An investigation into alleged bribery involving Adidas-sponsored universities and high school basketball students does not involve any other senior executives at Adidas AG (ADS - Get Report) , U.S. attorney for the Southern District of New York Joon Kim said at a press conference about the investigation on Tuesday, Sept. 26.
In the potentially wide-ranging case, spelled out in an FBI criminal complaint filed Monday, the head of global sports marketing for Adidas allegedly bribed high school basketball players for their commitment to Adidas-sponsored universities. James "Jim" Gatto, has been charged with four counts of fraud and money laundering that involved NCAA coaches at Oklahoma State University, Auburn University, the University of Arizona and the University of Southern California.
The FBI alleges that Gatto was involved in "making and concealing" payments of up to $250,000 to the families of two coveted high school basketball players in exchange for their commitment to attend two Adidas-sponsored universities, according to the complaint filed in Southern District of New York.
Adidas was not named in the complaint, but Gatto's LinkedIn.com and other social media accounts confirm his position at the sporting apparel giant. The complaint illustrates Gatto's direct involvement in the alleged accounts, detailing phone calls between him and Merl Code, another Adidas affiliate named in the case, as well as an NCAA coach about negotiations with the players being recruited. The complaint also indicated that while Adidas was courting two student athletes, a "rival athletic apparel company" also pursued them, pointing to the possibility of rampant fraud in the NCAA recruitment process among major sporting retailers.
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Gatto and Code were named in the criminal complaint, alongside sports manager Christian Dawkins; Jonathan Brad Augustine, the program director for an amateur basketball league and president of a nonprofit organization that mentors high school athletes; and Munish Sood, founder of investment company Princeton Advisory Group.
In both cases involving the two student athletes, Adidas allegedly did not make direct payments, according to the complaint. Instead, it allegedly funneled cash through a sham sports management entity created by Dawkins and Sood in one case, and, in another, by Augustine's nonprofit organization, the League Initiative, founded by former NBA player Chris Singleton.
Dawkins, Sood and Augustine "brokered and facilitated the corrupt payments in exchange for a promise that the players would retain [their financial and management] services upon turning professional," the complaint said.
Adidas could not be immediately reached for comment.
According to the complaint, Gatto was also allegedly in contact with a NCAA coach, who he assured him of a recruit's commitment to his university. The student's families received monthly payments as well as upfront sums as much as $25,000, according to the the FBI complaint. Dawkins told an undercover agent in the investigation, posing as a financial broker, noted the complaint, that he must figure out how to pay the father of one recruit $2,000 monthly and the mother of another recruit $5,000 for her "bills and that kind of stuff." Dawkins would later be reimbursed by Adidas, according to the complaint.
Ten college basketball officials involved in the corruption case were arrested Tuesday, CNBC reported, including the following coaches: Auburn University's Chuck Person, University of Arizona's Emanuel "Book" Richardson, Tony Bland of the University of Southern California, and Oklahoma State's Lamont Evans.
Shares of Adidas took a tumble Tuesday in Germany after news broke of the investigation.
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