Prohibition

I’m a little surprised nobody brought up the subject of what I was hinting at in the header of yesterday’s post about the announcement of federal prosecution of several basketball coaches.  No doubt it was easy to be distracted by the fact that, yet again, Auburn finds itself enmeshed in another recruiting scandal, but let’s not lose sight of the underlying cause of the (alleged) criminal activity.

It is from the NCAA’s system of amateurism that the criminal investigation became possible: law enforcement became aware various persons broke NCAA rules in ways that violated criminal law. If the NCAA had adopted a system where players were compensated for their labor and compensated for the use of their name, image and likeness, perhaps all or some of these “under the table” payments would not have occurred. We’ll never know. But some will ask.

Blow it off, if you like, but that is a typically real world result of market distortion.  If you want an uncomfortable analogy, it’s kind of like how they caught Al Capone.

The NCAA has a problem here, as well, that’s probably beginning to dawn on its member schools.  The problem is, unlike the usual investigation of such matters, it has no control over the proceedings.  Even worse, the federal investigation is far from toothless.  Unlike the NCAA, the feds have subpoena power and the threat of jail time to play in order to get cooperation.  That can turn over a lot of rocks that normally would stay in the shade.

Along those lines, the fact that such extensive corruption allegedly occurred raises questions as to whether the NCAA is even capable of stopping any of it. The NCAA, like any organization, has a limited bandwidth. Further, since it is a private actor, the NCAA lacks subpoena powers and other investigatory capabilities enjoyed by law enforcement.

The individual schools implicated in the prosecutions—including Auburn, Oklahoma State, Arizona, USC and Louisville—are also impacted by the trajectory of these cases. Employees of their schools are now accused of partaking in conduct that violates criminal law and NCAA rules. It stands to reason the NCAA could, and no doubt will, investigate the criminal cases and potentially impose sanctions on those schools.

The schools might also worry about civil liability associated with criminal acts committed by employees, as well as repercussions with their insurance companies. It stands to reason that a recruited player who loses his NCAA eligibility as a result of this criminal investigation could consider suing the recruiting school as well as others involved.

Adidas is also impacted. One of its well-known executives, Gatto, is now a defendant in a criminal case in which he is accused of peddling his position with the apparel company to advance a criminal enterprise. Even if other sneaker company executives partake in similar kinds of misconduct, Adidas is the one with an executive who faces charges. That dynamic could damage the brand and the confidence placed in it by company investors. Also, given that Adidas is a publicly traded company, allegations against an Adidas executive might attract the unwanted attention of the U.S. Securities and Exchange Commission.

All of these associated parties would likely be pleased if the defendants strike plea deals to end the cases as soon as possible. The NCAA, universities and Adidas all know the longer these cases drag out, the more likely compromising evidence will surface, whether that occurs through subpoenas, warrants or the pretrial discovery process. It’s possible many names, including of significant figures in college sports, will come to light and in unflattering ways. To that end, it seems quite possible head coaches and athletic department officials of implicated schools may have been aware of an assistant coach’s wrongdoing. Further, executives at the related universities and Adidas could all be called to testify in forums that damage their associated brands.

All this to preserve the amateurism protocol.  At some point, you have to wonder if Emmert’s bosses start to question if this a price worth paying to prevent student-athletes from being compensated for their names, likenesses and images. Down the road, we may look back on this indictment and recognize it as being as significant a turning point in the history of college athletics as NCAA v. Board of Regents of the University of Oklahoma wound up being.

43 Comments

Filed under See You In Court, The NCAA

43 responses to “Prohibition

  1. Dog in Fla

    Pitino is completely shocked to find out that gambling is going on at Rick’s place.

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  2. John

    While I think players should be compensated beyond scholarships paying players is not a miracle cure all.

    The players are being paid does anyone seriously believe that no booster/coach/bagman will every again attempt to break the rules by paying them more? People who are going to break the rules, and in this case the law, to gain a competitive advantage are not going to stop because guys are getting paid. They will do this because their motive isn’t to right the wrong that is not paying players their motive is to gain an unfair advantage.

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    • Nobody is suggesting it’s a miracle cure. But how do you think this indictment would have gone down if Adidas had been allowed to pay players over the table instead of under it?

