Arrests coming due to college bball kickbacks

slugboy

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ESPNjacket said:


https://www.charlotteobserver.com/sports/college/mens-basketball/article239923003.html
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I don’t think Nike is going to be slipshod in their approach to the trial, so that makes me think people involved with this case made a calculation that they were better off admitting to paying multiple amateur players.
Adidas employees and agents suffered some consequences for that. Will anyone at Nike pay a penalty?
Will anyone at one of their aligned universities?
(somehow, I think they’ve figured out a way to face a smaller penalty)


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I have a strong feeling Coach K is retiring in the next 2 years. Too much dirt out there about the Duke program, and he probably wants to ride out and disappear with his legacy intact before it all blows up.
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Coach K is the Lance Armstrong of College Basketball. Built a wide ranging cheating empire for a long period of time before everything ultimately came crashing down...obliterating his reputation and legacy.
 
CuseJacket

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https://www.espn.com/mens-college-b...s-directed-payments-recruits-parents-handlers
NEW YORK -- A former Nike EYBL coach testified on Friday that two of the sneaker company's employees directed him to make payments of tens of thousands of dollars to the parents and handlers of at least three high-profile recruits and then submit fraudulent invoices to the company for reimbursement.

Gary Franklin, who founded California Supreme and coached its under-17 elite team on the EYBL circuit, testified during celebrity attorney Michael Avenatti's federal criminal trial that he facilitated money to Phoenix Suns center Deandre Ayton's mother as well as the handlers, coaches and trainers of Denver Nuggets center Bol Bol and former UNLV player Brandon McCoy when the players were still amateurs.
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Franklin told the jury that Nike EYBL director Carlton DeBose then instructed him to submit an expense report to Nike for $60,000, and specify that the money was going to be used to pay for a California Supreme back-to-school event and travel expenses for his program's 15- and 16-year-old team.

Avenatti, whom the federal government accused of attempting to extort as much as $25 million from Nike to conduct an internal investigation of its employees' alleged misconduct, had released a text message between Franklin and DeBose, which Avenatti said detailed the false invoice for $60,000.

"Send me an invoice for $60K. $30K line item for 16U, 15U travel expenses, $30K for CA Supreme Back to School Event Sponsorship," DeBose wrote, according to Avenatti.
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slugboy

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The way that Nike is approaching the Avenatti case, it seems like they think that the payments to the players and the handlers are probably legal, but the fraudulent invoices are the thing that they think they'd be sanctioned for?

(I'm not a lawyer, I'm just guessing why Nike is admitting the payments, other than a fear that the hammer will come down a lot harder if they don't)
 

YlJacket

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Just a guess but you have to expect Nike believes they will not be seen as "bribes" in the technical definition of bribes. Will be interesting to see. Their other exposure is tax for potentially inappropriate business expenses or an audit/Sarbanes Oxley issue for lack of control over their financial systems (paying out against known incorrect invoices). In both cases the amounts being discussed are so small and not material that I think that risk is really small. I get why the lawyers would want to go down this path - especially when the only real option would be to lie and that leads to much larger potential issues out of perjury.
 
orientalnc

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Falsifying records to be used in a tax filing is a felony. Nike might be claiming the money was spent for legitimate business reasons (showing off their shoes and apparel to a young market), but they cannot admit to instructing employees or agents to file fraudulent documentation.
 
slugboy

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orientalnc said:
Falsifying records to be used in a tax filing is a felony. Nike might be claiming the money was spent for legitimate business reasons (showing off their shoes and apparel to a young market), but they cannot admit to instructing employees or agents to file fraudulent documentation.
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I follow that. Falsifying tax info is part of what sent Capone to jail. Falsifying records makes more sense to cover up an illegal action. I haven’t seen anyone involved in the cases so far say that paying the players or hangers on was illegal. If so, and my reasoning may be flawed, Adidas and Nike accepted false records illegally to cover up something that was legal but against NCAA regulations.
If you recorded the expenses correctly, you could have categorized it in a way that didn’t look that weird on your balance sheet and would probably be OK with the Securities and Exchange Commission. You could have just said to the IRS that you were paying athletes to wear your clothes, and report which athletes to the IRS so that they could ask for taxes. I don’t know if the NCAA would have a way to get that information from Nike. The athletes would have a requirement to tell the NCAA, but I don’t think Nike would.
Long story short, I’m trying to decide if Nike and Adidas could have paid the players, done it legally, and provided no information to the NCAA. It might depend on the contacts that Nike has with the colleges they sponsor, and if those contracts impose any legal obligations to the NCAA.
They broke a number of laws covering up something that might not be illegal (but obviously NCAA violations).

Edit: I’m still not a lawyer, and I’m not sure you’d want me as your lawyer after reading this.

