2-8-18 5:44 AM EST | Email Article
By Rebecca Davis O'Brien 

An undercover agent with the Federal Bureau of Investigation who played a central role in an investigation of alleged corruption in men's college basketball has been accused of misappropriating government money on gambling, food and beverages during the probe, people familiar with the matter said.

The Justice Department launched a criminal investigation last year into the agent's alleged behavior, two of the people said. If he is found culpable, it could compromise his ability to participate as a witness at any trials resulting from the investigation.

A spokeswoman for the FBI's New York office declined to comment. A spokesman for the Manhattan U.S. attorney's office declined to comment.

The corruption allegations last fall had wide-ranging reverberations, including team suspensions of players and the firing of Rick Pitino, the famed head coach at the University of Louisville, after his program was implicated in one of the alleged schemes. Mr. Pitino hasn't been charged, and has denied wrongdoing.

The investigation, which was anchored by a cooperating witness, several undercover FBI agents and wiretaps on least five phone numbers, was aided by a free flow of cash, according to charging documents and people familiar with the investigation.

To create the impression they were investors in a fledgling sports agency looking to reel in players, undercover FBI agents and a cooperating witness took coaches out to fancy dinners, booked elegant hotel rooms, and handed out envelopes of cash, the people said.

Starting in the spring of 2017, the FBI agent now under scrutiny spent months undercover in the investigation, posing as a business partner of the government's lead cooperating witness -- Pittsburgh financial adviser Marty Blazer. On July 29, while on an undercover trip to Las Vegas, the agent met in a hotel room with a group including Mr. Blazer, an aspiring sports agent and an assistant coach at the University of Southern California, according to the criminal complaints.

Within days of that meeting, the agent abruptly appeared to stop working on the undercover operation, some of the people familiar with the investigation said. His absence was explained to the aspiring sports agent as an overseas trip, according to the complaints last fall.

Some of the information about the allegations against the agent was disclosed in letters from the U.S. attorney's office to defense lawyers in the corruption case, along with other materials related to that investigation, according to the people familiar with that case.

The basketball probe came to light in September when authorities arrested four assistant coaches at prominent college basketball programs, along with an Adidas AG executive, a financial adviser and others.

The Manhattan U.S. attorney's office charged the men in three alleged schemes to funnel hundreds of thousands of dollars to college coaches and the families of top high-school recruits. The money was allegedly intended to induce players to attend certain schools and, once they turned pro, sign with specific advisers, agents and apparel companies, prosecutors have said.

Adidas has previously said it was cooperating with the investigation.

Lawyers for the defendants have argued the government is criminalizing NCAA rules violations and that the coaches were trying to help the schools, not defraud them.

"After expending enormous resources," lawyers for defendants in one of the cases wrote in a December motion, "the Government has strained to find any legal theory...in order to transform NCAA rule violations into a conspiracy to commit federal wire fraud."

A judge in that case, in which the Adidas executive is accused of arranging to pay recruits through intermediaries to attend schools with Adidas shoe contracts, will hear arguments next week on whether to dismiss the charges based on defendants' arguments that no one was hurt, and no law was broken.

 

(END) Dow Jones Newswires

February 08, 2018 05:44 ET (10:44 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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