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      • ASEF

        It certainly would eliminate massive middlemen overhead. And the NCAA would have rich young athletes all over the airwaves to deflate the reform lobby. Win win

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      • Squatchdawg

        Help me out here. Bribery and corruption are inevitable and too hard to uncover so we should just make them legal so we don’t have to deal with it?

        The problem with the premise is that if players were allowed to be comped for their likenesses then other forces would just be funneling money to them for other reasons to attend certain schools – it’s not like the people participating in these scandals would say “no thanks I have plenty”.

        How about we insist that people follow the rules and act honestly rather than changing the rules or ignoring them entirely…and punish those who do not? I know that’s a naive concept in today’s world.

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      • John

        I can see exactly the same scheme happening in a world where Universities pay players. University pays player no. 1 their salary and Adidas funnels their improper payment through assistants to ensure the players loyalty.

        The incentive is the same either way: to gain an unfair advantage by doing something outside the rules. Under the current rules Adidas can pay players- they just have to wait until they declare for the draft. Adidas cheated by paying them early and paying them to sign with Adidas backed Universities to gain an unfair advantage on their competition. If Adidas wants to pay them “over the table” they presumably have to follow the rules for doing so and compete with other companies who might be willing to do so.

        People who are willing to break rules/laws to cheat are going to do it regardless of what the rules or laws are. We could probably devise a system in which there are, functionally, no rules to break. However, the idea that people won’t cheat, or will feel less incentive to cheat, if players are paid just doesn’t make sense to me. As long as there are rules there will be people willing to break them for a competative advantage.

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        • Adidas cheated by paying them early and paying them to sign with Adidas backed Universities to gain an unfair advantage on their competition.

          That’s not why Adidas was charged yesterday. Go read the indictment. There was nothing illegal about Adidas paying players, but because such payments violate NCAA rules, Adidas is alleged to have resorted to illegal means to funnel the payments. That’s my point. Without amateurism, nobody at Adidas is under indictment this morning.

          If student-athletes are allowed to be compensated for their NLIs — just like every other American, by the way — why should the schools be involved in that? Adidas wants to have a player’s endorsement, it strokes a check to the player for that. Period.

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          • Sides

            What price is the NCAA paying? The players and I believe some of the unnamed universities are listed as victims of the fraud. Obviously the NCAA cannot police or prevent outside money going to players. The FBI seems to me to have helped preserve the model of amateurism.

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            • You think the schools really want the FBI and the US Attorney going through records and squeezing folks with subpoenas and prison threats?

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              • Sides

                Of course not, nobody wants that. Do you think the NCAA is worried if a few schools have the FBI and US Attorney going through records? The FBI is legitimizing and protecting the amateurism model. I don’t see right now why this would make the NCAA change, it just received backup from the federal government to police something that was out of control.

                I definitely believe players should be compensated for their likeness and do believe eventually they will. I just don’t see this investigation leading this change. Quite the opposite, I see it strengthening the NCAA’s amateur model. I separate the schools from the NCAA, if the NCAA were involved that would be a whole different issue….

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                • Do you think the NCAA is worried if a few schools have the FBI and US Attorney going through records?

                  You’re joking, right? Or do you think there’s some sort of separation between the NCAA and the schools?

                  Put it this way — Auburn ain’t looking at a Cam situation where it can blow off the SEC and the NCAA. It’s looking at subpoenas and threats of jail. We may not know where the bodies are buried, but that doesn’t mean they don’t exist or that the school doesn’t know about them. And, hell, no, they don’t want anybody digging around that.

                  Multiply that by every school that has to be concerned about a sting operation that lasted for three years that the NCAA didn’t know about until yesterday, and, yes, it adds up to pressure to change.

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                • Sides

                  I don’t know the relationship between the NCAA and its member institutions. I do think the NCAA would gladly sacrifice a few schools to protect its business model. Some schools are definitely going to get hammered but the NCAA will continue.

                  I don’t believe the NCAA didn’t know about this until yesterday. I know your a lawyer and I am definitely not. I have read a decent amount of the stuff pertaining to SC. I think SC has known about this (please let me know if you think otherwise). In the document under count 10 line 15, it says that Lamont Evans participated in a scheme to defraud Univ 2 (SC) by facilitating and concealing bribe payments causing Univ 2 to give scholarships to ineligible student athletes. I have to think that Sindarius Thornwell’s mysterious mid season suspension has to be related to this. Wouldn’t SC be notified if they were the victim of fraud?

