September 26, 2017 at 7:01 PM
This story has been updated
Four assistant basketball coaches at Division I schools and a top Adidas executive were among 10 people charged Tuesday with crimes including bribery and fraud as part of a wide-ranging federal investigation into corruption in college basketball.
Coaches at Auburn, Oklahoma State, Arizona and Southern California were all accused of accepting bribes in exchange for offering to steer players to preferred financial advisers, business managers and agents. A top Adidas executive and two associates were accused of arranging illicit payments for high school stars and their families to secure athlete commitments to Adidas-sponsored schools. And unidentified coaches at two other unnamed universities — whose descriptions match Louisville and Miami — were implicated in brokering deals between the Adidas executive and top basketball recruits according to complaints unsealed Tuesday
In a news conference Tuesday afternoon in Manhattan, a federal prosecutor described the case as focused on "the dark underbelly of college basketball," with allegations of dueling six-figure offers from sports apparel companies, money laundering, and kickbacks, all to secure to services of top high school recruits.
"The picture painted by the charges brought today is not a pretty one," said Joon Kim, acting US Attorney for the Southern District of New York. "Coaches at some of the nation's top programs soliciting and accepting cash bribes. Managers and financial advisers circling blue-chip prospects like coyotes. And employees of one the world's largest sportswear companies secretly funneling cash to the families of high school recruits."
Arrests were carried out Monday evening and Tuesday morning, Kim said, and the NCAA, the schools, and Adidas were all unaware of the investigation until Tuesday. Among those charged:
• Chuck Person, an assistant coach at Auburn, who faces charges including bribery conspiracy and solicitation of bribes. Person is accused of accepting $91,500 from a financial adviser who was cooperating as an informant with the FBI. Person accepted the payments, prosecutors allege, in exchange for helping to direct Auburn basketball players toward services provided by the FBI's informant and a man named Rashan Michel, a former NCAA and NBA referee who owns an Atlanta clothing store that specializes in bespoke suits and counts numerous NBA and NFL athletes as clients. (Michel also was charged Tuesday.)
• Jim Gatto, an Adidas executive who describes himself on LinkedIn as "director of global sports marketing – basketball." Gatto, along with two other associates, faces charges including wire fraud and money laundering conspiracy for agreeing to pay $100,000 to the family of one recruit and $150,000 to the family of another , the complaint alleges, to steer them to Adidas-sponsored schools. The schools were not named, though one was described as "a public research university located in Kentucky" with approximately 22,640 students, which seems to match Louisville. Tuesday afternoon, Louisville officials confirmed their school's involvement. The other school was described as "a private research university located in Florida" with approximately 16,000 students," which seems to match Miami. Officials at Miami did not offer confirmation Tuesday their school was involved with the investigation.
• Lamont Evans, an assistant coach at Oklahoma State, who faces charges including soliciting bribes and wire fraud conspiracy, and is accused of taking at least $22,000 in bribes over five years – which also includes time Evans spent coaching at South Carolina – from two financial advisors, one of whom was an FBI informant.
• Emanuel Richardson, an assistant coach at Arizona, who faces charges including soliciting bribes and wire fraud conspiracy, and is accused of accepting $20,000 in bribes from an undercover FBI agent who was posing as an associate of a sports agent.
• Tony Bland, an assistant coach at Southern California, who faces charges including soliciting bribes and wire fraud conspiracy, is accused of taking at least $13,000 in bribes from an agent and a financial advisor.
Adidas and the schools involved released statements Tuesday asserting they were unaware of any wrongdoing and would cooperate with an investigation prosecutors described as ongoing.
"Today, we became aware that federal investigators arrested an Adidas employee," the company said in a statement. "We are learning more about the situation. We're unaware of any misconduct and will fully cooperate with authorities to understand more."
Louisville confirmed it is the Kentucky school named in the complaints.
"While we are just learning about this information, this is a serious concern that goes to the heart of our athletic department and the university," said Dr. Gregory Postel, the school's acting president. "We will cooperate fully with any law enforcement or NCAA investigation into the matter."
Miami officials did not offer similar confirmation.
"As we are just learning the details, we cannot comment on the actions taken today by federal authorities. However, if requested, we will cooperate in any legal or NCAA review of the matter," said Miami athletic director Blake James.
Tuesday's charges could prompt NCAA investigations at all the schools whose coaches were arrested. Louisville's basketball program is currently under probation because of a scandal in which prostitutes were brought on campus to entice recruits.
"The nature of the charges brought by the federal government are deeply disturbing. We have no tolerance whatsoever for this alleged behavior," NCAA President Mark Emmert said in a statement. "Coaches hold a unique position of trust with student-athletes and their families and these bribery allegations, if true, suggest an extraordinary and despicable breach of that trust."
The charges announced Tuesday, law enforcement officials said, are part of ongoing investigation into the "pay-to-play culture" of college sports, and they encouraged tipsters with knowledge of similar schemes to come forward.
"It's better for you to be calling us, than for us to be calling you," Kim said.
