James Gatto, director of global sports marketing for basketball at adidas, as well as managers, financial advisers, and representatives at adidas have been arrested by the FBI, according to Business Insider.
Gatto and four other defendants have been charged with “making and concealing bribe payments” to high school student athletes and/or their families. The arrests have sent adidas stock into a downward spiral.
Also arrested for federal bribery, fraud, and corruption charges were coaches Anthony Bland, associate head coach at the University of Southern California; Chuck Connors Person, associate head coach at Auburn University; Lamont Evans, associate head coach and recruiting coordinator for Oklahoma State University’s basketball team; and Emmanuel Richardson, an assistant coach for University of Arizona, according to Business Insider.
The investigation, led by the FBI and the US Attorney’s office for the Southern District of New York, has been active since 2015. Three separate complaints have been filed.
In one, Gatto and the other defendants reportedly funneled $100,000 to the family of a high school basketball player in an effort to convince the player to sign with a “public research university” in Kentucky. While the complaint doesn’t name the university, it is likely the University of Louisville, which signed a $160 million sponsorship deal with adidas in August.
According to Business Insider, Gatto and other defendants allegedly agreed to make payments of up to $150,000 from adidas to convince a player to join another team sponsored by adidas. Although the university is not named in the filing, it is likely the University of Miami, which signed a 12-year partnership with adidas in 2015.
adidas said it was unaware of Gatto’s activities. “Today, we became aware that federal investigators arrested an Adidas employee,” an Adidas spokesperson said in an email to Business Insider. “We are learning more about the situation. We’re unaware of any misconduct and will fully cooperate with authorities to understand more.”
Gatto and other defendants used apparent payments to nonprofits as a way to conceal the bribes paid to players and their families.
Other defendants include Jonathan Brad Augustine, president of nonprofit The League Initiative; Merl Code, the head of Nike’s Elite Youth Basketball League as of 2013; and Christian Dawkins, a former sports agent who was reportedly fired in May for charging $42,000 in Uber rides on an NBA player’s credit card.
The United States Attorney’s office is scheduled to discuss the charges of the ten people arrested at a news conference at noon, according to The New York Times.