PETITION OF THE UNIVERSITY OF LOUISVILLE

TO

REFER CASE NO. 00843

TO THE INDEPENDENT ACCOUNTABILITY RESOLUTION PROCESS

DECEMBER 15, 2020

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 TABLE OF CONTENTS

Page

INTRODUCTION ....................................................................................................................... 1
BACKGROUND ......................................................................................................................... 1
REASONS WHY THE LOUISVILLE CASE SHOULD BE REFERRED TO THE IARP ............... 3
(1) Bylaw 19.11.3.1.1-(a): Major Policy Issues ................................................................. 3
(2) The Need for Consistency in the Resolution of the Related SDNY Cases .................... 4
(3) Bylaw 19.11.3.1.1-(g): “Increased” Stakes .................................................................. 5
(4) Bylaw 19.11.3.1.1-(e): Scope, Scale and Factual Complexities................................... 6
(5) COI’s Premature Ruling on Disputed Issue and Other Procedural Anomalies .............. 6
CONCLUSION ........................................................................................................................... 7

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 INTRODUCTION

The University of Louisville (“Louisville” or the “University”) respectfully requests that the
Infractions Referral Committee (the “Committee”) refer University of Louisville, Case No. 00843,
to the Independent Accountability Resolution Process (“IARP”). See Bylaw 19.11.3.2.1.

This case, like two others the Committee has previously referred to the IARP, arises out of a
fraudulent scheme by an Adidas executive and two Adidas consultants that was investigated by
the FBI, tried to a federal jury in New York (the “SDNY”), and resulted in three criminal convictions.
The key issue in this case, as in the two previously referred SDNY-related matters,1 is whether
the University is responsible for the fraudsters’ actions because it has a sponsorship agreement
with Adidas. The enforcement staff’s position is that Louisville’s commercial arrangement with
Adidas automatically and categorically renders Adidas-associated individuals representatives of
Louisville’s athletics interests (i.e., “boosters”).

Referring this case to the IARP is in the best interest of the Association, see Bylaw 19.11.3.1,
because the question of whether a member institution is responsible for the actions of its
commercial sponsors – even criminal schemes undertaken without the institution’s knowledge or
participation – is critically important to the Association’s members, the vast majority of which have
similar contractual arrangements with outside businesses, including apparel companies. See
Bylaw 19.11.3.1.1-(a). Additionally, because the IARP will already be addressing this issue in the
NC State and Kansas matters, referring Louisville’s case would ensure a consistent, Association-
wide approach on this crucial issue, and would avoid the fundamental unfairness and institutional
credibility issues presented by potentially inconsistent resolutions.

Referral is warranted for other reasons as well. The stakes involved in this case are unusually
high for the Association, its student-athletes, and for the University. See Bylaw 19.11.3.1.1-(g).
Louisville is facing significant institutional penalties; the high-profile nature of the SDNY cases
has systemic implications for NCAA leadership; and the enforcement staff’s position presents the
possibility that numerous other student-athletes at other NCAA institutions may have become
ineligible as a result of their interactions with apparel companies. Additionally, like the other
SDNY-related matters, this case is factually complex and presents novel interpretive issues. See
Bylaw 19.11.3.1.1-(e). Finally, the University questions whether the Committee on Infractions
(“COI”) can fairly adjudicate this matter because COI appears to have prejudged several key
points and taken other actions that call into question its ability to impartially resolve the case. As
explained in more detail below, referral would further the core NCAA goals of fairness and
integrity.

BACKGROUND

The Adidas scheme. Adidas is an international athletics sportswear corporation that has
commercial sponsorship agreements with several NCAA Division I member institutions, including
the University of Louisville. Beginning in 2015, an Adidas executive and two Adidas consultants
organized a conspiracy to defraud several Division I institutions with which Adidas had
sponsorship arrangements. Their plan was to pay prospective and enrolled student-athletes and
their families in exchange for commitments to attend Adidas-sponsored schools, with the aim of
ensuring that the student-athletes entered sponsorship agreements with Adidas after their
collegiate careers. This scheme was led by James Gatto, head of basketball global sports
marketing for Adidas, and Merl Code and Thomas J. Gassnola (both Adidas consultants). It was

1 North Carolina State University (“NC State”) and the University of Kansas (“Kansas”).

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also aided by Christian Dawkins, a business manager for professional athletes, and Munish Sood,
a financial advisor, who assisted Gatto and Code in directing payments to promising prospective
and enrolled student-athletes with the aim of signing these players as clients when they turned
professional. The scheme depended upon concealing the payments from the affected schools,
including the University of Louisville—a deception that the conspirators accomplished by talking
on burner phones, producing sham invoices to launder payments, and arranging clandestine
meetings to make in-person cash handoffs.

