In a decisive victory for federal prosecutors and a frightening warning to those involved in the payment of college recruits, a New York jury has convicted Adidas director of global marketing James Gatto, Adidas consultant basketball organizer Merl Code and client recruiter (a.k.a. runner) Christian Dawkins of wire fraud and conspiracy to commit wire fraud charges. U.S. District Judge Lewis Kaplan will sentence the defendants on March 5, 2019. While a pre-sentencing report will influence Judge Kaplan in determining appropriate prison sentences, it’s expected that the three men will likely be sentenced to somewhere between two to five years in prison.
Why the prosecution won
Prosecutors from the Southern District of New York convinced jurors that the necessary elements of wire fraud and conspiracy were proven beyond a reasonable doubt. By using the testimony of such cooperating witnesses as former Adidas consultant and AAU coach T.J. Gassnola and Brian Bowen Sr.—the father of former five-star recruit Brian Bowen—prosecutors established that top basketball recruits were paid thousands of dollars in clandestine exchanges. This was not an especially stunning point. For years, if not decades, the idea that basketball recruits were paid money “under the table” to attend certain colleges (in this case, colleges sponsored by Adidas) was well known to many in the basketball and apparel industries.
The more difficult challenge for prosecutors was to persuade jurors that these payments were not only NCAA rule violations but also, much more importantly, crimes. They did so by depicting the universities that enrolled the paid student-athletes—namely Louisville and Kansas—as victims. This deduction may seem illogical since those universities enrolled players who would helped their basketball programs win games and generate accompanying revenue. But prosecutors convinced jurors that they should regard the basketball program and its coaching staff as possessing disparate interests from the rest of the university. While the coach may gain from the enrollment of a superior player, the university provided that same player a full athletic scholarship and financial aid under a false pretense. Along those lines, the university and its admissions office staff purportedly believed that the player was eligible to play under NCAA rules when in fact he was not. The university, then, lost control of its finite financial assets, namely athletic scholarship and financial aid packages.
Further, by enrolling such a player, the school became at risk of punishment under NCAA amateurism rules. Likewise, prosecutors argued that there was intent to harm these schools: certain Adidas employees, agents, coaches and family members of the schools knowingly conspired to facilitate the enrollment of paid-off student athletes to the school.
The defendants can appeal
The decisions of Gatto, Code and Dawkins to go to trial surprised some given data on federal criminal trials. Approximately 90% of defendants in federal prosecutions plead guilty rather than go to trial. Further, defendants who go to trial usually lose; federal prosecutors secure convictions in somewhere between 85% and 95% of trials.
Unfortunately for these three men, their odds of waging a successful appeal are also strikingly low. According to the Judiciary Data and Analysis Office of the Administrative Office of the U.S. Courts, only 7% of criminal conviction appeals to federal appellate courts lead to reversals.
Still, Gatto, Code and Dawkins have an opportunity to petition the U.S. Court of Appeals for the Second Circuit to review their guilty verdicts. A successful appeal is not one that claims the jury “got it wrong.” Rather, a successful appeal proves that the presiding judge—here, Judge Kaplan—made a mistake of law in his administration of the trial and that it was so meaningful as to lead to a wrongful conviction. Typical grounds for an appeal are to argue the presiding judge mistakenly permitted or denied certain evidence or testimony. Another common approach is to argue the judge provided the jury with confusing instructions, and that led jurors into misunderstanding legal principles and misapplying the law. All of these are potentially at play here.
Under rules in the Second Circuit, Gatto, Code and Dawkins have 30 days to file a notice of appeal. The notice costs $505. To be clear, the notice is not itself an appeal. It merely expresses a desire to appeal and secures the opportunity to do so. An appeal, with detailed legal arguments, would follow.
An appeal would likely take months if not over a year. Appeals involve written briefs and, in some cases, 10-or 15-minute oral arguments by attorneys before a panel of three appellate judges. An appeal is nothing like a trial. No evidence is offered, no testimony is presented, no witnesses appear—the record is over and complete. Even the defendants themselves do not need to attend any oral argument or otherwise actively participate in the appeal. Rather, the appellate panel takes the facts and testimony established in the trial as the revelant record. The panel then considers the defendants’ arguments that the law was misapplied. Far more often than not, convictions are upheld on appeal.
Defendants in related trials might now want to reach plea deals—and that could implicate others
The convictions of Gatto, Code and Dawkins could motivate the other basketball corruption defendants to quickly negotiate plea deals with prosecutors in advance of their trials.
In February, a trial for former NBA player and Auburn assistant Chuck Person is scheduled, and in April three coaches—Tony Bland, Lamont Evans and Emanuel “Book” Richardson—go to trial. Prosecutors are likely emboldened by Wednesday’s convictions. A jury unanimously agreed that Gatto, Code and Dawkins desired to injure Louisville and Kansas. The trio did so by conspiring to induce elite recruits into accepting NCAA-violating inducements and by conspiring to induce those recruits into attending Louisville and Kansas, thereby placing those institutions at risk of NCAA punishments. Armed with the convictions of Gatto, Code and Dawkins, prosecutors are likely more confident than ever that they’ll likewise be able to establish that Person, Richardson and others fraudulently deceived colleges.
With that in mind, attorneys for Person, Richardson and the other defendants might strongly encourage their clients to weigh the possibility of seeking plea deals with prosecutors. Any plea deal would entail these defendants pleading guilty to crimes with the expectation that they would not face prison time or face much less time than the years that Gatto, Code and Dawkins will probably spend behind bars.
In return, the defendants will need to play ball with the government. They’ll have to (1) share any electronic records—including phone records, emails, texts and bank transactions—as well as other evidence that could implicate notable figures in basketball (including potentially head coaches) and (2) agree to testify against others, possibly including those who hired, mentored and trusted them. As a result, in the coming weeks and months, additional persons in the basketball industry could be charged with crimes.
Also, prosecutors normally prioritize convictions of the persons who had ultimate authority over unlawful acts. Such convictions hold responsible the decision-makers, rather than those who only implemented or administered decisions. Here, if prosecutors believe that head coaches and athletic directors were involved in corrupt practices, they would be more inclined to cut plea deals with assistant coaches and other defendants who could help prosecutors prove that the head coaches and athletic directors were involved.
This is why Wednesday's convictions should worry anyone in college basketball who has partaken in NCAA-violating payments to recruits and who are in any way connected to those still facing trial: their names and wrongdoing could soon become bargaining chips in plea deals. The government’s net of basketball corruption, then, could grow wider.
NCAA amateurism rules suddenly gain the power of deterrence
While the NCAA was not a party in this trial, its ability to enforce compliance of rules stands to gain from it. The fact is, agents, sneaker executives and coaches will now be much less likely to “bribe” recruits. They know it’s possible that federal informants are watching. And they know they could face years in prison if caught. For that same reason, recruits and their parents can expect fewer offers of payments.
Impact on new G League Select Contracts
As explained in another SI piece, the G League will soon offer certain 18-year-old players the opportunity to earn $125,000 a year to play in the G League for a year before pursuing the NBA. The opportunity comes in the form of “Select Contracts,” which are designed as an alternative for recruits who would otherwise become “one-and-done” college players.
To the extent a highly regarded high school basketball player believes he can go to college and get paid under-the-table, Wednesday’s convictions may cause that player to re-think his assumptions. The pot of money being dispensed could become a lot smaller. For that reason, the G League may become a much more attractive alternative.
Michael McCann is SI’s legal analyst. He is also Associate Dean of the University of New Hampshire School of Law and editor and co-author of The Oxford Handbook of American Sports Law and Court Justice: The Inside Story of My Battle Against the NCAA.