University of Miami Basketball Program Linked to FBI Corruption Probe

Update 9/27: One day after the FBI unsealed its indictments against Adidas officials, University of Miami President Julio Frenk confirmed that the school's basketball program is tied to the probe.

"The University of Miami was not named in the indictments nor was any University employee charged or identified," Frenk announced late Wednesday. "However, we have confirmed with the U.S. Attorney's Office that, at this time, it is investigating a potential tie to one member of our coaching staff and a student recruit."

Earlier today, a lawyer for Hurricanes Head Coach Jim Larrañaga told the Sun-Sentinel that the coach was "unaware of any impropriety on the part of UM basketball and does not know the identity" of the anonymous UM coach implicated in the FBI documents.

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The FBI today indicted ten people — including a top Adidas executive — on charges that the company illegally funneled cash to high-school athletes in exchange for pledges to attend Adidas-sponsored universities. The University of Miami isn't named in the complaint, but details strongly suggest the feds have tied the school to recruits who took payouts from the sportswear company.

The feds say Jim Gatto, Adidas' head of sports marketing, and his cohort paid a high-school athlete $150,000 in exchange for that player's agreement to attend a "private research university located in Florida" with roughly 16,000 students, 15 Division I sports teams, and a sponsorship deal with Adidas. Those details all match UM, which entered into a 12-year partnership with Adidas two years ago estimated to be worth more than $90 million.

UM spokespeople declined to confirm or deny whether the school was involved in the federal probe but said they would cooperate with authorities if asked.

“The University of Miami is aware of the indictments handed down today by the Department of Justice involving several men’s college basketball programs, coaches, financial advisors, agents, and apparel executives," a UM spokesperson said via email. "As we are just learning the details, we cannot comment on the actions taken today by federal authorities. However, if requested, we will cooperate in any legal or NCAA review of the matter.”

A message from President Frenk regarding University of Miami Athletics pic.twitter.com/EbD7RbFC8s

— University of Miami (@univmiami) September 27, 2017

The federal complaint also suggests that a coach at the Florida school — listed only as "University 7" — was involved in the bribery process. An anonymous coach, listed only as "Coach 3," allegedly spoke with Gatto twice August 6, 2017. The FBI claims the payments to the recruit were made "at the request of" the anonymous coach. That unnamed coach "knows everything," two of the people arrested said while being wiretapped, the FBI claims.

Gatto and four other defendants are charged with wire fraud, money laundering, and conspiracy to commit both of those crimes. In addition to Gatto, the FBI charged fellow Adidas executive (and former Nike employee) Merl Code, NBA agent Christian Dawkins, financial adviser Munish Sood, former NBA official Rishan Michel, and Jonathan Brad Augustine, who runs the Adidas-sponsored program "1 Family AAU."

The FBI also charged four college basketball assistant coaches — Auburn's Chuck Person, Southern California's Tony Bland, Arizon's Emanuel Richardson, and Oklahoma State's Lamont Evans — with multiple federal charges, including bribery. The FBI says it began looking harder at the NCAA-sports underworld in 2015; it's long been suspected that amateur players receive cash under the table, but the public has largely not known how.

The complaint claims the five men charged in the Adidas probe worked to "defraud" the anonymous university believed to be UM because they allegedly tricked the school into enrolling athletes who were not eligible for scholarships.

The federal complaint sheds some light on that black market for top college talent. But it also shows that the current payment restrictions on amateur student-athletes are remarkably stupid. The NCAA says players are not allowed to accept a dime of sponsorship money from companies such as Adidas if they want to remain eligible to play — but major athletic brands (Nike, Under Armour, Puma, etc.) and major sports networks such as ESPN make billions off the backs of those players. The NCAA argues that the students should just be happy with getting free degrees in exchange for playing sports, but the amount of money schools and TV networks make compared to the peanuts they give student-athletes is wholly out of whack.

As today's complaint shows, schools and athletes find ways to game the system anyway. The FBI's case suggests a massive underground sports-company payment machine, where multiple firms secretly funnel money to recruits on behalf of university programs and coaches. In UM's (alleged) case, the anonymous basketball coach helped Adidas orchestrate the deal just so UM wouldn't lose the recruit to another anonymous university, which had also offered the player $150,000 through a rival athletic company.

According to the complaint, the unnamed coach, Gatto, and four other men were caught on wiretaps multiple times last August admitting they were in something of a bidding war over the player.

'[W]e're trying to keep him from going to one of their schools," Code was caught saying. He added that the payments would be sent to the player's family gradually and would not be "all in one lump sum."

Gatto and Code were recorded multiple times saying that anonymous "Coach 3," believed to be a UM official, was pressuring them to funnel cash to the player.

"[University 7] wants this kid named [Player 12]," the men were caught on tape admitting.

UM only recently overcame the fallout from its last major athletics scandal: In 2011, Ponzi schemer and school booster Nevin Shapiro claimed he gave more than $2 million in illegal benefits to 72 football players from 2002 to 2010. By August 2011, UM had striped eligibility from 13 players tied to Shapiro, and the NCAA later imposed harsh sanctions on the team.

Many worried the scandal would end the historic UM football program, but the school's athletic program has lived on to possibly break NCAA rules yet again. The basketball program, now in its seventh year under head coach Jim Larrañaga, has been something of a national breakout, twice making the Sweet 16 in the NCAA Tournament.