Manhattan U.S. Attorney Joon H. Kim Announces Charges Of Fraud And Corruption In College Basketball

Manhattan U.S. Attorney Joon H. Kim Announces Charges Of Fraud And Corruption In College Basketball

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the arrest today of 10 individuals, including four Division I NCAA men’s basketball coaches and a senior executive at a major athletic apparel company (“Company-1”), in connection with two related fraud and corruption schemes. In the first scheme, as alleged in the three Complaints unsealed today, college basketball coaches took cash bribes from athlete advisors, including business managers and financial advisors, in exchange for using their influence over college players under their control to pressure and direct those players and their families to retain the services of the advisors paying the bribes. In the second scheme, a senior executive at Company-1, working in connection with corrupt advisors, funneled bribe payments to high school-aged players and their families to secure those players’ commitments to attend universities sponsored by Company-1, rather than universities sponsored by rival athletic apparel companies.

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Good afternoon. My name is Joon Kim. I'm the Acting United States Attorney for the Southern District of New York. Today, we announce charges of fraud and corruption in the world of college basketball. The picture painted by the charges brought today, is not a pretty one: coaches at some of the nation's top programs soliciting and accepting cash bribes, managers and financial advisors circling blue chip prospects, like coyotes, and employees of one of the world's largest sportswear companies, secretly funneling cash to the families of high school recruits. In all, we have charged 10 people in 3 separate complaints: 4 college basketball coaches, 3 people associated with professional managers and advisors, and 3 with ties to the major's sportswear company, including its global marketing director for basketball. These men allegedly participated in 2 difference – 2 different, but related schemes. In the first, college coaches took cash bribes from managers and advisors, in exchange for directing players and their families to those bribers. In the 2nd scheme, managers, advisors, and those affiliated with the sportswear company, worked together to funnel money to families of some of the country's top high school recruits, upwards of a hundred thousand dollars for the player's commitment to play for the schools sponsored by that company. Let me start with some details about the first scheme. We have charged 4 college basketball coaches: Chuck Person, Lamont Evans, Emmanuel Richardson, and Anthony Bland. They are all associate, or assistant coaches, at major division 1 schools with top- tier basketball programs. They have all been in and around the game of basketball for a long time. And one – Chuck Person – played and coached in the NBA. All of them had the trust of the young players they coached and recruited. Young men who looked up to them, and believed that the coaches had their best interests at heart. Chuck Person, in describing his influence over one of his players put it this way, "He listens to one person: that is me." Chuck person also explained that his players trusted and looked up to him because, as he reminded them, he had coached Kobe Bryant, and had worked for Phil Jackson. But as alleged, these coaches abused that trust placed in them by the players and their families, and they violated the duties that they owed to their schools in exchange for bribes ranging from $13,000 dollars, to almost $100,000 dollars each. These coaches allegedly pushed particular managers and advisors on the players, and their families. And certain other coaches arranged for separate payments to be made to the families as well. Anthony Bland described what he could do for the managers and advisors this way; "I can definitely mold the players and put them in the lap of you guys." The professionals whose lap the corrupt coaches put their players in, were the defendants: Christian Dawkins, Munish Sood, and Rashan Michel. Dawkins was an athlete recruiter for a sports agency who was trying to start his own sports management business. Sood was an investment advisor, and Michel owned a company that sold suits and other high-end clothing to professional athletes. For these men, bribing coaches was a business investment. They knew that the corrupt coaches in return for bribes, would pressure the players to use their services. And they also knew that if and when those young players turned pro, that would mean big bucks for them in professional fees and profits. As Daw – as Dawkins put it during a meeting that was recorded by law enforcement, "If we take care of everybody, we control everything. You can make millions off of one kid." While pushing these professionals, the bribed coaches showed little regard for the player's