NEW YORK – To argue that Adidas executive Jim Gatto didn’t pose a flight risk and ask for the judge to waive a $100,000 bond payment, lawyer Michael S. Schachter meticulously detailed the “outpouring of support” for his client in federal court here on Thursday afternoon. Gatto’s parents, brother and sister were among the crew of nearly a dozen Gatto supporters in the gallery. (Veteran New York City basketball recruiting analyst Tom Konchalski provided a boldfaced basketball name.)
Schachter mentioned Gatto’s “meaningful mortgage” on his suburban Oregon home, two teenage children and wife who moonlights as a sales assistant at Ann Taylor to supplement Gatto’s $139,000 annual salary. Schachter even mentioned Gatto’s dog, a white lab fittingly named “Coach.”
Assistant United States Attorney Edward B. Diskant flopped at his attempt to counter the argument, with the court chuckling at his rationale of Gatto presenting a flight risk because, essentially, he has no criminal history to show he’s not. Judge Katharine Parker ruled that Gatto should be released on his own recognizance, waiving the bond.
In the big picture, with lives and prison sentences hanging in the balance, the judge’s determination was a relatively meaningless ruling in the federal case into the underbelly of college basketball that’s resulted in the arrest of 10 men. But Schachter’s personal plea underscores the human dilemma that will ultimately determine the shape and scope of the case: Does Jim Gatto risk giving up that picket-fence life his lawyer described? Does he choose to protect college basketball programs and coaches, or give up information to assure he can continue petting Coach?
Gatto’s two decades with Adidas gave him entrée to programs like Kansas, UCLA, North Carolina State, Mississippi State, Texas A&M and Louisville. (UCLA just began a deal with Under Armour this season, but was a stalwart Adidas client from 1999 through 2016). He’s also, through Adidas grassroots basketball, been privy to a recruiting world that federal wiretaps exposed as a cesspool of cash deals, bribes and backroom maneuvering.
Whether more big names, programs and apparel companies end up in legal or NCAA limbo likely hinges on whether defendants like Gatto engage in what former U.S. Attorney Stephen L. Hill calls the “race to the courthouse.” It’s an informal legal term that describes the defendants giving the feds information that can further their case. Arriving both quickly and with relevant information can lead to significant sentence reduction.
“You’re sitting there and wondering if the other people involved in the alleged conspiracy are going to cooperate before you do,” said Hill, who is now a partner at the Kansas City branch of the global law firm Dentons. “Because if you’re behind others, the value of the information you’re going to provide is not as meaningful.”
Gatto, 47, faces charges that include two counts of wire fraud, one count of wire fraud conspiracy and one count of money laundering conspiracy in an attempt to allegedly help orchestrate a six-figure deal to land Louisville a top recruit. He faces a maximum of 80 years in prison, although the sentencing reality won’t be close to that amount.
The day in court marked the final two initial appearances of the 10 defendants in the federal probe into the underbelly of college basketball. Former Oklahoma State assistant coach Lamont Evans was released on $100,000 bond, his attorney declining to attempt to get the bond waived.
While the sport is on trial in many senses, the legal reality for the future of college basketball is that it will likely not see an actual trial. According to federal data, nearly 97 percent of federal cases end in plea bargains. That makes a dramatic courtroom trial less likely than a No. 15 seed beating a No. 2 in the NCAA tournament.
The truth in this case will likely get extracted behind the scenes over the next few weeks and months, information that will potentially determine where the FBI shows up next. The fresh-faced federal prosecutors and lawyers for the 10 defendants are expected to engage – or have already engaged – in the behind-the-scenes tango of obtaining information.
How does the tap dance work? It’s not nearly as simple as terse terms like “flipping” or “singing” would suggest. Hill predicts the back-and-forth between prosecutors and defense attorneys going this way: “It’s often open-ended, like ‘You know what we’re interested in. What does your client have that’s helpful to us?’ ” Hill adds: “Those conversations have either gone on or are presently going on right now.”
The FBI and United States Attorney’s Office, in their elaborate press conference on Sept. 26, stressed that this investigation is still an open one. That means information can turn into immunity, reduced sentences and, perhaps, more trouble for marquee names in a scandal that’s already cost one Hall of Fame coach, Rick Pitino, his job. Signal flares of the scope of the case have begun appearing on the sport’s landscape. They include reports of the FBI investigating both Nike’s grassroots division and prominent NBA agent Andy Miller. Oklahoma State received a grand jury subpoena for “actual or potential NCAA rules violations,” one that potentially landed on a handful of other campuses. And a report from the Daily Kansan on Wednesday night revealed that FBI information related to investigating Kansas and Adidas can’t be turned over because it “is located in an investigative file which is exempt from disclosure.”
It’s safe to consider this entire investigation the opposite of the old joke about NCAA justice – “The NCAA was so mad at Kentucky they put Cleveland State on probation.” The U.S. Attorney’s Office of the Southern District of New York, one noted for its ambition and appreciation of attention, clearly hasn’t engaged in this elaborate of an investigation to uncover corruption in the Horizon League. “It’s human nature that prosecutors and investigators want to go after people who are significant and famous,” said Edward McDonald, a former federal prosecutor who is now an attorney with Dechert LLP in New York.
The underlying tension in cooperation will be how strong the defense attorneys believe the government’s case is. McDonald said there are “some novel legal theories” evoked by the feds that led to the complaints and arrests.
But taking the case to trial marks a risk of significantly longer jail terms.
That’s potentially months or years of someone like Gatto being away from his wife, teenage children and white lab. To what extent will he cooperate? Schachter, who is from Willkie, Farr and Gallagher LLP, declined comment leaving the Daniel Patrick Moynihan Courthouse on Thursday afternoon. Gatto walked out of the courthouse with two photographers snapping his picture, their presence disorienting enough that he walked in the wrong direction.
As he scurried away, attention in the case will veer toward information extraction. And a giant question looms over college basketball: Could the race to the courthouse end up altering the road to the Final Four?
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