Adidas Responds to New Indictment in Ongoing College Basketball Payment Scandal

The college basketball season is over, but the FBI’s investigation into the sport’s student-athlete payment scandal is still going, continuing to cause unrest. And now, more Adidas-backed schools are in the crosshairs.

Louisville and Miami have been named in named in past documents, and were also named in the one filed in New York federal court on Tuesday. But Kansas and North Carolina State are newly implicated schools.

According to the indictment, prosecutors said Jim Gatto, a former Adidas exec, and others, were involved in getting roughly $40,000 in 2015 to the father of a top high school recruit to play for North Carolina State. After committing to the school in fall ’16, when concerns of the player choosing another school surfaced, Gatto arranged to make a payment to keep the player committed to North Carolina State.

According to a New York Times report, prosecutors said the North Carolina State player matches the description of NBA star Dennis Smith Jr. (Smith, however, was not named in the indictment.)

Dallas Mavericks Dennis Smith Jr. Under Armour sneakers
Dallas Mavericks rookie Dennis Smith Jr. in Under Armour sneakers at the team’s media day.
CREDIT: Rex Shutterstock

The indictment also stated Gatto and others made payments reaching roughly $90,000 to the mother of a Kansas commit. According to a New York Times report, sources identified the player as Billy Preston, who did not play for Kansas, instead opting to play professional basketball in Bosnia.

Also in the indictment, Gatto and others were named in making payments to the legal guardian of another Kansas player to play for the school after originally committing to play for different school backed by another athletic brand. In the indictment, although the amount of the initial payment was not declared, a call made on Sept. 11, 2017, involving Gatto mentioned “another $20,000” payment to the guardian needed to be made to get the student-athlete “out from under” the agreement to play for the other school backed by a different brand.

The New York Times report, prosecutors said the player’s description matches Silvio De Sousa, who plays for Kansas. The report stated De Sousa considered attending Under Armour-sponsored Maryland prior to committing to Kansas.

Adidas responded to today’s news via email. In a statement emailed to FN, the brand said: “Adidas is committed to ethical and fair business practices and to full compliance with applicable laws, rules and regulations. We have cooperated fully with the authorities in the course of their investigation and will continue to do so as this case proceeds.”

While news keeps breaking in the ongoing scandal, industry insiders question whether this will have any impact on the athletic brands involved.

“So far, the public hasn’t shown that it cares, in terms of taking business from a brand,” Matt Powell, senior industry adviser for sports with The NPD Group Inc., told FN in March. “When the scandal broke, I was watching it very closely, and it seemed as if Adidas sales got better right after.”

Famed sports marketing executive Sonny Vaccaro added, “It’s business as usual tomorrow. People don’t care.”

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