Beginning in 2015, the FBI began investigating the conspiracy, eventually using wiretaps,
undercover agents, an informant, and subpoenas of bank, telephone, email, and business records
from numerous individuals and entities.2 The investigation revealed that none of the University’s
administrators, coaches, or student-athletes were culpable for—or had any knowledge of—the
scheme. It also indicated, among other things, that a prospective student-athlete had enrolled at
Louisville after his father was promised a $100,000 payoff from Adidas, though he actually
received $25,000.

On September 27, 2017, a federal grand jury in the SDNY indicted Code, Gatto, and Dawkins on
two counts of wire fraud and one count of conspiracy to commit wire fraud.3 At trial, the
prosecution’s theory was that the conspirators “defrauded” the University, as well as NC State
and Kansas, by “conceal[ing]” their payments to prospective and enrolled student-athletes and
their families. The jury was eventually instructed that, to find the defendants guilty, it needed to
find that there was a scheme to defraud the institutions and that the schools had no knowledge
of it. The jury convicted Code, Gatto, and Dawkins on all counts.

The enforcement staff and its NOAs. The enforcement staff eventually issued Notices of
Allegations (“NOAs”) against NC State, Kansas, and Louisville arising out of the Adidas scheme.
In their NOAs and written replies, the enforcement staff has asserted that (1) Adidas was a
“booster” of each school that had apparel and equipment sponsorship agreements with Adidas in
place at the time of the offers and payments in question; (2) the institutions knew or should have
known Adidas was promoting their athletics interests and making financial contributions to their
athletics programs; and (3) the institutions were thus responsible for the Adidas scheme, even
though the premise of the federal criminal fraud convictions in the SDNY was that the institutions
were unwitting victims of the conspiracy.4 With respect to the University of Louisville’s NOA,
allegations 1-(a), 1-(b), 3, and 4 are all tied to the $100,000 offer and $25,000 payment to the
prospect’s father that the jury found defrauded Louisville. See Exhibit 1. In its written reply, the
enforcement staff contended that Adidas became the University’s booster because Louisville
knew that Adidas was providing apparel and equipment and making cash payments to the
university under its sponsorship agreement, and therefore knew Adidas was making “financial
contributions” and “promoting” the University’s athletics programs. See Exhibit 2, pp. 8-9.

On September 19, 2019 – after the enforcement staff had issued NOAs to NC State and Kansas,
but before Louisville received its NOA in February 2020 – the COI sent a letter pertaining to all
cases arising out of the criminal trials in the SDNY. The letter stated that some of the cases may
“derive from potentially overlapping or related conduct and actors” and that those cases should

2 A second criminal trial was held in the SDNY in April and May 2019 that involved several of the same conspirators
bribing collegiate men’s basketball coaches to steer enrolled student-athletes to certain agents, sports management
companies, and financial advisors. Louisville, NC State, Kansas, and their coaches were not involved in this second
trial.
3 The government reached plea agreements with Gassnola and Sood and they became cooperating witnesses against

their co-conspirators.
4 The information in this and the next section is based on documents that are publicly available.

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be identified to “ensure that the resolution of one case does not subsequently contradict others.”
See Exhibit 3.

Prior IARP Referrals. On February 14, 2020, the COI asked this Committee to refer the NC
State matter to the IARP. The COI noted that “the circumstances giving rise to the SDNY trials—
which are central to the issues in this case—are the very events that led to the creation of the
[IARP],” which made the case “the very type of case intended to be resolved through” independent
means. See Exhibit 4, p. 1 (emphasis in original). On May 18, 2020, the NCAA issued a press
release announcing that this Committee had referred the case to the IARP. See Exhibit 5.

Likewise, on May 18, 2020, the COI asked the Committee to refer the Kansas matter to the IARP.
Citing its September 19, 2019 letter, the COI’s referral request noted the importance of ensuring
“that resolution of one case does not subsequently contradict others,” see Exhibit 6, p. 2, and
urged “that the SDNY-related cases be grouped and processed to ensure credible and consistent
decision making based on complete information.” See Id., p. 8. The COI also noted that the case
involved high stakes for the institution, because of the prestige of the involved programs and
individuals, and for the NCAA given the gravity of the SDNY trials. See Id., pp. 9-10 citing Bylaw
19.11.3.1.1-(g). On July 1, 2020, the NCAA issued a press release announcing that this
Committee had determined that the Kansas case would enter the IARP. See Exhibit 7.

