Criminal Trial to Cap Off Tumultuous Year in NCAA Basketball
Three face charges of trying to bribe the families of top high-school basketball recruits to sign with top schools
By
Rebecca Davis O’Brien
Sept. 27, 2018 5:30 a.m. ET
The first of three criminal trials stemming from a sprawling probe of alleged corruption in college basketball is set to begin next week, a critical test for an investigation that rattled the sport with charges of bribery at some of the country’s most-storied basketball programs.
The trial, in Manhattan federal court, centers on alleged schemes—involving an aspiring sports agent, an
Adidas AG executive and an Adidas consultant—to
bribe the families of top high-school basketball recruits. Prosecutors say the payments were designed to induce the players to sign with schools sponsored by Adidas, including the University of Louisville and the University of Kansas.
Adidas hasn’t been accused of wrongdoing. The company said it had “cooperated fully” with authorities and would continue to do so. “We’ve put the individual charged on administrative leave and have terminated any consulting relationships related to the allegations.”
Neither Louisville nor Kansas were accused of wrongdoing, and no coaches were charged in this case.
At trial, prosecutors are expected to present evidence that purports to expose a seamy side of the billion-dollar industry of Division I college basketball and has prompted calls for sweeping overhauls. The yearslong probe involved wiretaps of multiple phones, recorded meetings in Las Vegas hotel rooms and
a cooperating witness who worked for months alongside undercover agents from the Federal Bureau of Investigation, court filings show.
Lawyers for the three defendants—Adidas executive James Gatto, consultant Merl Code and aspiring agent Christian Dawkins—have argued in filings and court hearings that making payments to college athletes is a widespread practice that may go against NCAA rules, but doesn’t amount to a federal crime.
“It is not against the law to offer a financial incentive to a family to persuade them to send their son or daughter to a particular college,” lawyers wrote in a December motion to dismiss the charges. “After expending enormous resources, the Government has strained to find any legal theory…to transform NCAA rule violations into a conspiracy to commit federal wire fraud.”
A central argument of the prosecution is that the schools themselves were victims of the alleged schemes. But the defendants’ lawyers say the aim was to assist—not defraud—the universities by drawing top talent to their basketball teams.
In September 2017,
prosecutors unsealed charges against 10 people, including Mr. Gatto, former National Basketball Association star Chuck Person, and assistant coaches at top-tier college basketball programs, in three separate alleged schemes.
Mr. Person, who was charged with accepting bribes in his capacity as an assistant coach at Auburn University, has pleaded not guilty and is set to go to trial next year. Auburn wasn’t accused of wrongdoing, and fired Mr. Person after his arrest last year.
In the weeks after the arrests, star college players were sidelined amid concerns about their NCAA eligibility, FBI agents raided a major sports agency and prosecutors subpoenaed schools across the country.
The NCAA set up a commission, headed by former Secretary of State Condoleezza Rice, to study corrupting influences in college basketball. The NCAA has adopted some of the commission’s recommendations, including stricter requirements for nonscholastic summer basketball leagues, allowing college players to be represented by agents as they consider going pro, and requiring coaches and athletics staff to report athletics-related outside income.
Among the more high-profile casualties of the case was Louisville’s Hall of Fame coach, Rick Pitino,
who was effectively fired last fall after being identified in one of the alleged schemes.
It is the alleged scheme involving Mr. Pitino that is headed to trial next week. Prosecutors allege that the three defendants worked with others to funnel tens of thousands of dollars to the families of high-school recruits to induce them to attend Adidas-sponsored schools, then sign with Mr. Dawkins when they went pro.
Prosecutors allege that Mr. Pitino—identified as “Coach-2” in the initial criminal complaint last fall—was aware of efforts to secure more Adidas money for a top recruit. Mr. Pitino has denied wrongdoing, and hasn’t been charged in the matter.
Messrs. Dawkins, Code and Gatto have pleaded not guilty to the charges connected to Louisville of conspiracy to commit wire fraud and wire fraud. Mr. Gatto has also pleaded not guilty to a third count, wire fraud connected to the alleged scheme at Kansas. Prosecutors also allege the men conspired to bribe players to attend the University of Miami and North Carolina State University. Neither university has been accused of wrongdoing, and no coaches there have been charged.
Several members of the alleged scheme have pleaded guilty since last fall, and could testify at the trial. In August, Munish Sood—a New Jersey financial adviser who had planned to work with Mr. Dawkins—pleaded guilty to bribing college basketball coaches, as well as counts of wire-fraud conspiracy and conspiracy to commit bribery, honest-services fraud and travel act offenses. Lawyers for Mr. Sood didn’t respond to requests for comment.
This year, a former director of an Adidas-sponsored travel basketball team for high-school students pleaded guilty to wire fraud in connection with a scheme to defraud the universities. He is expected to be called as a government witness, prosecutors said in court filings.
In February, the government dismissed charges against Jonathan Brad Augustine, the director of another amateur youth-basketball program, who was originally charged in the Adidas scheme. He could be called as a witness at trial. A lawyer for Mr. Augustine declined to comment.
The trial could also shed light on a scandal related to the investigation itself. One of the undercover FBI agents central to the probe
was accused of misappropriating government money and spending it on gambling, food and beverages during the investigation.
The Justice Department’s Inspector General’s office was investigating the matter, the Journal reported this year. The results of that inquiry haven’t been made public. A spokesman for the Inspector General’s office declined to comment.
Defense lawyers have for months sought disclosure of information related to the FBI agent’s conduct. It isn’t clear if prosecutors will ask the agent to testify at trial.
Write to Rebecca Davis O’Brien at
Rebecca.OBrien@wsj.com
Appeared in the September 28, 2018, print edition as 'Trial to Cap Tumultuous Year for NCAA.'