At one major university, a sports agent arranged for a quid pro quo among Adidas, the college’s men’s basketball program and a top high school prospect in which the player’s family would receive $100,000 if he committed to the school and signed with the apparel giant once he turned pro.
At another college, the basketball team’s associate head coach accepted nearly $100,000 to steer his team’s top players to a financial adviser eager to manage their future N.B.A. riches. At a third, a top assistant set up a similar arrangement, promising to trade his access to players for bribes.
“Some of it can’t be completely accounted for on paper,” the sports agent said in urging discretion about one of the deals, “because some of it is, whatever you want to call it, illegal.”
Rick Pitino has been ousted by Louisville one day after the criminal complaints were announced.
These and many more allegations were revealed in a series of complaints made public by federal investigators in New York on Tuesday. The complaints depict a thriving black market for teenage athletes, one in which coaches, agents, financial advisers and shoe company employees trade on the trust of players and exploit their inability to be openly compensated because of N.C.A.A. amateurism rules.
Rick Pitino Ousted by Louisville After Another Scandal September 27, 2017
College basketball has a long, baroque history of malfeasance involving under-the-table deals, but rarely, if ever, have federal investigators exposed such widespread corruption. The closest analogue is probably the point-shaving scandals of the early 1950s, said Rodney K. Smith, a law professor who has studied the history of the N.C.A.A.
“For these men, bribing coaches was a business investment,” Joon H. Kim, the acting United States attorney for the Southern District of New York, said while announcing federal bribery, fraud and other corruption charges. “They knew corrupt coaches, in return for bribes, would pressure the players to use their services. They also knew that if and when those young players turned pro, that would mean big bucks for them.”
This vision of what Kim called “the dark underbelly of college basketball” led to the arrests of nearly a dozen people, including four Division I assistant coaches and the global marketing director for Adidas basketball. Kim said the investigation was continuing, and the disclosures made on Tuesday seemed to promise further revelations of wrongdoing that could upend one of the country’s most popular sports, whose annual tournament provides the N.C.A.A. with the vast majority of its income.
Across three complaints, two broad schemes were alleged. One involved bribing four assistant coaches — at Arizona, Auburn, Oklahoma State and Southern California, all programs in the so-called Power 5 conferences of college sports — to persuade players to send business to certain financial advisers once they turned professional. The other involved efforts to secretly funnel money from Adidas to three players and their families in exchange for the players’ commitments to play at two Adidas-sponsored college programs and to later sign sponsorship deals with the company once they turned pro.
The latter complaint said a senior Adidas executive, Jim Gatto, was in on an agreement to pay about $100,000 to the family of “Player-10,” a heavily recruited high school standout, to steer him to a particular college. While neither the player nor the university was named, descriptions of the institution matched the University of Louisville, which this summer signed a 10-year, $160 million apparel contract with Adidas. Louisville’s men’s basketball program is currently on N.C.A.A. probation over a scandal in which prostitutes were used to entice recruits in on-campus housing (the university is appealing some of those penalties, which were announced in June).
Adidas said in a statement: “Today, we became aware that federal investigators arrested an Adidas employee. We are learning more about the situation. We’re unaware of any misconduct and will fully cooperate with authorities to understand more.”
Louisville’s interim president, Gregory C. Postel, confirmed his university’s involvement in the investigation. “While we are just learning about this information,” Postel said in a statement, “this is a serious concern that goes to the heart of our athletic department and the university.” He added that Louisville was “committed to ethical behavior and adherence to N.C.A.A. rules.”
The N.C.A.A. president, Mark Emmert, was caught off guard by Tuesday morning’s announcement but pledged his organization’s support. “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,” Emmert said.
Tuesday’s revelations all but ensured a renewed debate about two rules central to college basketball. One is the N.C.A.A.’s longstanding restrictions on compensation, a central part of college sports that has been under attack in recent years by polemicists, antitrust lawsuits and even some players.
The other is the so-called one-and-done rule, agreed to jointly by the N.B.A. and its players’ union, which generally prohibits players from entering the league before they have turned 19 or until a year after they graduate from high school.
Before the rule’s implementation, the best high school basketball players in each class had the option of simply entering the N.B.A. and receiving a salary, as well as lucrative endorsement deals, and above all not needing to worry themselves over N.C.A.A. rules.
Those restrictions, combined with the increasing pressure to rack up wins fueled by billion-dollar television deals, created an incentive, some said, for coaches to break the rules to secure top talent. In that environment, said a person familiar with top-level college basketball, who was granted anonymity to discuss rule-breaking, $100,000 for a five-star prospect was “a pretty good investment.”
The cases were brought with the aid of a cooperating witness against whom the Securities and Exchange Commission had brought securities charges, including misusing professional athletes’ funds. Two undercover F.B.I. agents posing as financial advisers were also involved. The witness was Martin Blazer, a former financial adviser based in Pittsburgh, the United States attorney’s office said. The investigation used judicially approved wiretaps, and began in 2015.
The complaints did not implicate any head coaches, perhaps for reasons explained by one of the defendants in an audio recording of a secret meeting. According to a transcript of comments by the defendant, an agent named Christian Dawkins, the path to securing commitments from college athletes went through assistant coaches, because head coaches “ain’t willing” to take bribes, “ ‘cause they’re making too much money. And it’s too risky.”
Illegal inducements and benefits to athletes come as no surprise to followers of college sports, and the N.C.A.A. has long struggled to police rules violations at its member universities. Many times, the violations have been exposed in vivid detail: department store discounts for Florida State football players; cash payments to Michigan’s so-called Fab Five; trades of tattoos for autographs at Ohio State.
Louisville was punished for the prostitute scandal in June, when the N.C.A.A. placed the Cardinals on probation, suspended Coach Rick Pitino for five games and ordered the university to forfeit what could be dozens of games — potentially including the Cardinals’ 2013 national championship. Those sanctions were announced June 15 — less than two weeks, Tuesday’s complaint claimed, after a Louisville coach is accused of taking part in the plan to funnel $100,000 to the all-American recruit.
The complaints announced Tuesday also included tantalizing clues indicating that what was alleged is merely the tip of the iceberg. Dawkins, for example, urged that the payment to a player’s family be increased because one of Adidas’s rivals was “coming in with a higher number.”