University of Kansas

KU requests more than $1 million in restitution from convicted Adidas exec Jim Gatto

The University of Kansas is seeking more than $1 million in restitution from former Adidas executive Jim Gatto, claiming the school has suffered financial harm as a “victim of Mr. Gatto’s and his co-conspirators crimes” involving payments to basketball recruits.

Gatto, along with former Adidas consultant Merl Code and former sports agent Christian Dawkins, were found guilty on all seven federal counts of wire fraud and conspiracy to commit wire fraud on Oct. 24, 2018. However, Gatto was the only defendant charged in connection with KU; 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.

Preston never played for KU while his eligibility was investigated. De Sousa has been ruled ineligible by the NCAA for the next two seasons. KU is planning to appeal the NCAA’s ruling on De Sousa.

William Sullivan Jr., an attorney for KU, submitted the restitution request in a victim impact statement to U.S. District Judge Lewis Kaplan dated Feb. 22. KU is seeking damages for a number of items, including:

• $112,731.52 for the athletic scholarship and financial aid KU paid for Preston and De Sousa made under false pretenses

• $289,886 for fees related to responding to the U.S. Justice Department subpoenas sent to the school

• $78,942 for preparing KU senior director of compliance Jeff Smith in his role as a witness at the federal trial, and also for the school having outside counsel present during select portions of the three-week proceedings in New York

• $308,472 for investigating Gatto’s misconduct as it related to KU

• $346,393 for legal fees incurred by outside counsel to respond to the NCAA’s investigation of Preston and De Sousa

In total, KU is seeking an award of $1,136,424.52. Louisville and North Carolina State — also involved with the federal trial — are asking for smaller amounts in restitution; Louisville requested $31,922.75, while N.C. State asked for $258,585.

As part of the victim impact statement, Sullivan said KU should receive compensation from Gatto and his co-conspirators “so that actions can be taken to repair the damage that they have done to the collegiate basketball community, in general, and to the University of Kansas, in particular.”

Sullivan also indicated the $1,136,424.52 total did not include “numerous hours spent by the University of Kansas’ in-house counsel and staff” needed to prepare for the federal trial and NCAA investigation of Preston and De Sousa.

“The damage done by Mr. Gatto’s and his co-conspirators’ greed cannot be overstated,” Sullivan wrote. “Their actions impaired the University of Kansas’ ability to continue to fully use those resources for both the benefit and welfare for its student-athletes, as well as for its ongoing mission of educational and community development and enrichment.”

On Feb. 12, Gatto’s attorneys argued for leniency, saying their client should serve no prison time.

Gatto’s sentencing memorandum said KU coach Bill Self and assistant coach Kurtis Townsend “actually expected Mr. Gassnola to violate NCAA recruiting rules in order to help recruit players, just as Nike does for the teams it sponsors.”

It also said that De Sousa’s scholarship in the 2017-18 academic year was worth $20,539, a year in which KU won its record-setting 14th consecutive Big 12 title and advanced to the Final Four, “an achievement directly traceable to four points scored by De Sousa in the Elite Eight” because KU defeated Duke by four points in that game. KU basketball made $18.8 million in revenue that season, according to Gatto’s sentencing memo.

Yahoo! Sports reported earlier this week that the NCAA is considering its legal options as it relates to obtaining more information gathered for the October trial into college basketball corruption. That could include up to 4,000 wiretapped phone calls that have been sealed since the trial’s completion.

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Steve Vockrodt is an award-winning investigative journalist who has reported in Kansas City since 2005. Areas of reporting interest include business, politics, justice issues and breaking news investigations. Vockrodt grew up in Denver and studied journalism at the University of Kansas.
Jesse Newell — he’s won an EPPY for best sports blog and previously has been named top beat writer in his circulation by AP’s Sports Editors — has covered KU sports since 2008. His interest in sports analytics comes from his math teacher father, who handed out rulers to Trick-or-Treaters each year.