Adidas Executive Asserts No Universities Defrauded in NCAA Bribe Case

On November 15, 2017, the attorney for Adidas executive Jim Gatto told a Manhattan federal judge that no colleges were defrauded. Gatto was charged in a bribery scheme to pay college basketball athletes to play for Adidas-sponsored schools and to hire certain agents after they went professional. Gatto was arrested in September and was Adidas’ head of global sports marketing directed at basketball. In addition, Merl Code, an Adidas consultant, and Christian Dawkins, a former NBA agent, pled not guilty to wire fraud conspiracy charges.

Prosecutors claimed that Gatto, Code, and Dawkins facilitated six-figure payments to basketball players’ families in exchange for promises that the players would enroll in Adidas sponsored NCAA Division I schools and that they would later on hire Dawkins. However, Gatto’s attorney, Michael Schachter, intends to seek dismissal of the indictment as legally insufficient and claimed there was no fraud because Gatto was doing exactly what the universities asked him to do, recruit top talent. In support, Schachter cited to the Seventh Circuit case U.S. v. Walters, which reversed a sports agent’s mail fraud conviction for paying college players in exchange for promises to later accept his representation because the universities never lost any money as a result of the scheme and the agent received no money from the schools. Schachter argued that the same theory is evident in this case.

However, prosecutors argued the universities were defrauded. Their argument focused on the student athletes’ inability to play if the bribery was uncovered. The student athletes conspired with defendants to obtain scholarships from the universities, which was deceptive because once the scheme is revealed, the players are rendered ineligible to play. Further, the prosecutors claimed by concealing the scheme the universities were deprived of information about their own non-compliance with NCAA rules. This deprivation interfered with the universities’ ability to control their assets and created a risk of tangible economic harm. Prosecutors also told the judge that it was a wiretap-heavy case, which includes over 100 hours of recorded calls from wiretaps, recordings from an undercover FBI agent and a cooperating witness, as well as hundreds of thousands of pages of documents.

Gatto, Code, and Dawkins are just one part of the larger investigation that also resulted in charges against four college basketball coaches at top tier NCAA universities and other individuals designating high school athletes. The four coaches were charged with taking bribes to present managers and financial advisors to make money off players once they joined the NBA. Three separate cases involve schemes to pay young athletes to attend and play at Adidas sponsored universities and to hire certain agents and financial advisors once they became professional players. Dawkins, Code, former Oklahoma State University associate head coach Lamont Evans, University of Arizona assistant coach Emanuel Richardson, and University of Southern California coach Tony Bland also pled not guilty to bribery charges. Chuck Connors “The Rifleman” Person, former NBA player and former Auburn University assistant coach, and Rashan Michel, clothing company owner, also pled not guilty to similar charges.

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