Taking a New Strategy to Court in N.C.A.A. Case

Taking a New Strategy to Court in N.C.A.A. Case

Basketball coaches are not usually thought of as government officials, but a 1984 statute — aimed at helping prosecutors police local governments and private organizations that receive federal funding — means those working even at private universities can effectively become public employees. And the bribery statute makes it a crime for officials to accept anything of value “intending to be influenced or rewarded in connection with any business, transaction or series of transactions” of the organization employing them.

The complaints filed last week describe conduct by coaches like Chuck Person, who worked as the associate head coach at Auburn after a long career playing and coaching in the N.B.A., to take money from agents in return for steering Auburn players to them. But those accusations are not the typical government contract or regulatory change usually sought through a bribe. Prosecutors will have to show that a coach like Mr. Person misused his authority over a player in connection with the business of the university. If he merely traded on a personal relationship with the athlete, then it might not have a sufficient connection to the school to qualify as part of its business.

The government’s second prong of attack is a law that defines a scheme to defraud to include depriving “another of the intangible right of honest services.” Coaches are expected to follow the rules, so honest-services fraud puts the focus on how the coaches lined their own pockets at the expense of their universities because they and the athletes were violating N.C.A.A. amateur athletics requirements.

Finally, the Travel Act makes it a crime to cross state lines to promote or carry on an illegal act, such as bribery, that violates state law. The Justice Department used a cooperating witness — a financial adviser who agreed to work undercover after settling a case with the Securities and Exchange Commission — to meet with the defendants in Manhattan and elsewhere to deliver payments to the coaches. So hopping on a plane to collect money can be enough to violate the statute, as long as it involved a quid pro quo arrangement.

The case against the other defendants is more complicated.

Unlike those against the coaches, the charges against James Gatto, the Adidas executive, and four others claim only wire fraud and money laundering for depriving the universities of scholarships paid to athletes who were ineligible because they took secret payments. Fraud is a type of larceny, so in a typical case the victim loses what the perpetrator obtains. For Mr. Gatto and the four agents, however, it is not apparent what the universities lost when the athletes were attracted to play for their programs, helping generate revenue along with favorable publicity.

None of those defendants worked directly for a university, so the bribery statutes do not apply, but prosecutors nonetheless continued the corruption theme by describing the money paid to persuade high school players to attend favored universities as “bribe payments.”

This is not the first time that federal prosecutors have gone after shady dealings in college sports. The Justice Department’s decision to focus primarily on bribery may be influenced by a previous loss: United States v. Walters, a 1993 case in which prosecutors pursued mail fraud charges against a would-be sports agent.

The defendant, Norby Walters, represented Hollywood entertainers and wanted to break into the sports world by giving players money and cars on the promise that they would choose him as their agent after their collegiate careers. Most never did, and prosecutors charged Mr. Walters with engaging in a scheme to defraud the universities of the scholarships paid to ineligible players.

The United States Court of Appeals for the Seventh Circuit in Chicago overturned the conviction, finding that the university’s payment of scholarships was not a fraud perpetrated by Mr. Walters. Along the way, the appeals court took a swipe at the government’s effort to make a violation of N.C.A.A. rules a federal crime, stating that “the prosecutor’s theory makes criminals of those who consciously cheat on the rules of a private organization.” The court continued, “We pursue this point because any theory that makes criminals of cheaters raises a red flag.”

The new strategy, then, may not be a winning one. Paying high school players to attend universities that had contracts with Mr. Gatto’s company is certainly unseemly, but whether it can be considered a fraud may founder on the analysis in the Walters case.

The investigation of college basketball is just starting, with more schools under scrutiny and the F.B.I. setting up a special telephone number to receive tips on other violations. (One school, the University of Louisville, moved to oust its head coach, the Hall of Famer Rick Pitino, after it was confirmed to be the case’s “University-6.”) And if this new strategy pays off — if college sports can be viewed as infected by corruption rather than by just a few of the kind of under-the-table payments seen hundreds of times before — then the government has the weapons to make its case with authority.

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