What is "knowing"?



  • This is perhaps the most important question for Kansas basketball.

    What is knowing?

    1. Is it knowing to have directed the transaction?
    2. Is it knowing to have written verification of the transaction?
    3. Is it know to have verbal verification of the transaction?
    4. Is it knowing to know of other such transactions by your contracted shoe partner?
    5. Is it knowing to know that the transaction is being pursued by your contracted shoe partner?
    6. Is it knowing to know that a prior transaction was completed with another third party?
    7. Is it knowing to know that a former head coach at your university is helping broker a deal?
    8. Is it knowing to know that your school has benefitted from prior transactions with your contracted shoe partner?
    9. Is it knowing to know that one of your players benefitted from a transaction with your contracted shoe partner and within weeks of that revelation you bring a second player on your roster of whom you are aware was positioned similarly?
    10. Is it knowing to know that one of your assistants knows?
    11. Is it knowing to know that one of your former head coach who may have brokered a deal knows?
    12. Is it knowing to know that this stuff happens all the time?
    13. Is it knowing to know that just weeks before the initial indictment, a player that is now at issue committed to your program, but was strongly leaning elsewhere?
    14. Is it knowing to know that another university that had a player strongly leaning elsewhere, received a commitment from that player, and that university was compromised by the initial indictment?
    15. Is it knowing to know that your university did not include any language in the proposed contract with its contracted shoe partner to prohibit the conduct that is of issue with the current indictments?
    16. Is it knowing to know that this stuff takes place, but one would rather not really “know” the details?

    I don’t know. But it’s concerning.




  • Banned

    All of this could change in 9 days depending on new NCAA rules recommended by the commission.

    I definitely find it hard to believe KU would hold out two players in seasons where we were a top 5 team if the compliance department wasn’t doing everything they could to provide “institutional control.”

    As long as the NCAA doesn’t come in and find a bunch of ways our compliance department basically ignored what was happening, I do not see us being penalized. I also think that at this point, the De Sousa’s need to cooperate with the NCAA and figure out what his suspension will be next season. I do not think he will be ruled ineligible, as several other players named in the investigation will be playing next season as well. As long as they are honest with the NCAA, the suspension won’t change even after all of the details come out in October.



  • @Kcmatt7

    Is the compliance department legally located within the university that is a “victim,” or is it in the legally separate 501.c3 athletic department corporation with so far apparently unspecified “victim” status?



  • @jaybate-1-0 If this wasn’t ensnaring Kansas, this would simply be entertainment. The idea that Kansas is a “victim” is just laughable.

    How can you be a victim when you have knowledge of the crime? Or more precisely, the scheme. How would Kansas have no idea of this stuff going on? If Kansas has any real knowledge of this scheme, how are we anything close to a victim?

    It is just senseless that someone is charged with a crime, the ultimate fact at issue being the player would thus be ineligible,with the ineligibility creating the fraud.

    @Kcmatt7 Try this – if DeSousa is not ineligible, where is the fraud? Do you see my point – he has to be ruled ineligible because of the payments or the case falls apart, right? How can there be fraud if the actual fact of it occurring did not result in the player’s ineligibility? Logic says the NCAA has to find him ineligible.

    Interested if anyone disagrees there.

    So DeSousa, per the link above, was 100% Maryland, and the red sea parts? Sure, it can happen. And nothing is for sure. But Kansas simply has no idea how this shift occurred? That concerns me. I work for Adidas. I want DeSousa to endorse my company. I pay him $20,000 so he’ll do that some time in the future. I tell him, look, it’s best for Adidas if you go to Kansas. That helps Adidas.

    I am a criminal?

    Why do I have any duty to the NCAA, Kansas, or the rules of “eligibility?” Why does Adidas have to, under the law, even care? All Adidas wants is to sell their brand.

    You know why? Because the prosecutors can charge whatever they want. They have the freedom to craft a case, and to fit it under a ridiculously broad statute, and to pick and choose who they charge. This is an assault on free enterprise. There is NO VICTIM.

    Further, Adidas entered the arrangement with the player before the player had any tie to the NCAA or the college. There wasn’t even an interference with the contract.

