Originally published April 8, 2019 at 09:04p.m., updated April 8, 2019 at 09:31p.m.
A former Adidas executive has agreed to pay the University of Kansas restitution as part of a federal fraud case involving college basketball recruiting.
ESPN reported Monday evening that James Gatto has agreed to pay $342,437.75 in restitution to KU and North Carolina State for his role in illegally paying college basketball recruits to attend their schools. The schools were listed as victims in the case because the illegal payments ultimately caused the schools to spend scholarship money on players who were never eligible to play. The schools also could end up facing sanctions from the NCAA for playing players who were ineligible.
The exact amount KU will receive as part of the restitution is unclear in the NCAA report. It will be at least $161,000, which will cover some of the university’s legal fees in the matter. The ESPN article also said the schools would be reimbursed for the cost of scholarships. KU previously has said it paid $112,731 in athletic scholarships and financial aid to Billy Preston and Silvio De Sousa, who were at the center of the pay-for-play allegations.
The restitution amount is far below the $1.1 million that KU had requested. The Journal-World reported last month that a lawyer for KU filed a letter with the court seeking restitution from Gatto and Christian Dawkins and Merl Code, who also were convicted in the fraud case in October.
“The damage done by Mr. Gatto's and his co-conspirators’ greed cannot be overstated,” Sullivan wrote in the letter. “Their actions have impaired the University of Kansas’ ability to continue to fully use those resources for both the benefit and welfare of its student athletes, as well as for its ongoing mission of educational and community development and enrichment.”
It was unclear whether KU has agreed to the lesser amount that has been offered by Gatto for restitution. Jim Marchiony, a spokesman for Kansas Athletics, said Monday evening he was unsure of that detail. He declined to comment further on the matter.
Gatto, Dawkins and Code were convicted by a jury in October and were sentenced in March. Gatto was sentenced to nine months in prison while Code and Dawkins were sentenced to six months.
Both Gatto and Code were closely tied to KU, through Adidas, which has a multimillion-dollar sponsorship agreement with KU. Federal prosecutors never tried to prove at trial that KU coaches were aware of the pay-for-play scheme that Gatto and Code were conducting to get recruits to come to KU.
During the trial, testimony focused on KU coach Bill Self’s relationship with government witness T.J. Gassnola. The former Adidas consultant testified that he paid the families of players to steer them to KU, including $90,000 to the mother of Preston and $2,500 to the guardian of De Sousa. Gassnola testified that he never told Self about the payments. Gassnola is awaiting sentencing in a separate but related federal case.
The defense in the case argued that the coaches, including Self and KU assistant coach Kurtis Townsend, were aware of the payments to players. Despite the argument, the jury found all three men guilty of defrauding universities, including KU, by providing money to players’ families to steer them toward certain programs.
De Sousa has since been suspended by the NCAA for two seasons. KU has filed an appeal with the NCAA seeking to have that suspension lifted or reduced.
Meanwhile, NCAA officials said they are “aggressively” attempting to get the federal court to release evidence in the pay-for-play scheme to NCAA investigators, who could then use the evidence as they consider whether penalties should be levied against the schools.
Among the testimony presented at trial was a series of text messages between Self, Gatto and Gassnola that has raised questions about what Self and the KU coaching staff knew about the efforts of Gatto and Gassnola to aid KU in recruiting players. Aid from a third party in recruiting matters often can be a violation of NCAA rules that could subject a school to penalties.
The court has not yet ruled on the NCAA’s request to release the evidence.
KU did spend significant amounts of money responding to the federal case. According to the letter filed with the court, KU paid:
•$346,393 for legal fees in response to the NCAA investigating De Sousa and Preston.
•$308,472 in fees to cooperate with the federal investigation of the Gatto, Code and Dawkins crimes.
•$289,886 for professional service fees the university incurred to respond to federal subpoenas related to the men’s crimes.
• $78,942 for fees the university incurred to prepare Jeff Smith, KU Athletics senior director of compliance, as a witness to testify and to have an attorney present during the trial.