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YlJacket

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I don't think $60 K against $10 Billion or whatever it is in revenue is going to get more than maybe a letter from the IRS. And it likely would have been a legit expense by tax if it were recorded correctly. Nike ain't sweating that one
 
orientalnc

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slugboy said:
I follow that. Falsifying tax info is part of what sent Capone to jail. Falsifying records makes more sense to cover up an illegal action. I haven’t seen anyone involved in the cases so far say that paying the players or hangers on was illegal. If so, and my reasoning may be flawed, Adidas and Nike accepted false records illegally to cover up something that was legal but against NCAA regulations.
If you recorded the expenses correctly, you could have categorized it in a way that didn’t look that weird on your balance sheet and would probably be OK with the Securities and Exchange Commission. You could have just said to the IRS that you were paying athletes to wear your clothes, and report which athletes to the IRS so that they could ask for taxes. I don’t know if the NCAA would have a way to get that information from Nike. The athletes would have a requirement to tell the NCAA, but I don’t think Nike would.
Long story short, I’m trying to decide if Nike and Adidas could have paid the players, done it legally, and provided no information to the NCAA. It might depend on the contacts that Nike has with the colleges they sponsor, and if those contracts impose any legal obligations to the NCAA.
They broke a number of laws covering up something that might not be illegal (but obviously NCAA violations).

Edit: I’m still not a lawyer, and I’m not sure you’d want me as your lawyer after reading this.

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It's called a 1099. Any payment over $600 must be to a person or company for whom you have a W-9. We have to send a 1099 to the recipient and the IRS for all those payments.
 
RonJohn

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slugboy said:
Falsifying records makes more sense to cover up an illegal action. I haven’t seen anyone involved in the cases so far say that paying the players or hangers on was illegal. If so, and my reasoning may be flawed, Adidas and Nike accepted false records illegally to cover up something that was legal but against NCAA regulations.
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Not a lawyer either, but the indictment against Gatto basically claimed: That the simple act of paying a player who is going to play at an NCAA school is fraud against the school, That since the payments crossed state lines and involved phone calls it was wire fraud, and that since steps were taken to hide the flow of money it was money laundering.

Like I said not a lawyer, but I don't understand how the federal prosecutors can't go after the Nike people. In Gatto's case they limited information to: Did Gatto pay players? Does the school have a compliance department that attempts to comply with NCAA rules? Did the transactions involve phone calls? Was the money trail confuscated?: Everything other than the question about whether the school has a compliance department has been admitted to under oath by Nike officials.
 
slugboy

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RonJohn said:
Not a lawyer either, but the indictment against Gatto basically claimed: That the simple act of paying a player who is going to play at an NCAA school is fraud against the school, That since the payments crossed state lines and involved phone calls it was wire fraud, and that since steps were taken to hide the flow of money it was money laundering.

Like I said not a lawyer, but I don't understand how the federal prosecutors can't go after the Nike people. In Gatto's case they limited information to: Did Gatto pay players? Does the school have a compliance department that attempts to comply with NCAA rules? Did the transactions involve phone calls? Was the money trail confuscated?: Everything other than the question about whether the school has a compliance department has been admitted to under oath by Nike officials.
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I forgot about the “fraud against the schools” angle. That raised a lot of eyebrows in the sports media.
Once this is all on the record, how do they avoid pleading guilty later?


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g0lftime

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NCSU argument is that they had no knowledge of the 40K payment to the Smith family and therefore should not be punished. There was some sort of issue with player tickets and I forget the details. The root of all this is AAU ball and whose shoes they will wear translates into $$.
 
okiemon

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slugboy said:
I forgot about the “fraud against the schools” angle. That raised a lot of eyebrows in the sports media.
Once this is all on the record, how do they avoid pleading guilty later?


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Seems a bit ironic to me, that the school was “defrauded”, resulting in them signing the player to whom the payments were made, which is what they wanted in the first place.


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LibertyTurns

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RonJohn said:
Not a lawyer either, but the indictment against Gatto basically claimed: That the simple act of paying a player who is going to play at an NCAA school is fraud against the school, That since the payments crossed state lines and involved phone calls it was wire fraud, and that since steps were taken to hide the flow of money it was money laundering.

Like I said not a lawyer, but I don't understand how the federal prosecutors can't go after the Nike people. In Gatto's case they limited information to: Did Gatto pay players? Does the school have a compliance department that attempts to comply with NCAA rules? Did the transactions involve phone calls? Was the money trail confuscated?: Everything other than the question about whether the school has a compliance department has been admitted to under oath by Nike officials.
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Sounds like a racketeering case forthcoming unless there’s too much political capital in this game & then it all gets whitewashed in a big government bureaucratic cluster.
 

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g0lftime said:
NCSU argument is that they had no knowledge of the 40K payment to the Smith family and therefore should not be punished. There was some sort of issue with player tickets and I forget the details. The root of all this is AAU ball and whose shoes they will wear translates into $$.
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Ignorance isn’t an excuse though. It’s just grounds for a lesser level penalty.

The comment on the 1099 forms was bang on. If Nike (or anybody) is paying people and not filing those forms, that’s breaking the law. If the people who get the money don’t report it on their taxes, that’s also breaking the law.
 

g0lftime

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The teams were turning a blind eye. They had to suspect something when the players or parents suddenly sported a new car or other niceties. Just didn't want to know where it came from. The Cam Newton farce took the cake with the NCAA. will Nike let their mess go to trial? Probably not.
 
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