    Now, I pointed out in the questions to start this thread – If Kansas and schools are so concerned, why don’t they have a contract provision prohibiting Adidas from doing what they did?

    Further, why wouldn’t an NCAA coach, that had knowledge of payments to players – you know, the normal cheating – be charged with a crime? He’s defrauding his university, right?

    This is a joke.



  • Of all the top bball programs in the country, and they want to try KU? I expect many more programs to be named. This is just the beginning. My guess is all the other programs have had chances to cover the bases with their “shoe whores.” This reminds me of Shawshank when Red said everyone in prison was innocent. Andy said he had to go to prison to become a crook. This pretty much sums up bball.



  • @HighEliteMajor

    I have maintained from the beginning that the entire case is a reach.

    There is no law that I know that prevents Adidas or any other firm or business interest from paying someone to endorse its product; in fact, they do it all the time.

    Now, if the player accepts payment he becomes ineligible to play college sports and if he plays he likely breaks multiple NCAA rules, this is RULES not laws. The NCAA has no authority to create and /or enforce laws, only the Government can do this. The NCAA has the power to create rules, to which the member schools adhere voluntarily, but they do not have the weight of law and the only consequence is penalties to schools by the NCAA but nobody goes to jail over it. If the schools feel like they have been wronged, then they can seek remedy in Civil Court which can only assign money penalties but no jail terms.

    The only way anyone goes to jail is if the recipient failed to pay taxes on the income in which case and given the money involved, the IRS probably levies a penalty and collects back taxes and maybe even then no one goes to jail, Remember that Al Capone went to jail for tax evasion but his was large scale and premeditated and not the amounts involved in the current deal.



  • I feel better that the feds are conducting this investigation over the NCAA. The NCAA dictates to members and can shift the burden of proof to levels that would never be tolerated outside of being a private organization with voluntary inclusion.

    If the feds find Kansas is involved, they will have solid evidence… like Stumpy’s call at Arizona.


  • Banned

    HighEliteMajor said:

    @Kcmatt7 Try this – if DeSousa is not ineligible, where is the fraud? Do you see my point – he has to be ruled ineligible because of the payments or the case falls apart, right? How can there be fraud if the actual fact of it occurring did not result in the player’s ineligibility? Logic says the NCAA has to find him ineligible.

    I think you are confusing whether or not the NCAA actually even wanted the FBI to get involved at all. The NCAA doesn’t HAVE to do anything they don’t want to do. And, personally, I do not think the NCAA wanted the FBI to become involved at all. So changing rules or precedent to completely ruin the FBI’s case wouldn’t surprise me in the least.

    However, as I’ve stated many times, these men committed fraud through the concealment of payments. Creating fake documents to circumvent rules and make payments is illegal. If the documents said payment to De Sousa’s for future endorsement, I do not believe the FBI would have a case at all.

    I do hope that the case gets thrown out though. That way players can start getting endorsements above board.



  • @JayHawkFanToo

    You are correct that it is not illegal for Adidas to pay individuals to endorse a product.

    However, it is a crime to conceal who payments are being made to, or make a payment to one person in order to ferry that payment to another person. That’s why this is about money laundering and wire/bank fraud. While it is legal to pay people to endorse products, because the source and beneficiary of the payments are intended to be hidden, that’s a violation of banking laws.

    These Adidas payments were being made, and money was being sent with a false purpose. That’s why the feds are involved. I doubt many of the universities actually get caught up in the criminal aspect because the whole criminal aspect is that the payments, the sources, and the beneficiaries were all supposed to be concealed. That’s the crime.

    However, the standard for the criminal part is different than it is for the NCAA. While KU may not have committed a crime, the NCAA could still make other findings that don’t rise to the level of criminal action.


  • Banned

    A question that I would like answered. Did the FBI ask the NCAA if they even WANTED this problem to be fixed? It seems to me that the NCAA is more than ok with this process or they would have instituted a larger and more intense process to make it through the clearinghouse that required documentation of all financial accounts and the subsequent auditing of those accounts by CPAs.

    Operating under the assumption that the NCAA wanted this to happen is a dangerous one. I personally see more reasons for the NCAA to NOT want the FBI investigating these matters.



