College Basketball Scandal: Adidas Exec. sees major charges dropped, could face probation, others li

While four assistant coaches were indicted by a federal grand jury last Tuesday in connection with allegations of corruption in college basketball, the indictment of Adidas executive Jim Gatto was noticeably slimmer. Gatto, who was accused of planning to pay company money to families of high school recruits to steer them to the Adidas sponsored University of Miami and University of Louisville, was originally charged with wire fraud conspiracy, two counts of wire fraud and money laundering conspiracy. He faced a maximum of eighty years in prison.

However, Tuesday he was only indicted on one count of conspiracy to commit wire fraud while the other serious charges were dropped.

Along with Gatto, defendant Merl Code, another Adidas employee and defendant Christian Dawkins, a college basketball runner, all charged with the same initial counts, also saw three of the four initial charges drop off. Code and Dawkins now face just one conspiracy count in the Gatto case, though they also face a slew of other charges in a separate indictment along with assistant coaches Tony Bland (USC), Chuck Person (Auburn), Emanuel Richardson (Arizona) and Lamont Evans (Oklahoma State).

For now, Adidas Exec. Gatto is the only indicted defendant to face just one charge.

Sources say Gatto could be cooperating though there are two more likely scenarios. One is that prosecutors realized their case was weak and decided not to pursue charges of wire fraud and money laundering against Gatto, Dawkins & Code. The second option is that the government brought all four charges to the grand jury, but the grand jury chose not to indict on three due to insufficient evidence. Considering the old Judge Wachtler saying "a grand jury would indict a ham sandwich," it may be the former. But, if either is true, prosecutors overcharged.

Multiple sources familiar with prosecutions in the Southern District of New York say Gatto, who has no criminal history, would walk away with a slap on the wrist, if convicted on the one conspiracy count and face probation. Under the federal sentencing guidelines, Gatto would fall in the 0-6 months zone which usually results in probation for a first time offender, unless prosecutors add "levels" to increase the sentence. To add levels, prosecutors must prove actual or intended loss to a victim. But there may be no provable losses in this case.

On the defense's side, if Gatto did in fact arrange to pay players to attend Universities, he enriched players and the University.

On the other side, the government claims Universities lost money by granting scholarships to ineligible players (who had accepted bribes in violation of NCAA rules). Such losses are not easy to measure since no scholarships have been withdrawn and there were no NCAA violations or fines at the time scholarships were granted.

Two former defendants likely cooperating

Another update to Gatto's indictment was the noticeable absence of original co-defendants Munish Sood, a financial advisor and Jonathan Brad Augustine, a Florida based AAU coach. Both Augustine and Sood were accused of arranging money to recruits to steer them to the University of Miami and the University of Louisville and to retain the services of Sood's management agency. The two men are no longer listed as defendants and are now identified as CC-1 and CC-2.

These new labels likely represent their status as co-conspirators, according to law enforcement sources who believe that both Sood and Augustine are cooperating with authorities, though their level of cooperation is not immediately clear. Sood and Augustine's identification as co-conspirators could indicate they have already agreed to plead guilty to the charged conspiracy and will likely provide testimony against other defendants. According to the original complaint, both men were caught on FBI recordings discussing the alleged pay to play scheme and the transfer of money from Adidas through Augustine's non-profit to secretly transfer it to families of recruits. Sood also allegedly worked hand in hand with runner Christian Dawkins who was in touch with both coaches and families of recruits. The FBI claims the two men were working on forming their own sports management agency where Sood would provide financial services to recruits if they made it to the NBA.

More coach arrests on the horizon

For the first time since news of the scandal broke, the Gatto indictment also names "unknown coaches" from the University of Miami and the University of Louisville as part of the conspiracy. It calls them participants in a scheme to defraud Universities through the making and concealing of bribe payments to players families. This could mean more arrests are imminent. Sources say Coach 1 from Louisville, who was caught by the FBI on tape in a Las Vegas hotel room with other defendants, could be charged in connection with the alleged scheme, but may not have been charged yet because he may be cooperating. Sources also expect the arrests of other coaches from other universities in coming months.

Famed former Louisville head coach Rick Pitino, recently told local media he believes Coach 1 is his former assistant coach Jordan Fair, who has been fired along with Pitino. Neither Fair nor Pitino have been charged.

Coach 2, reportedly Pitino, is also mentioned in the indictment, however, his actual level of involvement, if any, is still unclear. Pitino continues to publicly assert his innocence, and even filed a civil lawsuit alleging emotional distress against Adidas, as a self-proclaimed vehicle to bolster his claims of innocence.

So far the evidence regarding Pitino is thin. The government alleges that another defendant, Christian Dawkins, said Pitino agreed to call Gatto of Adidas to request money be paid to the family of recruit Brian Bowen.

Sources close to the case point out that Dawkins' telephone conversations had been intercepted pursuant to a court ordered wiretap for months yet the indictment does not detail any conversations between Coach 2 and Dawkins, despite detailing Dawkins' conversations with other co-defendants. An FBI investigator says phone records show that Gatto and Pitino spoke around the time that Bowen committed to Louisville, but Pitino's attorney denies those conversations concerned the payment of money to any student families.

Pitino and Larranga cooperating but could still be charged

Both Pitino and Jim Larranga, who is the head coach of the University of Miami and reportedly "Coach 3" listed in the indictment, have received subpoenas directing them to turn over documents, including emails and text messages and both are cooperating with authorities. Pitino has reportedly spoken with the FBI on more than one occasion. While Pitino's attorney Steve Pence, claims Pitino is not a target of the investigation, he is still a subject, meaning that he can still be charged if officials discover incriminating evidence in the course of an investigation.

Pitino's text messages

A few weeks ago, Pence also released text messages between Pitino and Gatto to attempt to show that Pitino and Gatto did not discuss Brian Bowen''s recruitment. In the conversations, Pitino requests the latest Yeezy sneakers among other things. However, the very bottom of the text message chain attracted scrutiny when it revealed that Pitino texted Gatto on September 28th, just two days after Gatto was arrested and the College Basketball FBI probe went public. In the text, Pitino says to Gatto, "Ok see u at Arena. Call Jordan n he will get u back." (Pitino has a former assistant named Jordan though it's unclear which Jordan he is referring to, the asst. coach, the assistant or someone else)

When confronted about the odd prospect that Pitino and Gatto met after Gatto's arrest, Pitino's lawyer Steve Pence denied it, telling reporters that Pitino meant to send the text to him but accidentally sent it to Gatto. Just one day before the text was sent, Pence had told reporters that Pitino had been placed on leave and "locked out" of facilities, after saying goodbye to players. It's unclear whether Pitino was at the Arena a day after being placed on leave and reportedly locked out and if so, it's also unclear who was with him.

A new sealed order for John Doe

Meanwhile, court documents reveal that a New York Judge sealed a court order on the same day that Pitino sent the text to Gatto. This order does not necessarily pertain to Pitino in any way but it also could. Sealed orders can include warrants for electronic surveillance such as wiretaps, charges against a new defendant, charges against a cooperating defendant as well as a host of other possibilities.

Sources familiar with undercover investigation techniques say sometimes after a defendant is arrested, they can be wired up as quickly as the same day and that it's certainly possible that if Pitino and Gatto did meet in person just two days after the scandal broke that Gatto could have been gathering information for authorities and was potentially wearing a wire. However, Pitino's attorney, dismissed those claims as an "Area 51" style conspiracy theory and adamantly denied the meeting ever took place or that Gatto flew to Kentucky just two days after being arrested. Gatto's attorney also declined to comment on the topic.