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                • I do think the NCAA would gladly sacrifice a few schools to protect its business model.

                  The NCAA’s business model is the schools’ business model. The NCAA’s membership is the schools.

                  I don’t believe the NCAA didn’t know about this until yesterday.

                  Then the US Attorney was lying about that during yesterday’s presser.

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                • Ward Robinson

                  Right. The NCAA is like your high school honor council. The DOJ then being your local cops. When a drug dealing ring is discovered at the school one group can investigate and punish in ways not even comparable to the other.

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          • John

            I have read the indictment and have, at a minimum, an equal understanding of the legal issues at play as you do.

            My point is not about legality/illegality but about people violating whatever rules are in place at the time in order to obtain an advantage over people who follow those rules.

            You point boils down to “if the rules were different Adidas’ conduct would not have violated them.” That is a fair point. It does not, however, mean that Adidas would not have broken a different set of rules to gain a similar advantage.

            For some reason you think that I am defending the status quo where players are not compensated. I am not. My point is only that there are some people, like everyone involved in Auburn athletics, that will break the rules no matter what they are. That does not mean players should not be fairly compensated. I would simply not expect the compensation of players, which will surely be governed by rules/guidelines/limits of some sort, to deter people from going beyond the bounds of those rules to gain a competitiveness advantage.

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            • I’m not accusing you of advocating for the status quo regarding amateurism.

              I just don’t get the argument that because you believe Adidas would have broken some other rules, there’s every need to enforce amateurism in a criminal setting. I find that overreaching.

              Might as well say they should have left Prohibition in place because you can still find moonshine in Appalachia.

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              • John

                A fair point. I will be interested to see if this prompts the NCAA to do anything regarding amateurism.

                Candidly, I am not sure why the FBI has, as you put it, decided to “enforce amateurism in a criminal setting.” It probably has something to do with people breaking the law as it is written. I doubt the FBI was motivated by the amateurism issue one way or the other.

                I think the prosecutors probably see a difference between a booster paying a player to go to school X and a public official (the coach) taking a bribe from a huge corporation to get ahead.

                One is against NCAA regulations and probably violates some tax laws (gift tax reporting etc). The other is the corruption of a public official by a large corporation. The FBI takes the corruption of any public official, whether its a senator taking kickbacks from a big medicare provider or a basketball coach taking money from Adidas, seriously.

                Since the affidavits supporting the indicative contain the boilerplate “we have not disclosed every fact which supports the indictment” language it is possible that there is additional information which might shed light on the “why this case.” My bet is that Gratto (Adidas head of international marketing) is filthy dirty and this is the tip of his personal iceberg.

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                • Cojones

                  Yeah, and as they mention in the request for indictment, the FBI had several agents embedded throughout this scheme who have recordings made during long car drives, e-mails and other forms of communication that should cavitate this procedure into furnishing the full extent of the pome de rue these perps participated in and says openly that there will be more institutions and individuals involved.

                  Everyone should devote the time to read(although I didn’t get past pg 25 due to mental fatigue) how deep the investigation went and what it means in the world of bribery extending into natl sports, not just universities. These guys were setting up to control their bets in the NBA future and rake money in from athletic contracts.

                  You just know that organized crime is going to be indicted if they can keep the revelations ongoing. This indictment IS the “tip of the iceberg”.

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  3. Al

    I’m a believer in following the rules, but the libertarian in me wants to know why players receiving benefits should be a concern of the federal government.

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    • Cojones

      Because federal money goes to the I Universities who maintain that they have amateur athletics.

      Read the indictments as furnished by Sides at 9:56 and you will understand the entire mess going forward.

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      • Al

        I get it, but to me it seems like an overreach and a waste of resources. Shouldn’t we be concerned about academics when it comes to federal money and let the NCAA handle athletics?

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        • Cojones

          That ain’t the problem. The FBI got into it early because it was a national scheme of fraud with outside slimy hands about to get a grip on NBA players coming from college who are already compromised and good fodder for gambling.

