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Allegations against Commanders could prompt action by several offices

The Commanders have denied allegations of financial improprieties that were detailed this week in a letter from a congressional committee to the FTC. (John McDonnell/The Washington Post)
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The allegations of financial improprieties against the Washington Commanders and their owner, Daniel Snyder, that were detailed this week in a letter sent by Democratic leaders of the House Committee on Oversight and Reform raised the possibility of responses by a variety of entities.

The 20-page letter signed by Rep. Carolyn B. Maloney (D-N.Y.), the committee’s chairwoman, and Rep. Raja Krishnamoorthi (D-Ill.), the chairman of the subcommittee on economic and consumer policy, was sent Tuesday to Lina M. Khan, chair of the Federal Trade Commission. It was copied to attorneys general Jason S. Miyares (R) of Virginia, Brian E. Frosh (D) of Maryland and Karl A. Racine (D) of D.C., along with NFL Commissioner Roger Goodell. The Commanders have denied committing any financial improprieties.

But while Racine’s office said Friday that it takes the allegations “very seriously” and “won’t hesitate to take action” if warranted, it remained unclear what the next steps in the matter will be.

Congress details allegations of Commanders’ ‘unlawful’ conduct to FTC

The FTC did not respond Friday to a request for comment. The agency acknowledged Tuesday through a spokesman that it had received the committee’s letter but declined to comment further.

William E. Kovacic, a George Washington University law professor who is a former chair and former general counsel of the FTC, said in a phone interview this week that the wishes of Congress and the high profile of the NFL could nudge the agency in the direction of taking action.

“You generally don’t like to brush off a legislative committee, especially if you’re the chair. It’s your own party; they want you to do something,” Kovacic said. “It’s awkward to tell them: ‘Get lost. We’ve got too much else.’ Indeed, they have too many other things to do. They have a whole collection of enormously ambitious, difficult projects that arguably involve much higher stakes for society. … They have a bunch of mergers dealing with less well-known industrial inputs or industrial markets that people don’t understand. But they understand the National Football League. So that would draw you to do it.”

Even so, Kovacic said the FTC’s lack of criminal enforcement powers suggests to him that the attorneys general might be better suited to pursue the allegations.

“If [FTC investigators] found something that could be called a crime, they’d have to hand it off to somebody else, which means going to the criminal division of the Department of Justice or perhaps going to these state attorneys general,” Kovacic said. “They have absolutely no criminal enforcement authority. On the civil side, their foremost remedy is to tell people to stop it and don’t do it again, to get an injunction, a cease-and-desist order. There is a big question now, owing to recent Supreme Court decisions, if they have the power to force the Commanders to give the money back to the victims.”

A spokesperson for Racine said in a statement Friday that his office considers the allegations serious.

“We take these allegations against the Washington Commanders very seriously, and if we find evidence that they have violated District law, we won’t hesitate to take action,” the spokesperson said. “During AG Racine’s time in office, our consumer protection team has filed dozens of lawsuits against companies that harmed District residents — including some of the largest companies in the world — and we’ve secured more than $12 million in relief.”

Congress investigating allegations of financial impropriety by Commanders

The committee’s letter detailed allegations made by Jason Friedman, a former vice president of sales and customer service who worked for the team for 24 years. According to the letter, Friedman accused the team of withholding as much as $5 million in refundable deposits from season ticket holders and also hiding money that was supposed to be shared among NFL owners.

The letter referenced evidence that it said indicated the revenue gained by the team through such practices was known internally as “juice.” It detailed allegations that the Commanders improperly attributed such revenue to being derived from a Navy-Notre Dame football game at FedEx Field or a Kenny Chesney concert so that it wouldn’t be included in the NFL’s revenue-sharing pool.

The team reiterated this week that it “categorically denies any suggestion of financial impropriety of any kind at any time.”

Frosh said in an interview Tuesday, “If what Mr. Friedman described is accurate, it could be a violation of Maryland’s Consumer Protection Act.”

A spokesperson in Miyares’s office said, “We’ve received the letter and are reviewing.”

If the FTC pursues the matter, it would be expected to conduct its own inquiry and could compel the Commanders to turn over records and make officials available for interviews under oath. The Commanders could contest this compulsory process and would be given time to collect and present the information.

Kovacic said the allegations involving the team’s ticket holders would be more relevant to the FTC than those involving revenue hidden from other NFL owners.

“I don’t see the FTC spending a lot of time coming to the aid of the owners or wanting to devote a lot of resources to figuring out whether the other NFL owners were defrauded,” Kovacic said. “About the ticket owners, that’s a different category.”

But even on those consumer-related issues, Kovacic said of FTC officials: “They are queuing up a host of other matters that go to the very heart of their privacy authority, their broader consumer protection authority, their antitrust authority. How much time do you want to spend on the season ticket owners for the Commanders? I don’t know.”

The NFL said this week that the financial allegations detailed in the committee’s letter would fall under the umbrella of the league’s ongoing investigation being conducted by attorney Mary Jo White, a former chair of the Securities and Exchange Commission. The NFL Players Association did not respond to requests to comment. The allegations of hidden revenue could draw scrutiny by the union because NFL players receive a portion of league revenue under the salary cap system.

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