well being. They ignored red flags, seeing only the green of the cash bribes flowing their way. For example, in steering players to finance – to a financial advisor – who it turned out was actually cooperating with the Government – most of the coaches never asked the advisor a single question about his qualifications, his track record in handling player's money, or really anything else about his business. A simple Google search by the coaches of the advisors name would've revealed that the SEC had brought securities fraud charges against him just last year, including for misusing his professional athlete clients' money. Similarly with Christian Dawkins, none of the – none of the coaches warned the players or their families that Dawkins had lost – had lost his job at a sports management company after an NBA Players Association investigation revealed that he had misused his client's credit cards – credit card to pay tens of thousands in unauthorized purchases. But it wasn't just that the bribe taking coaches ignored red flags, and didn't seem to care about the qualifications of the advisors. As alleged, the coaches affirmatively lied to the players, and their families. In talking to the families, they built up these professionals, some of whom they barely knew, with ball faced lies. Chuck Person claimed that one of them was his own personal advisor, and a financial advisor to hall of fame basketball player Charles Barkley. Well, that wasn't true. That advisor – the same one who was cooperating with the Government – had never even met Charles Barkley, and never handled Chuck Person's money, other than than paying him cash bribes. Chuck Person also assured a player's mother that he, himself, had not received a penny for promoting that advisor to her. That was a lie too. That conversation took place 5 days after Person had taken an envelope filled with $15,000 in cash from that very advisor during a secret meeting in a Manhattan hotel room. By allegedly accepting bribes in this way, these 4 coaches not only breeched their obligations to their schools, violated NCAA rules, and betrayed the trust of their players, they also committed serious federal crimes, as did the managers and advisors who paid them. The 2nd scheme, although slightly different, came from the same playbook of fraud and corruption. In this scheme, Dawkins and Sood again, worked with 3 people with ties to a major global sportswear company to send bribe money to the families of some of the country's top high school recruits. The 3 men are; James Gatto, the Global Marketing Director for basketball at the sportswear company, Merle Code, a business affiliate of the same sportswear company, and Jonathan Brad Augustine the Program Director for an amateur basketball team sponsored by that company. The complaint alleges that these defendants conspired to secretly funnel 6-figure payments to the families of 3 high school players. In exchange, the players would agree to commit to playing basketball at 2 colleges that were sponsored by that company, and eventually retain the advisory services of Dawkins and Sood, and to being sponsored by that sportswear company. Recognizing the illicit nature of these payments, Gatto and Code allegedly took steps to hide them. Instead of paying the families directly, they made the payments through Dawkins' company, and Augustine's amateur basketball team. They also conspired to disguise the payments in the company's books by using fake invoices, and false entries. As Merle Code put it in another recorded call, "It's on the books, but it's not on the books for what it's actually for." As alleged, the charged defendants claim that the payments to the players and their families were made in coordination with the coaches at the 2 colleges sponsored by that company. Now if you read the detailed allegations in the 3 complaints totalling over a hundred pages, you will find yourselves in the dark underbelly of college basketball. We were able to get into that world through a cooperating witness, and 2 undercover agents posing as corrupt advisors, and financial backers. And we obtained numerous court authorized wiretaps, and made hundreds of consensual recordings. Through these recordings, we were able to hear in the defendants' own words, the audacious, allegedly criminal schemes. And I'm gonna quote a couple of them. As Dawkins put it in one recording, "If you're going to fund these – those kind of guys (referring to the coaches) at the most elite programs," Dawkins said, "I mean, we'd be running college basketball." In another recorded conversation with the FBI undercover, Dawkins explained that what they were doing – funneling money to players' families – could "not be completed – completely accounted for on paper because some of it is – whatever you want to call it – illegal." He was right. That is what we call it; illegal. So let me walk, uh, you through some of these visuals you have here. These 2 charts, uh, diagrams show the 2 different