The Department of Justice on Tuesday announced federal charges were filed against 10 people, including four NCAA basketball coaches, managers, financial advisers and the head of global marketing for Adidas.
Jim Gatto, the director of global sports marketing for the sports apparel brand, is accused by the F.B.I. of conspiring to pay hundreds of thousands of dollars in bribes to get at least three top prospects to Adidas-sponsored schools. Another executive who once headed a junior basketball league for Nike, Merl Code, was charged as part of the indictment.
The allegations are part of a DOJ probe into corruption in collegiate basketball and it includes three separate criminal complaints.
Four coaches were also charged as part of the investigation: Auburn’s Chuck Person, Oklahoma State’s Lamont Evans, USC assistant Tony Bland and Arizona’s Book Richardson, and eight of the 10 people indicted have been arrested. Person was arrested in Alabama, Bland in Tampa, Florida, Evans in Oklahoma and Richardson in Arizona, the DOJ said.
Read the full criminal complaint filed against Gatto below:
On one occasion, the FBI alleges Gatto tried to pay one player and his family $100,000 if he went to a school believed to be the University of Louisville.
The F.B.I. said it’s been investigating criminal influence of money on charges and student-athletes who participate in intercollegiate basketball, which is governed by the NCAA, since 2015.
Adidas released a statement after the charges were announced, saying they were left completely unaware of the alleged misconduct by Gatto.
“Today, we became aware that federal investigators arrested an Adidas employee,” the statement said. “We are learning more about the situation. We’re unaware of any misconduct and will fully cooperate with authorities to understand more.”
Here’s what you need to know about the case and Gatto:
1. Gatto & Adidas Allegedly Helped Get a Top Recruit to Attend a School Believed to be Louisville
“We announce charges of fraud and corruption in the world of college basketball,” acting U.S. Attorney for the Southern District of New York Joon H. Kim said during a press conference. “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 at one of the world’s largest sportswear companies secretly funneling cash to the families of high school recruits.
While no coaches from the University of Louisville were charged as part of the case, the federal indictment alleges that from May 2017 until September 2017, four men conspired to funnel about $100,000 to a highly-recruited high school player, whose name was concealed in the documents but attended a “public research university” in Kentucky.
A description of the school in the documents is in line with Louisville, which also has an enrollment of 22,640 students like the document says. According to the indictment, Gatto was clamoring for an opportunity for one of Adidas’ “flagship schools” to get a top recruit. Hours after the charges were announced, Louisville received official notice from the F.B.I. informing it that it’s under federal investigation.
The sum of money was allegedly wired to consultants, who then made direct cash payments to the player’s family. That player officially committed to the school in June.
“The bribe money was structured in a manner so as to conceal it from the NCAA and officials at (the university), among other things, having Adidas wire money to third party consultants who then facilitated cash payments to (the player’s) family,” the criminal complaint says.
While he wasn’t named in the document, WDRB News reported that recruit Brian Bowen was viewed as a “surprise commitment” when he announced June 3 he would be attending Louisville.
At one point, a sum of money was agreed upon between the company and the player believed to be Bowen, but a “rival apparel company” ended up coming in for more. One of the men involved in the scheme allegedly talked to another coach at the school about obtaining more money. That’s reportedly when Gatto and Adidas stepped in and raised his offer.
According to court documents, Gatto “needed time to generate a sham purchase order and invoice” to justify the use of Adidas funds “since they could not lawfully pay the family” directly.
In July, Gatto allegedly arranged a process to pay the family in which two members of a sports management business would make an initial $25,000 payment to the family, later to be reimbursed by Adidas. One of the defendants said he trusted Gatto to handle the payment “off the books” because of previous interactions.
An initial payment was allegedly made in cash to the father of the recruit on or around July 14, and the defendant said they believed they had secured the student-athlete’s commitment to the school.
The court document further accused Gatto of accounting for the full $100,000 payment at Adidas by “booking it on (Adidas’) records as a payment to an outside organization affiliated with” one of the defendants.
“It’s on the books, (but) it’s not on the books for what it’s actually for,” a defendant said during a wiretapped call.
In August, Louisville inked a contract extension with Adidas worth $160 million over the next decade. That ranks the program’s deal with the company as the No. 4 most expensive in all of the NCAA.
2. A Coach in Florida Asked Gatto for $150K in Bribe Money
According to the indictment, a coach at a college in Florida told Gatto that that he needed to pay one of its top recruits $150,000 so that the player wouldn’t attend another Division I school that was sponsored by a rival company. The player wasn’t identified, but was expected to graduate high school in 2018.
The federal documents don’t directly name the school in Florida, but refer to it as a “private research university” with an enrollment of about 16,000 students. It’s one of the state’s largest universities.
