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Press Release

Adidas Executive And Two Others Convicted Of Defrauding Adidas-Sponsored Universities In Connection With Athletic Scholarships

For Immediate Release
U.S. Attorney's Office, Southern District of New York

Robert S. Khuzami, the Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, announced the convictions of JAMES GATTO, a/k/a “Jim,” MERL CODE, and CHRISTIAN DAWKINS for conspiring to defraud universities by funneling illicit payments to the families of high-school and college basketball players and concealing those payments – which were prohibited by university policies and NCAA rules – from the schools.  GATTO, the Director of Global Basketball Sports Marketing at Adidas, CODE, an Adidas consultant, and DAWKINS, an aspiring manager of professional athletes, will be sentenced on March 5, 2019, at 10:00 a.m. by Judge Kaplan, who presided over the four-week trial.

Two other scheme participants, MUNISH SOOD, a financial advisor, and THOMAS “T.J.” GASSNOLA, a former Adidas consultant, previously pled guilty in connection with their participation in the fraudulent scheme. 

Mr. Khuzami said:  “Today’s convictions expose an underground culture of illicit payments, deception and corruption in world of college basketball.  These defendants now stand convicted of not simply flouting the rules but breaking the law for their own personal gain.  As a jury has now found, the defendants not only deceived universities into issuing scholarships under false pretenses, they deprived the universities of their economic rights and tarnished an ideal which makes college sports a beloved tradition by so many fans all over the world.”

According to the allegations contained in the Complaint, Indictment, Superseding Indictment, and evidence presented during the trial in Manhattan federal court: 

Overview of the Scheme

As found by the jury, GATTO, CODE, and DAWKINS brokered and facilitated the payments funded by Adidas to the families of high school and college aged basketball players in connection with decisions by those players to commit to Adidas-sponsored schools and a promise that the players also would retain the services of DAWKINS and sign lucrative endorsement deals with Adidas upon turning professional.  The payments, which the defendants took great lengths to conceal from the victim-universities, served to defraud the relevant universities in several ways.  First, because the illicit payments to the families of student-athletes rendered those student-athletes ineligible to participate in collegiate athletics, scheme participants conspired to conceal these payments from the universities, thereby causing them to provide or agree to provide athletic-based scholarships and financial aid under false and fraudulent pretenses. Indeed, the defendants and their co-conspirators, who included the families of the student-athletes and, in certain instances, one or more corrupt coaches at the universities, knew that, for the scheme to succeed and the athletic scholarships to be awarded, the illicit payments had to be concealed from the universities, and that certifications, falsely representing that the student-athletes were eligible to compete in Division I athletics, would be submitted to the universities.

Second, the scheme participants further defrauded the universities by depriving the universities of significant and necessary information regarding the non-compliance with NCAA rules by the relevant student-athletes and their families, and, in some cases, by certain corrupt coaches involved in the scheme.  In doing so, the scheme participants interfered with the universities’ ability to control their assets and created a risk of tangible economic harm to the universities, including, among other things, decision-making about the distribution of their limited athletic scholarships; the possible disgorgement of certain profit-sharing by the NCAA; monetary fines; restrictions on athlete recruitment and the distribution of athletic scholarships; and the potential ineligibility of the universities’ basketball teams to compete in NCAA programs generally, and the ineligibility of certain student-athletes in particular.

Allegations Involving the University of Louisville

Beginning in approximately May 2017, GATTO, CODE, DAWKINS, and others worked together to illicitly funnel approximately $100,000 from Adidas to the father of Brian Bowen, then a top-rated high school basketball player, in connection with Bowen’s commitment to play at the University of Louisville, a school whose athletic programs are sponsored by Adidas.  Because the payments to the family of Bowen were both in violation of NCAA rules and illegal, the defendants took steps to conceal them from the University, including funneling the money indirectly through an amateur team affiliated with CODE and a corporation controlled by DAWKINS.  The payments were all funded by Adidas pursuant to phony invoices approved by GATTO, and the first installment was delivered to Bowen’s father in cash in July 2017 in a parking lot in New Jersey.

Allegations Involving the University of Kansas

Between 2016 and 2017, GATTO and GASSNOLA worked together to funnel approximately $90,000 from Adidas to the family of Billy Preston, then a high school basketball player, in connection with Preston’s commitment to play at the University of Kansas, a university whose athletic programs are sponsored by Adidas.  To conceal the payments from the University, GATTO routed the money to Billy Preston’s family indirectly, through an Adidas-sponsored amateur team affiliated with GASSNOLA, and pursuant to sham invoices which GATTO approved.

In addition, in the summer of 2017, GATTO and GASSNOLA agreed to funnel money to the legal guardian of Silvio De Sousa, then a high school basketball player, in connection with De Sousa’s commitment to play at the University of Kansas.  In one instance, GATTO and GASSNOLA were intercepted over a wiretap discussing a $20,000 payment to the legal guardian.

Allegations Involving the North Carolina State University

In approximately November 2015, GATTO and GASSNOLA agreed to funnel approximately $40,000 from Adidas to the family of Dennis Smith Jr., then a high school basketball player, in order to stop Smith Jr. from de-committing from North Carolina State University, a university whose athletic programs are sponsored by Adidas.  GASSNOLA flew to North Carolina to personally deliver the money in cash to a basketball coach at North Carolina State University, who then routed the money to Smith Jr.’s family.  After GASSNOLA made the payment, GATTO reimbursed GASSNOLA via his Adidas-sponsored amateur team. 

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GATTO, 48, of Wilsonville, Oregon, CODE, 44, of Greer, South Carolina, and DAWKINS, 25, of Atlanta, Georgia, were each convicted of one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carry a maximum sentence of 20 years in prison.  GATTO was also convicted of an additional count of wire fraud.

Mr. Khuzami thanked the FBI and the Special Agents of the U.S. Attorney’s Office of the Southern District of New York for their tireless efforts during the investigation and prosecution of this case.

The case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Edward B. Diskant, Noah Solowiejczyk, Eli J. Mark, and Aline R. Flodr are in charge of the prosecution.

Updated October 24, 2018