Adidas Scandal (FBI Investigation, Several Schools Impacted)

[OldPhiKap]

I note that the title of the thread is that folks were "arrested." Has anyone been taken in, or have they merely been indicted?

Maybe a difference only a lawyer cares about, but there is a big difference between the two.

[Hingeknocker]

Sure. And I am a big advocate of player rights, but this argument is weak. Sort of like saying "I got pulled over for speeding, but the limit should be 15 mph higher there anyway."

Your analogy makes sense only if you add that there are a bunch of people who are perfectly allowed to drive that extra 15 mph, and actually the only people who are restricted from going that extra 15 mph are college athletes, and there are piles and piles and piles and piles of incentives for outside sources to give the athletes the ability to get at least a few extra mph out of the deal, and now I think I've tortured the analogy long enough. Just pay them and save everybody the brain cells.

[dudog84]

Yeah, there are other reports surfacing now that Bowen's family was paid 6-figures to attend an Adidas school and that Louisville was the school of choice. While there is nothing that indicates Pitino or anyone at Louisville knew what was going on, this is yet another stain on Pitino. One wonders if he can survive another major scandal.

-Jason "I really wish the ACC had gone elsewhere for another team... Louisville is not a cultural match with anyone else in the ACC" Evans

Louisville was 11-2 (including a Sugar Bowl win) and 12-1 in the two years before joining the ACC. They also regularly pull 50,000+ to home games. Football. That is the reason they joined the ACC, no other.

And yes Jason, I know that you knew that.

[devildeac]

There have been recent rumors that Papa John (who's a BIG donor at Louisville) wanted Pitino gone. Did he know something was coming?

Whoa now. Papa John is a well-respected poster here.

[devildeac]

U of L, a fine member of the ACC:

Almost
Completely
Corrupt

[DukieInKansas]

I note that the title of the thread is that folks were "arrested." Has anyone been taken in, or have they merely been indicted?

Maybe a difference only a lawyer cares about, but there is a big difference between the two.

Arrests were made per this article: https://www.nbcnews.com/news/us-news...hletes-n804781

"The FBI made the arrests across the country overnight, a senior law enforcement official told NBC News.

Among those arrested was James Gatto, director of global sports marketing for Adidas, who was accused of paying high school basketball players or their families for committing to sign with a university sponsored by Adidas. The complaint identifies $250,000 in payments made by Gatto and other co-defendants."

[dudog84]

Your analogy makes sense only if you add that there are a bunch of people who are perfectly allowed to drive that extra 15 mph, and actually the only people who are restricted from going that extra 15 mph are college athletes, and there are piles and piles and piles and piles of incentives for outside sources to give the athletes the ability to get at least a few extra mph out of the deal, and now I think I've tortured the analogy long enough. Just pay them and save everybody the brain cells.

I believe the only solution is to have semi-pro leagues for basketball and football and let the kids go "pro" right out of high school if they want. If they go to college, they can't be drafted for 3 years (gee, doesn't this sound like baseball?). Might be a bit tough on a kid like Luke who blossomed as a sophomore, but that would be the choice that the kid made for himself. And with Luke as the example, he would have only had to "tough it out" for 1 more year. Also think how much more he would have shone against "lesser" competition.

Come to think of it, we could probably compete against Alabama in football in this scenario.

I for one watch college ball for the competition. I realize I may be in the minority here. If it's about watching the best athletes, that's what the pros are for. I would much rather watch the kids grow and mature over a few years in college. That used to be part of the enjoyment.

America has completely bastardized the college student-athlete model on many levels. And in so doing, have cheapened and in some cases tarnished universities. The kids are 18, legal adults, they should be allowed to make money on their skills if they want. Tennis players, baseball players, entrepreneurs etc. all have that opportunity. Only basketball and football players are shoe-horned into college.

[swood1000]

As a non-lawyer, do I have this right?

The feds have jurisdiction here because
(a) schools receive federal funding, and
(b) the bribe was wired

?

Thanks in advance.

The main charges are violations of federal statutes:
 

• 18 U.S. Code § 666 - Theft or bribery concerning programs receiving Federal funds

• 18 U.S. Code § 1343 - Fraud by wire, radio, or television

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both.

•18 U.S. Code § 1349 - Attempt and conspiracy

Any person who attempts or conspires to commit any offense under this chapter shall be subject to the same penalties as those prescribed for the offense, the commission of which was the object of the attempt or conspiracy.

