Former Adidas Executive, Former Adidas Consultant, And Aspiring Manager All Sentenced To Prison Terms For Their Roles In Defrauding Adidas-Sponsored NCAA Division I Universities

Robert S. Khuzami, the Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, announced today that former Adidas director of global sports marketing for basketball, JAMES GATTO, a/k/a “Jim,” was sentenced to nine months in prison, former Adidas consultant MERL CODE was sentenced six months in prison, and sports business manager CHRISTIAN DAWKINS was sentenced to six months in prison, after having been found guilty in October 2018 by a federal jury of wire fraud and wire fraud conspiracy charges.  The defendants were sentenced in Manhattan federal court by U.S. District Judge Lewis A. Kaplan, who also presided over the jury trial.

Attorney for the United States Robert Khuzami said:  “The sentences imposed today only begin to reflect the magnitude of the harm these defendants caused through a scheme that not only defrauded multiple public universities but upended the lives of young student-athletes and corrupted a game cherished by so many.  Today’s sentences send a clear message to those who might be similarly tempted to corrupt collegiate athletics for their own personal gain that defrauding schools in connection with athletic scholarships is not just a rules violation but a crime, one that will result in a prison term.”

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

Overview of the Scheme

GATTO, CODE, and DAWKINS, including with the assistance of Thomas Gassnola, a former Adidas consultant, and Munish Sood, a financial adviser, brokered and facilitated 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 would be submitted to the universities falsely representing that the student-athletes were eligible to compete in Division I athletics.

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.

The University of Louisville Scheme

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.

The University of Kansas Scheme

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 approved by GATTO.

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.

The North Carolina State University Scheme

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.

*          *          *

In addition to the prison sentences, Judge Kaplan ordered CODE, 45, of Greer, South Carolina, and DAWKINS, 26, of Atlanta, Georgia, to each pay restitution to the University of Louisville in the amount of $28,261.  The court reserved the decision on the restitution for GATTO, 48, of Wilsonville, Oregon, and set a conference for April 9, 2019, at 10 a.m.  Each of the three defendants was sentenced to two years of supervised release. 

Gassnola and Sood have previously pled guilty and are awaiting sentence. 

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 was prosecuted 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.