All three defendants in the Adidas college basketball trial were found guilty Wednesday by a federal jury.
Adidas executive James Gatto, former Adidas consultant Merl Code and former sports agent Christian Dawkins were accused of conspiring to pay the families of players to attend schools sponsored by Adidas, including Kansas.
They were found guilty on all seven counts of wire fraud and conspiracy to commit wire fraud: three for Gatto, two for Dawkins and two for Code. Gatto was the only defendant charged in connection with Kansas; his former associate T.J. Gassnola testified he paid the family of former KU player Billy Preston $89,000 and the guardian of current Jayhawks player Silvio De Sousa $2,500 for online classes.
Gassnola, a witness for the government, also testified he agreed to pay $20,000 to help the guardian repay a Maryland booster who gave him $60,000, but Gassnola never paid, he said. Gassnola also testified that neither KU coach Bill Self or assistant Kurtis Townsend knew about the payments.
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KU announced Wednesday that De Sousa won’t play pending a review of his NCAA eligibility.
“Today’s convictions expose an underground culture of illicit payments, deception and corruption in the world of college basketball,” said Robert S. Khuzami, the deputy U.S. attorney for the Southern District of New York.
“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.”
Gatto’s defense attorney, Michael S. Schachter, said he will appeal the verdict. “Of course,” he said.
Sentencing is scheduled for March 5. A legal source familiar with the trial said sentences of two to four years for each defendant is a “very real expectation.”
During the trial, the defense didn’t contest payments were made and NCAA rules were broken, but argued the prosecution didn’t prove that the universities were victims of the payment schemes and no federal laws were broken.
Last week, Mark C. Moore, an attorney for Code, described a wiretapped phone conversation, which was not entered into evidence, between his client and Townsend in which Code says a relative of then-recruit Zion Williamson, now a Duke freshman, was asking for “money in the pocket” and “housing for him and the family.”
According to Moore, Townsend replied to Code: “So, I’ve got to just try to work and figure out a way. Because if that’s what it takes to get him for 10 months, we’re going to have to do it some way.”
Court testimony shows that on Aug. 19, 2017 — days before KU Athletics announced a still-unsigned 12-year contract extension with Adidas — Gassnola texted Self to thank him for helping complete the deal. Self replied via text that he was happy with Adidas and wrote “Just got to get a couple real guys.”
“Coach Self, in T.J. Gassnola’s view, speaks for Kansas, and Kansas wants Adidas to help Kansas recruit,” Schachter said in his closing argument last week. “Nike does the same thing for their schools, and if Adidas doesn’t do the same, it’s going to lose its sponsorships to Nike.”
Schachter also said in his closing argument that when Self said he was happy with Adidas, he was linking KU’s extension of its agreement with Adidas to “getting a couple of real guys.” Schachter argued the coaches wanted the payments, adding Gatto was trying to help Kansas and Louisville and not defraud them.
”It appears to Jim that this is something colleges are aware of and encourage,” he said.
The jury thought otherwise. Lou Dawkins, Christian Dawkins’ father, was seen crying after the verdict.
“You don’t want his comment. Just read between the lines,” Dawkins’ mother, Latricia Vaughn Dawkins, said. “That’s how we feel about it.” An attorney for Dawkins told CBS Sports that he will appeal.
A legal source with knowledge of the trial said the verdict will put pressure on the NCAA and schools to take action. The verdict also could have ramifications for two more trials scheduled for next year involving similar payment schemes and Code, Dawkins, a financial adviser and four former Division I assistant coaches.
“I suspect there will be a race to cut deals with the U.S. Attorney’s office now,” the source said. “Plea bargains are very likely for the next set of defendants.”
The jury, composed of eight women and four men, had deliberated since Monday at the Moynihan United States Courthouse.
In instructing the jury Monday morning, Judge Lewis A. Kaplan said, “A violation of an NCAA rule by itself is not a violation of a law.” He added the issue was whether “the universities were fraudulently misled about whether an NCAA violation took place.”
Self read a prepared statement as part of a news conference Wednesday night in Lawrence in which he said he could not comment on elements of the trial or address information “that has the potential to be related to a future inquiry.”
“While I cannot specifically comment, I can say that we all know shoe companies have influence on all levels of basketball. They work hard to develop brand loyalty with top high school prospects, and they have some influence with them, which is totally permissible under NCAA guidelines,” Self said. “When recruiting prospective student-athletes, my staff and I have not and do not offer improper inducements to them or their families to influence their college decisions, nor are we aware of any third-party involvement to do so.”
Earlier in the day, KU chancellor Douglas Girod and athletic director Jeff Long issued a joint statement following the verdict that said, in part:
“During the trial, information was presented regarding a former KU student-athlete, a current KU student-athlete, and KU men’s basketball coaches. Some of the information we were aware of, and some is new to us. The new information needs to be evaluated and understood. We have already been in contact with the NCAA regarding trial developments and will continue to work with NCAA staff moving forward.
“Two additional federal trials are set for February and April 2019. Thus, we remain unable to fully comment on the issues before us. By limiting our comments, we are able to protect the integrity of the federal matters and the work of the NCAA.
“While that work continues, we remain fully supportive of our student-athletes, our coaches and our men’s basketball program.”
The KU statement also addressed Kansas’ athletic apparel contract with Adidas, which runs through 2019, and the proposed extension: “While we have made no decision regarding a long-term contract extension with our apparel partner, Adidas, we continue to evaluate our options. There is no timetable for a decision.”
Adidas issued a statement after the verdict that said: “We cooperated fully with the authorities during the course of the investigation and respect the jury’s verdict. We look forward to continuing to work with the NCAA and other stakeholders in a collaborative and constructive manner to improve the environment around college basketball. We have strengthened our internal processes and controls and remain committed to ethical and fair business practices.”
The Star’s Jesse Newell contributed to this report. Follow @AdamZagoria on Twitter.