was never charged. He remained CEO and founder of Diamante Cabo San Lucas throughout the litigation.¹⁷¹⁸¹⁹

1
New York Post. Golf Resort Developer Bilked NHL Stars: Suit
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NBC Connecticut. Players Allege Loss of $25 Million to Bad Investment, Porno Parties
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NY Daily News. Roger Clemens Pal Ken Jowdy Fights Back Against $25 Million Lawsuit by NHL Players
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NBC San Diego. Players Allege Loss of $25 Million to Bad Investment, Porno Parties
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Golf Digest. Hockey Stars Sue Over Resort Investment
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FBI. Two Convicted in Multi-Million Dollar Investment Fraud Scheme
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NY Daily News. With Phil Kenner and Tommy Constantine Convicted, Victims of Hockey Con Men Get Relief
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GovInfo. United States v. Kenner, Case No. 13-CR-607
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Forbes. Disgraced Financial Advisor to Ex-NHL Players Sentenced to 17 Years in Prison
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NY Daily News. Federal Fraud Conspiracy Trial for NHL Scammers Phil Kenner and Tommy Constantine Begins Monday
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CBS News. 2 Convicted of Luring NHL Players Into Phony Investments
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CaseMine. United States v. Constantine, No. 20-4278
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U.S. Department of Justice. Former Investment Advisor Sentenced to 17 Years in Prison
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U.S. Department of Justice. Coconspirator Sentenced to 10 Years Imprisonment
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vLex. United States v. Kenner
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Yahoo Finance. 3 NHL Players Collect $1.4 Million in Settlements
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Diamante Cabo San Lucas. Our Story
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TAFER Resorts. TAFER to Open Two Luxury Resorts at Diamante Cabo San Lucas
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Hotel Management. TAFER Hotels and Resorts Open Two Mexican Luxury Resorts