schemes, uh, in a picture format. So this one shows the coaches. This is the alleged coaches bribery scheme. These are the managers and advisors who paid the bribes to these coaches, who in turn pressured players, uh, to go, uh, to use these managers once they turned pro. And some of the college coaches alleged to have, uh, funneled some of the bribes to the players and their families. This depicts the, uh, alleged sportswear company fraud scheme that has, uh, the company affiliates, and the managers and advisors paying cash to families – players and their families. Some of them directed uh, according to them, by the coaches. In exchange, the players and families would commit to, uh, division 1 schools, uh, and they would file false certifications about their amateur status, and receive athletic scholarships in return. And these were schools that were sponsored by that company. This investigation has required the dedication, hard work, and skill, of many, many people, and I want to recognize some of them. First, I want to thank our great partners at the FBI, represented here today by Assistant Director in Charge Bill Sweeny, Special Agent in Charge Mike McGarrity, and Assistant Special Agent in Charge George Kasami. We thank them, and the many terrific agents in the New York Field Office who worked tired – tirelessly on this investigation. We also thank the agents around the country who helped execute the arrests last night, and this morning. We do so many of our important – our most important groundbreaking – groundbreaking cases with the FBI, and this is certainly one of them. Second, I want to thank the career prosecutors and investigators in our Office who have worked relentlessly and masterfully on this case. They are, Assistant United States Attorneys Robert Boone, Ted Diskant, Noah Solowiejczyk, and Aline Flodr, as well as Tatiana Martins and Russell Capone, the Chief and Deputy Chief of our Public Corruption Unit. And I also want to recognize the criminal investigators in our Office, and in particular, LaValle Jackson, for all of his work. For the defendants charged today, the madness of college basketball went well beyond the big dance in March. Month after month, the defendants exploited the hoop dreams of student athletes around the country, allegedly treating them as little more than opportunities to enrich themselves through bribery and fraud schemes. Fraud, abuse, and corruption, of the type alleged in the charges brought today, contaminates all that is good and pure around it, and it has no place in college sports. The defendants alleged conduct not only sullied the spirit of amateur athletics, but it showed contempt for the thousands of players and coaches who follow the rules, and play the game the right way. And as many of them hit the hardwood floors later this week for college basketball's first official day of practice, we hope that these charges and arrests will help keep the sport that they love, clean and honest. Thank you. I'd like to bring to the podium now uh, Bill Sweeny, Assistant Director in Charge of the FBI's New York Field Office. (Bill) Thank you Joon, and thanks to your team whose on my right, and thanks to Mike and George for your leadership in the investigation. To all the agents, forensic – the forensic accountants and the countless agents around the country who helped us execute the arrests this morning. Those charged today include athletics industry consultants, a financial advisor, an executive of major international athletics apparel company, and several coaches from both public and private universities as well as high school level AAU. Coaches have a significant influence over their players. And with that influence, comes a responsibility to guide these young athletes in the right direction. As alleged however, the coaches charged today casted aside that responsibility, choosing instead to use their influence to benefit themselves, without regard to the players' own genuine interests. All of those charged today contributed to a pay-to-play culture that has no business in college basketball. Today's arrests should serve as a warning to others choosing to conduct business this way in the world of college athletics. We have your playbook. Our investigation is ongoing, and we are conducting additional interviews as I speak. We have a lot more work to do, and I encourage those who wish to proactively provide information, to contact us through our tip line at (212) 384-2135. Thank you. (Joon) I'll take some questions. (Aside) (inaudible) comes as a surprise (inaudible) money that (inaudible). Um, I guess my question is how widespread do you believe this (inaudible)? And that's the first question. (inaudible) Um, and the 2nd question, when you look at the circle, (inaudible) legal, who's the victim in this? Because in this circle, everyone (unintelligible) in some way financially; the players, the coaches, the sportswear company, and the colleges. So who's the victim? (Joon) Um, so you had 2 questions. One is how per – pervasive do I think it is, and, uh, who's the victim? Um, on the pervasiveness, um – no, the – I'm not gonna comment beyond what we've charged, but there's a lot there, as you can see. It's a hundred plus pages of allegations. 