The coach allegedly told Gatto that the player was offered a “substantial sum of money” by the school and turned to the Adidas executive for the massive sum of money.
At least two phone calls took place on August 11 between Gatto, a coach of the Florida school and other defendants, according to the documents.
In one of the calls, Gatto discussed the specifics of the scheme to make the payments to the player, saying he would prefer to do so in 2018 instead of 2017 due to ongoing payments with the other student-athletes in the instances listed above.
In exchange for the $150,000 the unidentified player was expected to commit to a sport agent once he joined the NBA.
3. Another Instance Included Another Player Committing to the Kentucky School & Cultivated With a Meeting at a Vegas Hotel
The incident involving Adidas, the Kentucky college and the top recruit wasn’t the only one, according to the F.B.I. The court documents go into further detail about how on July 27, an assistant from the Adidas-sponsored school, believed to be Louisville, met with the conspirators inside of a hotel room in Las Vegas.
The group met to talk about a person they referred to in the documents as “Player 11” and how to funnel him and his family money. All the while, though, the F.B.I. was recording the meeting with video recorders and a bodycam worn by one of the undercover officers.
The documents refer to “Player 11” as being a student who was expected to graduate in 2019. One of the four men said the mother of the student told him “we need our f***ing money” and the group talked about how they had to be “particularly careful” in funneling the money, especially because the school was already on probation.
In June, the NCAA announced it suspended Rick Pitino for the first five games of the Atlantic Coast Conference season and ordered the university to forfeit dozens of victories. The penalty comes after the school issued self-imposed sanctions in 2016, including a postseason ban, after it was revealed that its former director of basketball operations offered strippers and prostitutes to players and recruits inside dorms on campus for numerous years.
The group hatched a plan and an envelope containing $12,700 cash was handed to the father of the recruit, which was supposed to “take care of July, August,” the complaint alleges.
The complaint refers to a coach at the school, believed to be Louisville, as having big pull with the executives at Adidas.
“All (the unidentified coach) has to do is pick up the phone and call somebody (and say) these are my guys, they’re taking care of us,” one of the defendants allegedly said at the Las Vegas meeting.
4. The F.B.I. Wiretapped Numerous Phone Calls & Found That Person Collected Bribes to Be Funneled Into a Financial Adviser & Suit Retailer
According to the court documents, the F.B.I. launched an investigation into the matter and wiretapped numerous phone calls in which Gatto can be heard trying to work out a deal to pay to have the prospects attend Adidas-sponsored schools.
In exchange for the bribes, the student-athlete would sign an agreement to be represented by the bribery suspects once they entered the NBA.
The investigation has revealed multiple instances of bribes paid by athlete advisors, including financial advisors and business managers, as well as high-level apparel company employees, and facilitated by coaches employed by NCAA division 1 universities, to student-athletes playing at or bound for NCAA D-1 universities, and the families of such athletes, in exchange for a commitment by those athletes to matriculate at a specific university and a promise to ultimately sign agreements to be represented by the bribe-payors once the athletes enter the NBA.
The F.B.I. alleges that Person collected almost $100,000 in bribes in exchange for sending Auburn players to a specific financial adviser and a suit maker named Rashan Michel. The coach used some of the bribe money to pay off the families of recruits, the FBI alleges.
The court documents say Person met with one player in particular and warned him of the repercussions if he didn’t keep quiet about the plan. According to the documents, Person told one of the recruits that “the most important part is that you … don’t say nothing to anybody.”
“That’s very important ’cause this is a violation … of rules,” Person allegedly told the player. “But this is how the NBA players get it done. They get early relationships, and they form partnerships, they form trust, you get to know (financial advisor), you get to know Rashan a lot and like Rashan can get you suits and stuff … you’ll start looking like an NBA ball player, that’s what you are.”
5. Gatto Has Worked for Adidas for Almost 25 Years
According to his LinkedIn profile, Gatto graduated from Elmira College in New York in 1992 with a degree in marketing. Just one year after that, he was named the head of global sports marketing for Adidas’ basketball brand.
Now based in Portland, Oregon, it’s a position he’s held for 24 years. Part or Gatto’s job means frequently traveling to enhance the brand. He’s known to have direct communications with numerous collegiate coaches and has attended several basketball tournaments hosted by Adidas featuring top recruits from around the nation.
While, according to the F.B.I., Gatto has had influence on the NCAA and its athletes, he was also influential in creating Adidas Nations. It’s a basketball tournament that takes some of the top high school recruits and international players and puts them in front of college scouts and coaches.
“Seven years ago, when we wanted to do something different, we came up with this Adidas Nations idea of doing more skills and bringing in international players together,” Gatto told Bleacher Report in 2014.