  • @justanotherfan On one important point, you are incorrect. It is not illegal “to conceal who payments are being made to, or make a payment to one person in order to ferry that payment to another person.”

    The reason you are incorrect is that such activity must be connected to an illegal venture.

    Thus, respectfully, your argument is circular.

    First, money laundering is concealing payments for illegal activities. There has to be a crime. What is the crime? It’s the same one we’ve discussed. The crime is the claimed fraud – the fraud claimed to be perpetrated on the university because the player is (or I guess may be) ineligible. That’s the alleged crime. Otherwise, there is not “money laundering.” You don’t have “money laundering” without a crime. Money laundering is simply concealing a payment (in or out) from one party, and making it look like it came from another. But the activity involved has to be criminal – there has to be concealment of a crime.

    Second, you have stated no “false purpose” – what is the false purpose? You have to have a “false purpose.” And we’re back to square one. The only “false purpose” in the indictment is, allegedly, that the activity of making these payments would make a player ineligible, thus defrauding the university. Am I correct there?

    No fraud, no crime, no money laundering. There is no crime of “money laundering” without another offense. You have to either have another crime.

    You cite “banking laws” – but the indictments refer to specific statutes. Wire fraud, conspiracy to commit wire fraud, as the underlying crimes supporting the money laundering charges. These may be considered banking laws of course, but your vague reference implies something more as I read it. There is nothing more.

    This case rises and falls on the premise I have identified. That is whether actions by the Adidas reps (and assistant coaches) amounted to fraud by actions that might make a player ineligible. That’s it.



  • @justanotherfan said:

    However, it is a crime to conceal who payments are being made to, or make a payment to one person in order to ferry that payment to another person. That’s why this is about money laundering and wire/bank fraud. While it is legal to pay people to endorse products, because the source and beneficiary of the payments are intended to be hidden, that’s a violation of banking laws.

    if Adidas is paying someone to endorse a product or brand be that directly or indirectly, it might be causing the recipient to break a NCAA rule and become ineligible but it is not breaking any law as long as it is properly recorded in its accounting books and the recipient pays taxes on the income. Most companies do not pay endorsers directly, they do it through advertising agencies that act as intermediaries. I have a family friend that was a high end model and endorsed high end cosmetics and the negotiations were never between her and the manufacturer but between the advertising agency hired by the manufacturer to run the campaign and her agent.

    You have no direct information that a private contract does not exist between Adidas and the recipient with a confidentiality clause, right?

    Hiding payments would be illegal if they re done with the purpose of breaking an actual law and not NCAA regulation or to hide income, i.e. money laundering. We know these payments do not break any law and we don’t know if taxes were being evaded.

    These Adidas payments were being made, and money was being sent with a false purpose. That’s why the feds are involved.

    I believe the purpose was very clear, they were designed to steer athletes to certain programs, hide the information from the NCAA to avoid ineligibility and avoid penalties but breaking a NCAA regulation is not a criminal offense. Yes, it might land the parties on probation but no one will go to jail over it. If the schools feel aggrieved the recourse is Civil not Criminal Court.

    I doubt many of the universities actually get caught up in the criminal aspect because the whole criminal aspect is that the payments, the sources, and the beneficiaries were all supposed to be concealed. That’s the crime.

    Hiding information from the NCAA is a violation of its rules and regulations but it is not a crime. It might result in penalties imposed by the NCAA if ineligible player are found to have participated in games or programs are found to have been involved. How many athletes and programs have been found to have violated these rules over the years? Many…programs were placed on probation, financial penalties levied and people lost their jobs and yet no one ever went to jail over them.

    However, the standard for the criminal part is different than it is for the NCAA. While KU may not have committed a crime, the NCAA could still make other findings that don’t rise to the level of criminal action.

    The NCAA has no, zero, zilch, nada authority to find any criminal activity; it can only find violations of its own rules which is not a crime. If they suspect a crime was committed, they would have to refer the case to an agency with the proper authority…the NCAA ain’t it.



  • @HighEliteMajor

    Interesting. Your post must have come as I was typing mine and obviously I did not see it, otherwise I wold have skipped mine since we are both saying pretty much the same thing. :smile:



  • Lots of legal theorists here! I know @justanotherfan is an attorney. I am (make that “was”!), too, but my experience in criminal law was military, although my federal career was in the arena of investment fraud. Both fields involved extensive legal research into fraud related crimes, but I never did anything on the technicalities of money laundering.