10 people have been arrested, 4 coaches at major top-tier basketball programs. So, um, that's, uh, a significant number of people, uh, and conduct that, um, that affects a number of important programs. So, you know, the investigation as Bill said, is ongoing. This is, um – it's now overt, obviously – It was covert until today – uh, and we will continue to be investigating. So we'll see how pervasive it is. Um, on the question of who's the victim, um, it's, it's clear that in, in this, uh, scheme for example, there are false statements being made to the colleges, uh, saying – and those, those were generated buy the professional managers, people working at the sports apparel company saying, um, you know, if we're gonna give you money, you should commit to this school, and yet they, they make false certifications to the school saying that they are, um, amateur athletes, and have not been paid. So, uh, uh, the schools are in, in a way, the victim. The schools are also a victim uh, where they have hired, uh, college coaches who are taking bribes – uh, cash bribes from managers and advisors to direct players who are entrusted in their care to certain professional advisors. Um, the schools are also – a number of them are public schools, and, uh, and they are all schools that receive, uh, money – federal funded money. And so, uh, to the extent the bribery – the bribery laws prohibit – the federal laws prohibit those who, who work for public institutions, or institutions that receive public money, from taking bribes. And I think all of us the public, uh, anyone who plays in the game, uh, are victims of that type of conduct. (Aside) I was wondering if, uh, what kind of cooperation you've had with the NCAA up until this point, and what kind of special (unintelligible) we have from (stutters) here on? (Joon) Uh, the investigation was covert until this morning, so uh, we have reached out to the NCAA, and we will be working and talking to them. Until today, uh, I don't believe they were aware of this investigation. (Aside) You've established a, uh, a special phone number in this case. What's your message to people that are in, in the programs that are referenced in your charging documents today and what's your message to people maybe in other programs about what you want to have them call forward about, and (stutters) your message to them to maybe cooperate (inaudible)? (Joon) Yeah. The message to them, uh, along the lines of what, uh, Bill Sweeny said is, if you were someone who engaged in this type of conduct, or you are aware of others who have engaged in this type, type of conduct, call, call us – call the FBI hotline number that's on our press release, or our Office, uh, and tell us about it. Um, if you're someone who yourself engaged in some of this conduct, uh, I'd also encourage you to call us, uh, because I think, uh, it's better for you to call us, than us to be calling you when we're ready to charge you. (Aside) Joon, Joon, uh, not too long ago when, uh, your predecessor was – uh, Preet Bharara was up there talking about, uh, the Albany trial – the Albany corruption cases, he mentioned that, uh, beyond prosecution, there needed to be a cultural change in Albany. i'm wondering if there's some sort of analogue here with the NCAA, um, beyond this kind of, uh, (unintelligible) that this prosecution represents? Uh, is there anything the league can do that needs to happen otherwise? (Joon) Um, as I've said, we haven't been in communication with the NCAA until today. Um, so, this – the message of this case is that we have uncovered the conduct that we've alleged in this complaint. It is serious, they are federal crimes, and it involves a number of important programs and important, uh, uh, coaches. And the message is, if it is pervasive, then people should be looking at it. And, you know, I'm not gonna comment much more on what the NCAA should or could do. Uh, we speak, uh, through our charges, and I think the charges speak pretty loudly. (Aside) Would you say that it's fair to say that the charges hinge (unintelligible) into the (unintelligible) rules? And secondarily – without you telling the NCAA to do – was it important to you – beyond the fact that because of NCAA rules – there was false certifications? And certainly what you just said, you kind of spoken independently of the importance of amateurs in college sports. Do you guys take a position that it's important that college sports be amateur? (Joon) Um, let me take that last part first. I'm not – we're not taking – we're a prosecutors' Office. We're not taking a position on what's good for, uh, amateur sports, or things of that nature. What we do take a position on, is if you violate the law, we're gonna