Dec.23, 2009, 12:33 AM EST

Triton Financial LLC, the investment firm that co-sponsors the Heisman Trophy Trust and hires former National Football League players to solicit clients, was sued by regulators for defrauding investors in an insurance venture.

Chief Executive Officer Kurt Barton and Austin, Texas-based Triton misused funds raised to buy and overhaul insurance firms, the U.S. Securities and Exchange Commission said in documents filed today at federal court in Austin. After Sports Illustrated magazine questioned the firm’s marketing in a March article, Triton sent fabricated documents to state regulators, the SEC said. The firm agreed to an asset freeze and a receiver was hired to track down investor money, court records show.

Barton “intends to work closely with the receiver in an effort to ensure that the investors, many of whom are friends and relatives, do not lose their money,” his attorney, Joseph Turner, said an e-mailed statement today. The executive didn’t admit or deny the SEC’s claims while consenting to a court order barring him from breaking securities laws.

Triton, which has raised more than $50 million for at least 40 ventures since 2004, “made most of its offerings through personal contacts,” the SEC wrote. Salesmen included stockbrokers and “prominent former National Football League players,” it said, without accusing any of wrongdoing.

The firm has employed Heisman Trophy winners including Chris Weinke, the Florida State quarterback honored in 2000, as well as former NFL quarterback Jeff Blake, to help solicit professional athletes, according to statements on its Web site last week that were later removed. In June, Triton hosted a Champions Tour golf event that featured Heisman winners in a charity competition.

Blake last year sent an e-mail to 102 retired NFL players saying Triton was averaging 32 percent annualized returns on its investments, Sports Illustrated reported in March. Barton was cited by the magazine as saying the returns aren’t guaranteed and that the e-mail should have included disclaimers.

The SEC’s lawsuit focuses on Triton Insurance, the firm’s main fundraising vehicle from July 2008 through October of this year. The venture raised about $8.4 million from 90 people, mostly by word-of-mouth and personal contacts of Barton, Triton employees and salesmen, the SEC said, without describing the investors. Though clients were initially told their money would be used to buy a specific insurer, the acquisition was put on hold and funds were used to pay bills for Triton and its affiliates, the SEC said.

One investor, clutching a bottle of wine, pulled a handgun on employees at Triton’s office on Dec. 11, demanding a refund of her money, the Austin American-Statesman newspaper reported Dec. 14, citing an arrest affidavit from the Bee Cave Police Department. An employee seized the gun while the woman tried to fish a box of bullets from her purse, the newspaper reported. The woman was later quoted by WALB television as saying she intended to scare Barton into returning her money. A police department employee said she couldn’t immediately e-mail the arrest records.

Triton’s Web site was altered Dec. 15 to remove pages listing Weinke and Blake as vice presidents responsible for “new client contact” in the firm’s Athlete Services business. The unit offers programs to help athletes build wealth and manage spending, according to the Web site. It also works with agents to manage endorsement finances and can help athletes evaluate investment pitches, the site said.

Calls to Triton were answered by a recording that said the firm is closed “in observance of the holiday season,” except by appointment. There was no immediate response to messages left at its main number and at an e-mail address for media inquiries. The firm’s lawyer, Eric Taube, didn’t respond to messages.

Weinke and Blake, who weren’t mentioned in the SEC’s complaint or accused of misconduct, couldn’t immediately be reached. There was no response to messages left for Weinke at the firm and at a Texas phone number listed in his name. Triton’s voicemail system doesn’t list an extension for Blake. Former agents for both athletes didn’t return calls.

Rob Whalen, director of the Heisman Trophy Trust, didn’t return a phone call seeking comment. The trophy honors the year’s outstanding college football player and is named in the memory of former football coach John Heisman, who helped create the award as director of New York’s Downtown Athletic Club in 1935. After the case was filed, Triton’s logo was removed from the Heisman Web site, where it had appeared alongside logos for Nissan Motor Co., Walt Disney Co.’s ESPN and Wendy’s/Arby’s Group Inc.’s Wendy’s hamburger chain.