I doubt it is much of an exaggeration to say that in every workplace in North Carolina this time of year, there is talk of basketball. College basketball, of course, and, more specifically, ACC basketball. The conversation in late February usually is about the second UNC/Duke game, first-place finishers in the conference, brackets, and which teams are on the bubble. But this week, the conversation wasn’t usual. Instead it was about which school’s current and former players got what benefits from whom and who knew about it. That conversation was spurred by last Friday’s Yahoo Sports report listing dozens of players from dozens of schools who may have received payments in violation of the NCAA’s amateurism rules. The report was based on reporters’ review of documents obtained by the FBI in connection with its “investigation into the underbelly of college basketball.” All of this caused me to wonder, aside from potential NCAA rules violations, what crimes are associated with the alleged payments to coaches, players, and player’s family members.
The federal investigation. Last September, the acting United States Attorney for the Southern District of New York and the Assistant Director-in-Charge of the FBI’s New York office announced the arrest of ten people, including four Division I assistant college basketball coaches and an executive at Adidas, in connection with what they alleged were two related fraud and corruption schemes. In the first scheme, they said that college basketball coaches took cash bribes from athlete agents in exchange for directing the players they coached to retain the services of those agents. The coaches also allegedly directed agents to make payments to players and the families of players who had committed to play for their schools. In the second scheme, the government alleges that an Adidas executive bribed players and their families to attend universities sponsored by Adidas.
The coaches and agents are charged with a litany of federal crimes including:
- Conspiracy to commit bribery concerning a program receiving federal funds
- Solicitation of bribes by an agent of a federally funded organization
- Conspiracy to commit honest services wire fraud
- Honest services wire fraud
- Wire fraud conspiracy
- Travel act conspiracy
Who was defrauded? The federal charges are closely intertwined with the alleged violation of NCAA amateurism principles and rules, which are detailed in the charging documents. Among those core principles is the notion that student-athletes are amateurs who should be protected from exploitation by professional and commercial enterprises. NCAA rules thus prohibit any financial assistance to a student-athlete other than from the university itself or the athletes’ legal guardians – unless the NCAA has expressly authorized the assistance. In addition, student-athletes, prospective student-athletes, and their relatives may not accept benefits, including money, travel, clothing, or other merchandise from an agent or financial advisor. Recruitment of a student-athlete in violation of NCAA rules, as acknowledged by the institution or established through the infractions process, renders the student-athlete ineligible to play sports for the college or university.
The government alleges that the payments and the schemes described above were concealed on certificates that student-athletes and coaches submitted to their universities alleging that they had not received impermissible benefits and were not aware of NCAA rules violations. It contends that the conspiratorial acts of the coaches, agents, apparel company executive–and players and family members—resulted in the obtaining of athletic scholarships at Division I schools through false and fraudulent means. In essence, the government alleges that the universities awarded scholarships to athletes involved in the scheme under false pretenses since the payments made them ineligible to compete. This created a risk of financial harm to the universities, which, as a result of the violations, may be required to pay fines to the NCAA, lose post-season eligibility and athletic scholarships, and whose student-athletes may be deemed ineligible to play.
The federal crimes with which the defendants are charged are defined in terms broad enough to inspire envy in any state court prosecutor who has ever attempted to identify a false pretense. Among the counts is an allegation of “honest services fraud,” a crime that occurs if an employee, public or private, uses the wire or mail to engage in a scheme to defraud in which the employee accepts bribes or kickbacks and thereby deprives his employer of the intangible right to his honest services. See Skilling v. United States, 561 U.S. 358, 408–09 (limiting the reach of 18 U.S.C. Section 1346 to fraud involving bribes or kickbacks).
But, accepting the allegations as true, and assuming that such conduct occurred in North Carolina, are there any state law charges that also would fit these facts?
Obtaining property by false pretenses. G.S. 14-100(a) makes it unlawful to (1) knowingly and designedly by means of any kind of false pretense; (2) obtain or attempt to obtain from any person anything of value; (3) with intent to cheat or defraud any person of the thing of value.
It’s a bit hard to fit the allegations above into this crime. One could argue that the coaches and agents conspired to obtain value from the universities. The coaches falsely represented that they were following NCAA rules while they were allegedly receiving kickbacks for facilitating violations of those rules. The value the coaches received was their continued employment under the guise of following the rules. Or perhaps the agents and coaches conspired to falsely represent that the agents’ services were the best services the student-athlete could obtain. The value the agents obtained was access to the school’s student-athletes. The universities were in turn deprived of the value of those student-athlete’s performance because the student-athletes’ dealings with the agents rendered them ineligible. Or, perhaps the student-athletes themselves were deprived of the value of the opportunity to play collegiate sports, which could later enhance their professional prospects. But see McAdoo v. University of North Carolina at Chapel Hill, 225 N.C. App. 50, 65–66 (2013) (rejecting plaintiff’s claim for special damages based on the loss of his college scholarship which he contended depressed his subsequent earnings as an NFL football player). All of these theories strike me as somewhat of a stretch. Cf. Skilling, 561 U.S. at 400 (explaining that the honest services theory was designed to target corruption that lacked the symmetry of a fraud in which the victim’s loss of money supplied the defendant’s gain, with one the mirror image of the other).
Bribery. G.S. 14-373 criminalizes the bribery of players, coaches, referees and others “for the purpose of losing” a game or limiting the margin of victory or defeat. A companion statute prohibits the acceptance of bribes by players, coaches, referees and others for this same purpose. Since there is little question that the scheme alleged in this case was not for the purpose losing games—it might better be termed winning at all costs—the provisions of Article 51 of Chapter 14 for the “Protection of Athletic Contests” would not apply.
Other statutes criminalizing bribery prohibit the bribery of public officials or candidates for public office, but not persons generally, see G.S. 14-217, 14-218. See also G.S. 14-220 (making it a criminal offense to bribe a juror. Thus, bribery charges would not fit these facts, even had the events taken place in North Carolina.
Sports agent crime. Followers of sports scandals (especially local ones) will doubtless recall the one initiated by the tweet from former North Carolina football player, Marvin Austin. As a result of the investigation that ensued, a sports agent from Georgia pled guilty to violating North Carolina’s sports agent laws. Those laws require that athlete agents register with the Secretary of State and make it a Class I felony for such an agent to do any of the following, with the intent to induce a student-athlete to enter into an agency contract:
- Give any materially false or misleading information or make a materially false promise or representation.
- Furnish anything of value to a student-athlete before the student-athlete enters into the agency contract.
- Furnish anything of value to any individual other than the student-athlete or another registered athlete agent.
These laws clearly would be violated by some of the allegations leveled by federal prosecutors had those activities occurred in North Carolina.
Athlete agents also are prohibited from intentionally failing to notify a student-athlete before the student-athlete signs an agency contract that the signing or authentication will make the student-athlete ineligible to participate as a student-athlete in that sport, but no specific criminal penalty is provided for violations of this provision. See G.S. 78C-98(b)(6).
Have a different perspective or an insight you’d like to share? Post your comment below. Just don’t tell me what happened last night in the UNC vs. Miami game. All I know is that Joel Berry tied it up with 5 seconds left. I have my own version of madness.