investigate it and prosecute you. Um, so, the question about, um, um, whether, um, (unintelligible)…. we're not, we're not here to regulate, uh, college basketball, but if we find that, that you're engaged in conduct where you're violating – for example, in the charges that we have brought: um, wire fraud, uh, statutes – uh, the travel act, bribery statutes – then you will be prosecuted. (Aside) Hey Bill – this is for, um, Bill. (unintelligible). Um, (unintelligible) upon that with another type of case. Um, (unintelligible) Did it (unintelligible), or is it just, uh – (Bill) So for those who couldn't hear the question, the question was, uh, how did we get involved, and how we start this case? And you should know that I'm not gonna answer that (laughing). (Joon) I'm gonna answer some of it. I think in the complaint, uh, we do allege that a, a cooperating witness who I've mentioned, uh, was charged by the SEC, that he became a cooperating witness after being charged by the SEC, and then – he had in the past engaged in this type of conduct, and said, I'm aware of people who are willing to do this, and then he was inserted. And so, that's – that's in the public documents. (Aside) Is there any evidence that um, the players who were pushed to your cooperator, or to Dawkins – I think the one who was charged with the credit card fraud – or fired for credit card fraud – any evidence that those players have been defrauded, or ripped off by these managers? (Joon) Uh, the – we don't – there, there is no allegation in the complaints that I'm aware of of the players that are, uh, described in the complaints being ripped off, uh, by these defendants, other than being told of the lies that I, uh, referenced, and being told that they're being sent towards certain advisors, uh, because they thought it was in their best interests, when in fact, they were just getting bribes. (Aside) (unintelligible) (inaudible) (inaudible)? (Joon) Sorry, I couldn't hear you. (Aside) To your knowledge, do you think (inaudible) programs and universities (inaudible)? (Joon) Did any officials at the – well, there are a number of coaches who have been charged – oh, higher. There are no allegations of, uh – in the complaint – of administrators, uh, participating in the, in the bribery. (Aside) Hi. Have you (unitelligible) a little more? Um, (unintelligible). (Joon) Mm hmm. (Aside) Um, which sportswear company, how long has this been going on, and how high up the, um, chain of command, uh, does this go? (Joon) Okay. For the sportswear company, um, uh – we don't – we haven't named uh, the company, or any particular school, in our charging documents. That's what we generally do. We don't name individuals, or any of these that are not charged. That being said, uh…the internet's an amazing thing. You, you, you search these folks, you know where they work. Um, so…one of the defendants who was charged, is himself quite senior in the company. Uh, he's the global – I believe the, the title was Global Director of Basketball, or Marketing – Global Marketing Director for Basketball. So, uh, that in our view is a pretty serious and senior position. It's clearly someone who had uh, the authority – as alleged in the complaint – to funnel company money upwards of $100,000 dollars, and also,uh, book it in certain ways that would disguise them. But there are no other allegations in the complaint of more senior people at that company. Last question. (Aside) Could you state your reaction to the, um, the corruption conviction being overturned for Dean Skelos? (Joon) Yeah. Um, you know, we, we issued a statement, uh, just before coming down. Um, you know, we're still assessing our appellate options, but, um, we, we, we look forward to retrying uh, Dean Skelos and Adam Skelos. Um, the, the reversal – if you read the decision – makes clear that the evidence that we presented at trial was more than sufficient to prove their guilt under any standard, even under the new McDonnell standard. Um, but because McDonnell came out after, and the jury instruction at the time didn't obviously reflect what was later to be the language in the McDonnell decision, the 2nd Circuit reversed it, and sent it back for a retrial. Um, as I said in the statement, we look forward to a retrial, and again, uh, uh, presenting that evidence to a jury of New Yorkers, and giving the public what they deserve (we think) in that case, which – uh, the justice that they deserve. Look, we can see from this case, and all, you know, the work that went into this, um, cleaning up corruption is difficult work. Um, it's certainly difficult in, uh, uh, in New York State government. uh, but we're here, and these folks standing here, uh, are here to do what we can, uh, to make sure that, uh, our Government is clean and honest. (Aside) How confident are you, um, to get another conviction? (Joon) We're pretty confident. (Aside) How are you gonna change your strategy in McDonnell?

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