•18 U.S. Code § 1956(h) - Conspiracy to launder monetary instruments

[Mtn.Devil.91.92.01.10.15]

Your analogy makes sense only if you add that there are a bunch of people who are perfectly allowed to drive that extra 15 mph, and actually the only people who are restricted from going that extra 15 mph are college athletes, and there are piles and piles and piles and piles of incentives for outside sources to give the athletes the ability to get at least a few extra mph out of the deal, and now I think I've tortured the analogy long enough. Just pay them and save everybody the brain cells.

Yes. They earn all the money and make none. But you can't do illegal things with the rationale "but it SHOULD be legal." That isn't how the law works.

[UrinalCake]

I'm trying to follow the story on twitter, as many are reacting to the press conference. A common theme is that the story could become even bigger, that others may be involved and more names will surface. Not a good day for college b-ball or college sports in general.

Although selfishly speaking, I have been considering Louisville to be our biggest competition in the ACC this year and Arizona to be our biggest competition nationally. So if those two schools are deemed ineligible, well then WHEEEEEE!!!

[dudog84]

I'm trying to follow the story on twitter, as many are reacting to the press conference. A common theme is that the story could become even bigger, that others may be involved and more names will surface. Not a good day for college b-ball or college sports in general.

Although selfishly speaking, I have been considering Louisville to be our biggest competition in the ACC this year and Arizona to be our biggest competition nationally. So if those two schools are deemed ineligible, well then WHEEEEEE!!!

Not to take your joy away, but it probably won't happen that fast. Arizona in particular, if they feel they have a chance at a national championship this year, will pull a uNC. Delay, delay, delay.

[killerleft]

You have a point. But the current system in a multi-billion dollar industry whose most valuable assets cannot be paid legally. That means that ancillary people will be overpaid (which explains, for example, why Nick Saban, unsuccessful at the highest level, is paid far more than any coach in the NFL), that "competition" will focus on ancillary things (e.g., "facilities" such as flat screen televisions being used as name plates) and, most importantly, that under-the-table payments to obtain the most valuable assets are inevitable.

Nobody makes these players come to college. They have other options if they want to get paid. Since college is where they can increase their worth (in addition to getting a free ride to college), I'm not crying for them. Bilas is doing enough whining for everybody.

Before you ask, if they want NBA money, sue the NBA. The colleges have no input concerning the age limit of NBA players.

[UrinalCake]

Not to take your joy away, but it probably won't happen that fast. Arizona in particular, if they feel they have a chance at a national championship this year, will pull a uNC. Delay, delay, delay.

I would have to think at the very least that Bowen will be ineligible. Or if they play him then they'll risk having to later vacate those games. Not sure if any specific players for AZ have been named.

[Henderson]

Perhaps the same reason the feds went after Lance Armstrong. A U.S. Attorney wants to make a name for himself or herself. Are all the indictments in the same district?

Cannot see this as a huge priority in federal law enforcement.

According to the indictments, this investigation began in 2015, when Preet Bharara was the U.S. Attorney in that district (Southern District of New York). But the indictments were handed down under the authority of the Acting U.S. Attorney, Joon Kim, who took over from Bharara when Bharara was fired earlier this year by President Trump. The investigation was conducted by the FBI, operating under James Comey (when the investigation began), continued under Andrew McCabe (as Acting FBI Director) and Christopher Wray (current FBI Director). So if these indictments represent an attempt by someone to make a name for himself, there seem to be several people scrambling for the limelight.

Three things in the indictments suggest that this is just the beginning:

1. The indictments repeatedly refer to the bad actors as including not just the named defendants, but "others known and unknown." Such language is included either to send tingles down the spines of other folks the FBI is investigating, shake the trees to see who else falls out, or both. Why not indict the other "known" bad guys? Because they are talking terms with the US Attorney's office regarding their potential indictments or cooperation. And the U.S. Attorney is being carefully ambiguous about what they have. Fear of the unknown is always stronger than the fear of the known. And fear is what will cause other people to cooperate. The best deals are made with those who come forward early, and these folks will learn that as soon as they consult their lawyers.

2. The indictments describe meetings and cash payments witnessed by a confidential informer. So the FBI has already has someone on the inside, perhaps someone whom they flipped.

3. The indictments also mention the participation of an undercover FBI Agent in those meetings and payments. So that makes two people on the inside, an informer and an undercover FBI Agent. That's really bad news for the named defendants AND for the others "known and unknown". Double whammy ouch. Envelopes containing thousands of dollars in cash trading hands at meetings witnessed by an FBI Agent and confidential informant? Bummer.

As for the federal criminal hook, the primary focus of the indictment seems to be 18 USC Section 666(a), which is entitled, "Theft or bribery concerning programs receiving Federal funds". In this context, it makes it a federal crime to bribe (or try to bribe) a coach at a school receiving federal funds.