    Does anyone opining here have any expertise in the statutes cited in the addidas-related indictment? Are there more lawyers here than I thought?



  • https://www.law.cornell.edu/uscode/text/18/1956

    Here is a link to the statute so anyone can review. You’ll see the requirement of “specified unlawful activity”, then the second clause of each subparagraph relates to the IRS code.

    This is a very interesting topic. But a key, I think, is that the law provides discretion to a prosecutor and sometimes prosecutors venture beyond those lines, and sometimes the inside portion of the lines is highly questionable. A lot of this stuff is “arguable” one way or the other – in this case, whether this is really fraud. The prosecutor has made his case in the filing.



  • @mayjay

    Anyone that owns a business has (or should have) a basic understanding/knowledge of money laundering since many legitimate business expenses, if not properly recorded, can fall under that category. I will have owned my business for 20 years this May and the two accountants i had (the first one retired) made sure I was aware of the basic details. So, while I am not or claim to be an expert I do have a basic understanding of the subject…and I slept at the Holiday Inn Express to boot…:smile:


  • Banned

    @HighEliteMajor I don’t know that you are looking at this with your eyes wide open, or even exploring the possibility that what they did might be a crime. You seem to have already made your decision, without considering a lot of the facts.

    I see this from an accountants perspective, and so I have a few questions for you, and points to make myself.

    • Would, creating fake invoices so that IRS reporting for cash payments larger than $10,000 is avoided, be unlawful? I would say yes.

    • Would, creating invoices in a way so that none of the required personal income tax documents get filed, such as a 1099, be unlawful? I would say yes.

    Because of this, I would say that the money laundering charge is legit.

    These guys are completely screwed regardless of the case against the schools. Adidas is a public company. And every single shareholder was defrauded. That is a case that would absolutely stick, imo.


  • Banned

    Now, I do not think that the NCAA or Universities have much of a leg to stand on to say they were defrauded. At least not in a criminal sense. I can’t see anything there.

    I have found precedent that says what these guys did was criminal. But I do not know that I agree with it.



  • @Kcmatt7 That theorizing is reasonable on the items you suggest … but that is not what is in the indictment. They charged money laundering based on the fraud element and conspiracy to commit fraud, not the second clause of each subsection related to IRS matters.


  • Banned

    @HighEliteMajor I would say that is probably true. But I do find it as good evidence for the prosecutors to use as a way of explaining how they committed fraud and knew what they were doing was unlawful.

    However, I do think precedence has already been set from the Myron Piggie case.

    https://caselaw.findlaw.com/us-8th-circuit/1161058.html

    Which was based off of precedence from a case against Assistant Coaches from Baylor’s Basketball Team:

    https://openjurist.org/96/f3d/769/united-states-v-gray

    That case was based off of this U.S. Code:

    https://www.law.cornell.edu/uscode/text/28/1346

    In the Baylor case, they argued that the code was unconstitutionally vague, and lost.

    Also this code:

    https://www.law.cornell.edu/uscode/text/18/371

    If you notice the use of “honest services” was documented in the FBIs indictment several times. This, to me, means they will most likely be referencing the codes that I linked as well as the cases I linked.

    I find it very unlikely that these men will be able to get out of this the more I read. These codes were put in for dang near these exact type of cases.



  • I found your answer:

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  • Well, I finally had a chance to look at the Gatto indictment more carefully, and I fear that all of you who think it is based purely on payments to families or students, or on alleged violations of NCAA rules, are incorrect. The thrust of the indictment is based on conspiracy to defraud by willfully concealing material information (payments) from the victims (universities) to allow the students to obtain something of value (scholarship) under false pretenses (misrepresenting their eligibility to receive a scholarship). @justanotherfan was correct about it being based on covering up money, but it was not really money laundering as we know that term (but future charges could be brought against the recipients if they did so). Federal jurisdiction lies by virtue of the wire fraud and conspiracy allegations.

