Volume: 15 Issue: 10
The US Attorney’s Office for the Southern District of New York (‘US Attorney’s Office’) announced on 26 September 2017 the arrest of ten individuals alleged to have taken part in wire fraud, bribery, and conspiracy in connection with ‘two related fraud and corruption schemes’ involving National Collegiate Athletic Association (‘NCAA’) basketball programs. The US Department of Justice (‘DoJ’) press release states that the arrests include four Division I NCAA men’s basketball coaches and a senior executive at a major athletic apparel company, who are alleged to have taken part in “corrupt practice in which highly rated high school and college basketball players were steered toward lucrative business deals with agents, advisors, and an international athletics apparel company,” stated FBI Assistant Director William F Sweeney.
According to the DoJ’s press release the two fraud and corruption schemes have been investigated by the US Attorney’s Office and the FBI since 2015. The first scheme, dubbed the ‘Coach Bribery Scheme,’ allegedly involved bribes being paid by athlete advisors such as financial advisors and business managers to assistant and associate head basketball coaches at NCAA Division I universities, sometimes directly to student athletes, in exchange for influencing student athletes to retain the services of the bribe-payers once they entered the National Basketball Association (‘NBA’).
The second scheme, identified in the DoJ’s press release as the ‘Company-1 Scheme,’ alleges that bribes were paid to student athletes, prospective student athletes and their families in order to persuade them to commit to enrolling at certain Company-1 sponsored universities and agreeing to be sponsored by the bribe-payers once they enter the NBA.
“The NCAA’s amateurism model is vulnerable to this kind of corruption network because of the substantial commercial value of intercollegiate sports,” said Matthew Mitten, Professor of Law and Executive Director at Marquette University. “The strong economic potential for corruption is exacerbated because elite, highly recruited high school basketball players are not immediately eligible to play in the NBA after graduation. The NBA effectively requires them to play collegiately (or overseas in a foreign professional league) for at least one year because they must be 19 years old to be eligible for the NBA Draft. This barrier to entry in the form of a one year delay into US major league professional basketball combined with NCAA rules prohibiting price competition among universities for the services of elite players younger than 19 creates an opportunity for corruption and other illegal conduct among college coaches, agents, and companies seeking to advance their respective economic interests by providing financial incentives to highly talented young basketball players not yet eligible to play in the NBA.”
The DoJ has yet to make any further announcements regarding the defendants and the alleged offences.