Unless this is complete garbage (and it doesn't look like it, given the specificity in the indictments), this is just the beginning. Expect more in the coming weeks as people start to come forward and roll over.

[Nick]

Why is it illegal for Adidas to give money to somebody to attend a particular school? I understand that it's shady but I can't articulate why exactly.

[MChambers]

FWIW, I wouldn't be shocked if this is an outgrowth of some investigation of Munish Sood who runs an IA/BDC who has done some opaque transactions over the years. This is just the more sexy angle of pay-to-play.

http://fortune.com/2015/10/23/invest...s-big-lawsuit/

Probably the only CBB board where you can find a reference to investment advisers and business development companies. Not sure I see any reason to think Sood has any connection to this investigation, however.

Edit: I see Sood is named in the complaint. So sammy3469 may well be right about the origins of this case.

[SoCalDukeFan]

I understand that this is a developing story and more will come out.

So far it seems like there are two types of allegations:
1. Adidas paid players to go to certain schools and coaches knew about it. Obvious major NCAA violation.

2. Coaches were paid to steer players to agents, financial advisors, etc. Not sure if this is an NCAA violation. Certainly an ethical violation and because of probable not being reported on tax returns and other reports a legal issue.


SoCal

[MChambers]

I understand that this is a developing story and more will come out.

So far it seems like there are two types of allegations:
1. Adidas paid players to go to certain schools and coaches knew about it. Obvious major NCAA violation.

2. Coaches were paid to steer players to agents, financial advisors, etc. Not sure if this is an NCAA violation. Certainly an ethical violation and because of probable not being reported on tax returns and other reports a legal issue.


SoCal

If any of the financial advisors were registered investment advisers with either the SEC or one or more states, they’d have to disclose the payments on their registration forms.

[sammy3469]

According to the indictments, this investigation began in 2015, when Preet Bharara was the U.S. Attorney in that district (Southern District of New York). But the indictments were handed down under the authority of the Acting U.S. Attorney, Joon Kim, who took over from Bharara when Bharara was fired earlier this year by President Trump. The investigation was conducted by the FBI, operating under James Comey (when the investigation began), continued under Andrew McCabe (as Acting FBI Director) and Christopher Wray (current FBI Director). So if these indictments represent an attempt by someone to make a name for himself, there seem to be several people scrambling for the limelight.

Three things in the indictments suggest that this is just the beginning:

1. The indictments repeatedly refer to the bad actors as including not just the named defendants, but "others known and unknown." Such language is included either to send tingles down the spines of other folks the FBI is investigating, shake the trees to see who else falls out, or both. Why not indict the other "known" bad guys? Because they are talking terms with the US Attorney's office regarding their potential indictments or cooperation. And the U.S. Attorney is being carefully ambiguous about what they have. Fear of the unknown is always stronger than the fear of the known. And fear is what will cause other people to cooperate. The best deals are made with those who come forward early, and these folks will learn that as soon as they consult their lawyers.

2. The indictments describe meetings and cash payments witnessed by a confidential informer. So the FBI has already has someone on the inside, perhaps someone whom they flipped.

3. The indictments also mention the participation of an undercover FBI Agent in those meetings and payments. So that makes two people on the inside, an informer and an undercover FBI Agent. That's really bad news for the named defendants AND for the others "known and unknown". Double whammy ouch.

As for the federal criminal hook, the primary focus of the indictment seems to be 18 USC Section 666(a), which is entitled, "Theft or bribery concerning programs receiving Federal funds". In this context, it makes it a federal crime to bribe (or try to bribe) a coach at a school receiving federal funds.

Unless this is complete garbage (and it doesn't look like it, given the specificity in the indictments), this is just the beginning. Expect more in the coming weeks as people start to come forward and roll over.

They basically turned one financial adviser facing fraud charges who linked them with Sood and Dawkins. With the way he was talking in the press conference, these indictments certainly seem like the low-hanging fruit that they could do with direct wire tap or video surveillance. It won't be surprising if there is more to come once these first indicted guys start looking for deals especially Gatto.

If people are looking for an analog, this is almost exactly what they did in the FIFA case with Chuck Blazer being the informant who wore the wire.

[75Crazie]

Nobody makes these players come to college. They have other options if they want to get paid.

Oh come on, do you really believe that? Do you really believe that there is any other realistic avenue towards professional basketball and football that does not involve attending a college? There should be, and maybe the NBA developmental league is on its way towards that goal ... but the opportunities it provides for advancement are still limited and are nowhere as visible as college basketball. And football does not even have that. The only sensible solution is a minor league approach similar to baseball, where young athletes are given a choice. And that will never happen unless enough people recognize the hypocrisy in so-called "college" revenue sports and demand a change. And that, in turn, will never happen.