This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (September 27, 2017).
Coaches at some of the most storied programs in college basketball and the sportswear company Adidas AG are at the center of federal allegations that if proven true could shed light on the lucrative worlds of sports management and apparel contracts and underscore the power coaches wield over top recruits.
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In one of several alleged schemes outlined Tuesday by federal prosecutors in New York, a top Adidas executive worked with others including a sports agent and a financial adviser to funnel tens of thousands of dollars to the families of high-school recruits to induce them to sign with major-college programs including Louisville. In exchange, they were expected to sign with the agent and adviser and, when they turned pro, choose Adidas as their sponsor, prosecutors say.
Criminal charges against the Adidas executive, James Gatto, and others were unsealed Tuesday as part of a sweeping crackdown on alleged corruption. The case also involved alleged bribes paid to assistant coaches at the University of Arizona, Oklahoma State University, the University of Southern California and the University of South Carolina.
Prosecutors said Adidas paid high-school recruits through third-party intermediaries to attend schools with Adidas shoe contracts. Prosecutors also alleged financial advisers and agents paid bribes to the coaches with hopes of securing college stars as clients after they enter the National Basketball Association.
The charges followed a yearslong investigation by the Manhattan U.S. Attorney's Office and the Federal Bureau of Investigation. The probe involved undercover FBI agents, a cooperating witness and wiretapped phones. In a news conference Tuesday, acting U.S. Attorney Joon H. Kim said the cases provided a window into the "dark underbelly of college basketball."
Four assistant coaches at big-time college basketball programs were arrested and charged Tuesday. Among them was Chuck Person, a former NBA star who works as an associate coach for the men's basketball team at Auburn, where he was a stand-out player in the 1980s. Mr. Person was charged with accepting tens of thousands of dollars in exchange for steering student-athletes to a financial adviser.
A lawyer for Mr. Person, who was set to appear Tuesday in federal court in Alabama, couldn't be reached for comment.
Auburn and the other universities involved in the allegations suspended the four coaches Tuesday. They said they were surprised by the investigations, shocked by the allegations of misconduct and planned to cooperate with the federal authorities.
The allegations unsealed Tuesday are unlike any violations ever uncovered by the National Collegiate Athletic Association, the governing body of college athletics.
Prosecutors described a sprawling scheme involving hundreds of thousands of dollars in bribes, recorded conversations in a Las Vegas hotel room, and employees for sports agencies and financial advisories bragging about their connections to the coaches of elite college teams.
Mark Emmert, president of the NCAA, called the charges "deeply disturbing" and said the organization would support the continuing federal investigation. "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," said Mr. Emmert.
University of Arizona assistant coach Emanuel Richardson, University of Southern California assistant coach Anthony Bland and Oklahoma State University associate coach Lamont Evans were arrested for allegedly accepting cash bribes from a sports agent, Christian Dawkins. Munish Sood, a financial adviser involved in the alleged scheme, was also charged.
Lawyers for Messrs. Richardson, Bland, Evans, and Dawkins couldn't immediately be reached for comment. A lawyer for Mr. Sood didn't immediately respond to a request for comment.
Agents and others specifically targeted the team's assistant coaches, rather than head coaches with million-dollar salaries, some of whom are their state's highest-paid employees, because "they're making too much money and it's too risky," according to the complaint.
Messrs. Dawkins and Sood were also charged for their roles in the alleged scheme to lure top recruit Brian Bowen and another high school athlete to Louisville.
One of the most talented high-school basketball players in the U.S., Mr. Bowen kept a list of schools where he was hoping to play this fall. As recently as May, the University of Louisville wasn't high on it. But according to prosecutors, Adidas and other sarranged for payments totaling $100,000 to be made to Mr. Bowen's family. Shortly thereafter, Mr. Bowen committed to Louisville.
No coaches at Louisville were charged on Tuesday. But according to the complaint, it was at the request of at least one Louisville coach that, in May 2017, Mr. Gatto, Mr. Sood and Mr. Dawkins, among others, conspired to bribe Mr. Bowen's family.
In July 2017, Mr. Dawkins and Merl Code -- identified in the complaint as an Adidas affiliate -- arranged a $25,000 payment to Mr. Bowen's family, using a financial backer who was in fact an undercover FBI agent, according to prosecutors. Mr. Code allegedly explained to the FBI agent and Mr. Sood that Adidas would reimburse the financial backer, rather than make payments directly.
Mr. Bowen's parents couldn't be reach for comment.
"You guys are being introduced to...how stuff happens with kids and getting into particular schools and so this is kind of one of those instances where we need to step up and help one of our flagship schools...secure a five star caliber kid," Mr. Code allegedly said, in a call recorded by the FBI and quoted in the complaint.
The following day, the undercover agent met Mr. Sood in Princeton, N.J., handing him $25,000 in cash for Mr. Bowen's father, according to prosecutors. Days later, Mr. Dawkins allegedly told Mr. Sood -- in a phone call caught on an FBI wiretap -- that Mr. Bowen's father had agreed that his son would enroll at Louisville and ultimately sign with the sports management company Messrs. Dawkins and Sood were starting.
"We got lucky on this one," Louisville head coach Rick Pitino told a local radio host in June, when Mr. Bowen signed. "We spent zero dollars recruiting a five-star athlete who I loved when I saw him play." Mr. Pitino couldn't be reached for comment Tuesday.
A lawyer for Mr. Code said his client appeared in South Carolina federal court and was released Tuesday on an unsecured $100,000 bond. None of the defendants were asked to enter a plea.
A lawyer for Mr. Gatto, the Adidas executive, didn't immediately respond to requests for comment.
In a statement, Louisville's interim president, Gregory Postel, said the school would cooperate with any investigation into the matter.
Louisville has already been tarnished by recent allegations of misconduct. Mr. Pitino was suspended in June and the school was punished with four years of probation and risks losing its 2013 national title for its involvement in a sex scandal that included charges of coaches lavishing adult entertainment on basketball players and recruits.
In 2014, Mr. Pitino took aim at the role of athletic companies in college recruiting, saying their influence over where students decide to attend college is "a problem that is really prevalent in basketball right now"
An Adidas spokeswoman said, "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."
The investigation, which began in 2015, stemmed from a case brought by the Securities and Exchange Commission against a Pittsburgh-based financial adviser, Louis "Martin" Blazer," who became a cooperating witness for the government, according to court filings and people familiar with the matter.
Mr. Blazer pleaded guilty in a criminal information unsealed Tuesday to five counts, including securities and wire fraud, stemming from the SEC case. Mr. Blazer was charged with making unauthorized investments from his clients' accounts in various music and film productions and taking funds from other clients' accounts to cover his losses.
Mr. Blazer was also a central figure in a long-running state probe into alleged corruption at the University of North Carolina's football program, according to court records and people familiar with the matter. Mr. Blazer couldn't be reached for comment.
Mr. Blazer told authorities he could help them identify others who were bribing college coaches and athletes, Mr. Kim said at the news conference.
--Andrew Beaton contributed to this article.
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(END) Dow Jones Newswires
September 27, 2017 02:47 ET (06:47 GMT)