Two separate schemes
The investigation began in November 2014, according to the complaints, when a financial advisor who was facing criminal charges agreed to serve as an FBI informant. The informant, identified as "cooperating witness 1" in complaints is Louis Martin "Marty" Blazer III, a Pittsburgh financial adviser, according to law enforcement officials.
In 2016, Blazer settled civil charges filed by the Securities and Exchange Commission alleging he defrauded several professional athlete clients out of more than $2 million. Marty Dietz, a lawyer for Blazer, declined to comment, citing the ongoing investigation.
With Blazer's assistance, and through the use of wiretaps and undercover agents, they alleged that they uncovered two main corruption schemes, one in which Adidas executive Gatto was arranging bribes for players and families, and a second scheme in which assistant coaches were taking bribes to help send star players to preferred agents and financial advisers.
The payments from Adidas — named in the complaints as "Company-1" — were arranged by Gatto with the assistance of four men, prosecutors allege:
• Merl Code, 43, of Greer, South Carolina, a former Clemson basketball player described as "affiliated with Company-1 and its high school and college basketball programs."
• Munish Sood, 45, of Trenton, New Jersey, chief executive of financial advisory company Princeton Capital.
• Jonathan Brad Augustine, 32, of Winter Garden, Florida, who is affiliated with an Adidas-sponsored AAU program.
• Christian Dawkins, 24, of Atlanta, a sports agent and business manager. Much of the evidence against the men came from wiretaps of Dawkins' phone.
In early June, the complaint alleges, a top high school recruit surprisingly agreed to attend the school later identified as Louisville. This player agreed to attend the school, the complaint alleged, only after Gatto promised to pay the player's family $100,000.
There is only one Louisville recruit who meets the description outlined in the complaint: Brian Bowen, a freshman small forward from La Porte, Ind.
When Bowen announced his decision to attend Louisville on June 3, it was greeted as a pleasant surprise.
"We got lucky on this one," head coach Rick Pitino told reporters.
Bowen was unable to be reached to comment late Tuesday. In an interview with the Louisville Courier-Journal, Bowen's mother, Carrie Malecke, said she had no knowledge of any bribe.
"I don't know anything about that. I'm not aware of anything like that," Malecke said.
It's unclear from the complaints if prosecutors believe the alleged payments involved more executives at Adidas, or just Gatto. In one recorded call, the complaint states, Gatto discussed creating a "sham purchase order" to invoice his company, so he could justify payments. In another discussion, Code said that he had expected Gatto to handle the transactions "off the books," noting other payments that "didn't go through the system."
In a July 27 meeting in a hotel room in Las Vegas, an undercover FBI agent, an assistant coach from the university later identified as Louisville and Augustine met, the complaint states, to discuss paying a different high school player, expected to graduate in 2019. Payments for this player would funnel through Augustine, whose amateur basketball team was sponsored by Adidas. At the meeting, the complaint states, an undercover agent handed Augustine an envelope containing $12,700 cash.
On Aug. 11, Gatto and Code discussed, on a call recorded on a wiretap, paying a third player — due to graduate in 2018 — and his family $150,000 to secure the player's commitment to University-7, whose description matches Miami. An unidentified coach with the university was involved in these discussions, prosecutors allege.
It's unclear from the complaints if this deal was ever officially completed, or merely discussed.
In a later conversation Code was recorded saying that "budget-wise, everything was kind of strapped for '17," and indicated the men hoped they could postpone having to pay the recruit until 2018. In another recorded conversation, however, Code told Gatto, the Adidas executive, that they'd have probably to pay even more for the recruit if they waited, perhaps as much as $200,000.
Assistants at the wheel
The corruption schemes prosecutors described involving the four coaches charged Tuesday are much simpler: with a financial adviser, an elite clothier, and others offering bribes to assistants in exchange for their help landing the business of top college players.
Assistant coaches were safer bets for bribes, according to the agent Dawkins, because head coaches "ain't willing to [take bribes], cause they're making too much money. And it's too risky."
Person, the Auburn coach, explained that players trusted him because he once coached NBA star Kobe Bryant, and worked under head coach Phil Jackson. Of one Auburn player, Person said, according to the complaint: "he listens to one person: that is me."
In a statement, Auburn said it had suspended Person without pay.
"We are committed to playing by the rules, and that's what we expect from our coaches. In the meantime, Auburn is working closely with law enforcement, and we will help them in their investigation in any way we can," the school said.
Bland, the Southern California coach, was recorded saying, according to the complaint that he "could mold the players and put them in the lap of you guys."
Southern California, issued a statement, saying: "We will cooperate fully with the investigation and will assist authorities as needed, and if these allegations are true, will take the needed actions."
Kim, the U.S. Attorney, said Tuesday the coaches rarely asked financial advisers or agents about their qualifications or references before agreeing to steer players their way. A simple Google search would have revealed that Blazer, the informant, had been accused of fraud, and that Dawkins, the agent, had been accused by the NBA Players' Association of fraudulently using a client's credit card to run up $42,000 in personal charges.
Dawkins was recorded, according to complaint, marveling at the financial possibilities offered by arranging bribes.
"If we take care of everybody, we control everything," Dawkins said. "You can make millions off of one kid."
Matt Zapotosky and Devlin Barrett contributed to this report.