    The key here is the same as any other fraud indictment, that being the allegation that the defendants (and others acting with them) purposely acted to conceal material information from the victims (the conspiracy charge alleges they acted in concert to do so). This can be simplified: Gatto and others provided money to families and/or students that, if known to the schools, would have resulted in ineligibility and not getting their promised scholarships. They are allleged specifically to have induced the recipients (1) to conceal the money from the schools and (2) to falsely certify their eligibility to receive the scholarships.

    That is conspiracy and inducement to obtain something of value under false pretenses.

    An analogy here: You all may be familiar with the Stolen Valor scandals–people pretending to be combat veterans, wearing uniforms and medals, and the like. Those people were not commiting crimes despite their public lies, so long as they made no attempt to get anything for it. (I do not address the bar drinks they got.) But let’s say I run a home renovating business. I want customers. So, I give a guy a false DD214 discharge paper, and tell him how he can now register at Lowe’s to get their military discount of 10% based on his fake 214, saving thousands of dollars on his $40,000 remodel, and we agree he will pay me a commission on those savings. We have now entered into a conspiracy to defraud Lowe’s by presenting false information to receive something of value.

    Violating the Defense Department rules on who is a veteran is not an element of the crime. It is sufficient to prove simply his status as a nonveteran and that he concealed that from Lowe’s both when falsely registering and every time he received something for which by his status he was not eligible.

    Similarly, the NCAA’s rules are clear that receiving money from someone to attend a school impacts a player’s eligibility. A player is not eligible to compete until he receives a confirmation of amateur status from the NCAA, in conjunction with information provided to the school and by the school to the NCAA. The actors here worked hard to make sure that the players did not reveal payments in amounts that would made the schools know that the student was not in fact eligible under NCAA rules and rulings. More importantly, the players falsely asserted their eligibilty to get scholarships. Possibilities of appeals and waivers are irrelevant to the status determination. (It is arguable that the feds could have avoided some questions by having the NCAA do its determinations first, but no prosecutor wants to rely on private adjudications with no known timelines.)

    I only address here whether the indictment alleges federal crimes and they do. If any defense is raised about whether a player was automatically not eligible until the NCAA made a determination, the answer is that the universities will no doubt swear up and down that no scholarships would have been given if they knew of the payments. Not “if they knew of NCAA amateur rules being violated.”

    The existence of the payments was what the universities needed to know in deciding whether to grant a scholarship, which is the definition of a material fact. The bad guys acted to conceal that information, and by doing so helped the students obtain scholarships worth @$40,000 or whatever the amounts would be at each school.

    A bigger problem for the indictment is whether the recipients actually have sufficient nexus to the students to render their receipt of money disqualifying. It would be for any parent or guardian (i.e., anyone with financial responsibility to the kid) providing false documents to the school, but if there were any who got money who have nothing to do with a kid’s finances, it seems the Newton rule could extend to that kid’s part of the case. (I don’t think that applies to SDS.)

    I will probably need to edit this later, but I need to go to Lowe’s to get my discount.



  • @mayjay

    Spot on. Excellent example to make it more clear.





  • @mayjay Does this mean they will go after the students and / or parents as part of the fraud?



  • @Hawk8086 I think they don’t need to. Even the ones who allegedly knew what was going on haven’t been indicted yet. They always can have unindicted coconspirators (President Nixon was the most famous) and use the information from them against the main defendants. In the most extreme case, I guess they could indict a parent who was a major participant or who roped others in, but I think that isn’t likely unless they run out of evidence from the guys spilling the beans and documents now.

    One thing I meant to mention earlier is that the indictment refers to “corrupt assistant coaches” at certain schools (not KU, TG). This thread started with exploration of what knowledge of the payments means, in the context of whether KU was victimized by the conspiracy as discussed in my prior post. I don’t think the participation of any assistant coaches creates knowledge of the schools sufficient to defeat the charge of fraud. (Unless the co-conspirator coach was the one making all eligibility determinations, that is. It is no different from a bank teller working with a customer to defraud the bank by cashing a check known to be a forgery–the bank doesn’t become knowledgeable of the forgery when the teller criminally acts without authority. Same for almost all employees–virtually no one who wields lawful power to act in a criminal fashion detrimental to their employer.)



  • @mayjay There is always the dreaded lack of institutional control label/punishment.


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