A Trump-Backed Senate Candidate’s Hedge Fund Disaster

He had assumed that Auburn had vetted Mr. Stroud as a potential donor. Jerry Smith, a local fund-raising consultant who has worked with the athletic department, met with Mr. Stroud, but was dubious.

“I couldn’t tell whether the guy was for real or not — he talked a good game,” Mr. Smith said in an interview. “I just didn’t believe some of the stories he was telling.”

The investors in the fund included friends of Mr. Tuberville, some of whom had connections to the football programs at Auburn and Texas Tech. Old clients of Mr. Stroud also invested, as well as employees of the small firm. One couple, a bookkeeper and a retired teacher, invested more than $800,000.

Things seemed to go smoothly for a time, and the two men even made a cameo appearance in the 2009 football movie “The Blind Side.” But trouble began in 2011, when Mr. Tuberville got a call from Mr. Stroud’s chief operating officer, Baron Lowe, whom he had not met.

“Coach, he is not paying his bills,” Mr. Lowe, who would later become a plaintiff in the civil suit against Mr. Tuberville, said, according to the court records. Mr. Tuberville called Mr. Stroud, who said, “I am a little behind.” Mr. Tuberville told Mr. Stroud to talk with Mr. Lowe, adding, “I am coaching and I don’t have enough time to mess with your business and mine at the same time.”

Mr. Lowe, who said at the time that the situation had “the optics of a Ponzi scheme,” according to the court records, testified that Mr. Tuberville assured him all investments would be repaid. They were not. Glen Williams, another investor and employee of the company, said Mr. Tuberville stopped returning his calls by October of that year, records show.

Mr. Tuberville testified that he told Mr. Stroud to repay everyone, but he clearly grew alarmed. In one text message, he told Mr. Stroud: “I hear the state securities commission is coming to investigate. I hope you have everything in order. Call me.”