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  4. This scenario is a perfect example of what happens when an economic system is “over-regulated.” Schools are finding ways to skirt the rules, and some venture into illegal activity. If the NCAA would at least allow student-athletes to benefit from an Olympic model, most of this goes away.

    Who knows what the legal outcome of this will be, but there’s no escaping the fact the NCAA will be watching this with the intent of using the information from the legal proceedings to build a compliance case.

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    • DawgFlan

      Ding ding. It’s like a country that manipulates their currency in trying to prevent inflation. Bread is only $0.49 in the store, but you can’t find any at the store. Instead, the store manager is selling it on the black market for $25.

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      • I found it the opposite in places in certain places in South America. They openly advertise the price you pay in hard currency (the USD) over the local currency.

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        • DawgFlan

          I was using USD as a sloppy shorthand for the equivalent in-country value, not wanting to get specific. You’re right, and it proves the point – people will turn to other forms and methods of exchange when the sanctioned market distorts the underlying value. Maybe a crude analogy, but the NCAA’s regulations distort the value of the players, so non-NCAA methods of exchange seek to fill the gap.

          Please don’t read this as condoning what any of the coaches did – they signed up to play by the rules. Also, there is a proper tension that needs to be balanced between regulation and anarchy, it should just be clear to everyone at this point that the NCAA have over-regulated amateurism.

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  5. 69Dawg

    Glad to see that as usual many of us have our heads firmly inserted into the sand. It can’t be illegal unless it is. Also the players that received these payments will soon get a visit from 2 IRS agents, one to determine the tax and one to read them their rights. I doubt that the shoe company issued 1099’s to the players. Hard to play ball while in jail for tax fraud.

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    • Cojones

      There is much more to it, 69. Read the indictment. You can skip through the administrative remarks, court location, abbreviations for schools, etc and go to the nitty-gritty at the specific bullet point paragraphs. It’s an eye-opener that Bluto is only using that part pertaining to universities and amateurism and NCAA’s part as a blundering money-grabber/grubber that is not suited to smell this shit out before the sport is fully corrupted.

      Think Chicago “Black Socks”.

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  6. Also the players that received these payments will soon get a visit from 2 IRS agents, one to determine if they are directly or indirectly related to Lois Lerner and when affirmed, the other to say move along, nothing to see here.

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  7. Cojones

    I shuddered at the quote recorded from one perp who outlined how the scheme could work because “… you can fuck with these lesser coaches because they don’t make the money the head coaches make” – or something close to that. He goes on to say that they will essentially be in your pocket from then on and would be instrumental for setting up the NBA contracts they later may receive, i.e, they have those individuals and the players that take the money by the balls in the future if you want to go full organized crime by fixing games..

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  8. Cojones

    Pitino and Jurich fired. Pitino’s will wait for 10 days to avoid notice be given as per his contract.

    This shit be serious, people.

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  9. Macallanlover

    Glad to see this explode on the college sports scene. This is the tip of the iceberg and the investigation will run into the other primary revenue sport soon. Hope to see the states that passed the laws against agents interfering in college sports get active and file charges, as well as the IRS going after the tens, and hundreds, of thousands of dollars that were paid under the table and never reported as taxable income.

    Clean the sport (s) up, and let the cheaters go pro if they cannot stay within the rules. There is going to be some serious dealing going on between those charged, and the FBI. Going to take a huge pile of popcorn to follow all of this.

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  10. Before we pat ourselves on the back and think that our beloved UGA is clean here … peruse some of the names and locales of the participants. Martin Blazer was part of the 2015 investigation of Christopher Hawkins role in paying UNC athletes. Remember Hawkins? He is also known as the guy who bought AJ Green’s jersey.

    The bespoke clothier – Rashan Michel – is based in Atlanta and is former SEC & NBA basketball referee. Todd Gurley is one of his clients along with other SEC/ACC football guys. Also Dominique Wilkins apparently tried to punch him after a Hawks game.

    Given the # of NFL names in this article, it doesn’t seem to be beyond the assumption that this could drift into college football too.

    http://www.espn.com/mens-college-basketball/story/_/id/20834050/the-story-how-fbi-brought-words-corruption

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