REASONS WHY THE LOUISVILLE CASE SHOULD BE REFERRED TO THE IARP

Referral of a case to the IARP is proper where “the Association's interests are best served by
resolving the case under the independent accountability resolution structure.” Bylaw 19.11.3.1.
For five primary reasons, referral is the best course for the Association here. First, this case
involves major policy issues that implicate the Association’s core values and commitment to the
Collegiate Model. Second, the same major issues are already before the IARP in the NC State
and Kansas matters, so referral would further the core goals of consistency and fairness and
promote institutional credibility. Third, the stakes of the case for Louisville, NCAA leadership, the
Membership, and current and prospective student-athletes are uncommonly high. Fourth, the
case is factually complex and presents novel interpretive issues. And fifth, the COI and the NCAA
leadership regrettably appear to have prejudged this and the related cases, making independent
review necessary.

(1) Bylaw 19.11.3.1.1-(a): Major Policy Issues

A core issue in this case – whether Adidas was Louisville’s “booster” because of the parties’
commercial sponsorship arrangement – is of central importance to the Association and its
Membership and current and prospective student-athletes. The enforcement staff has asserted
that funds paid and apparel supplied pursuant to a negotiated sponsorship contract are “financial
contribution[s]” to a university athletics department for purposes of NCAA Constitution 6.4.2-(b)
and Bylaw 13.02.15-(b), and that sponsorship agreements necessarily result in promotion of an
institution’s athletics interests for purposes of NCAA Constitution 6.4.1, 6.4.1-(a), and 6.4.2-(e)
and Bylaw 13.02.15-(e). See Exhibit 2, pp. 8-9. The University vigorously disputes both
assertions, and has explained why in its Response to the Notice of Allegations. See Exhibit 8,
pp. 14-21.

If the enforcement staff is correct, then the potential consequences for the Membership are
staggering. Virtually all NCAA Division I member institutions have similar arrangements with
commercial sponsors, including (but by no means limited to) apparel and equipment companies
like Adidas. If all such sponsors are “boosters,” then their counterparty institutions are

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responsible, in one way or another, for a far broader swath of conduct than they ever previously
contemplated.5 That would have wide-ranging consequences for all NCAA Member Institutions
with such contracts. For example: for decades, prospective basketball student-athletes
throughout the country have participated on nonscholastic teams and in leagues, tournaments,
and events that have been certified by the NCAA enforcement staff pursuant to Bylaw 13.18 even
though the teams, games, and events have been sponsored by Adidas, Nike, and Under Armour.
If the enforcement staff’s theory is accepted that sponsoring apparel companies are categorically
“boosters,” all of the many thousands of prospective student-athletes who received expenses for
their participation in these NCAA-certified events would have received impermissible
inducements and lost their eligibility. To take another example: if the apparel companies are
“boosters” because of their commercial sponsorship contracts with NCAA member institutions,
their innumerable contacts and telephone calls with and evaluations of prospective student-
athletes during nonscholastic basketball practices, games, tournaments, and events over the past
several decades would have violated NCAA legislation thousands of times over.6

These potential implications of a ruling in favor of the enforcement staff’s argument are just the
tip of the iceberg. As Louisville asked rhetorically in its NOA response, is the University of
Kentucky responsible for the actions of a rogue Kroger cashier or criminal bag boy because its
football team plays at Kroger Field? See Exhibit 8, p. 19. Under the enforcement staff’s theory,
that possibility is far from remote. Perhaps for that reason, the COI agrees that the Adidas-as-
booster issue is crucially important to the Association; its Kansas referral petition stated that
“whether apparel companies and their executives and consultants are boosters is a critical
question underlying [the Collegiate Model] commitments,” and argued that “[d]eciding this
question for men’s basketball and the NCAA is an area that could benefit from independent
decision making in the IARP.” See Exhibit 6, p. 4. The COI is correct on both counts.

(2) The Need for Consistency in the Resolution of the Related SDNY Cases

Referral is additionally warranted to ensure consistency of approach and decision-making among

the Louisville, NC State, and Kansas cases. All three cases arise out of the same criminal
conspiracy as they involve overlapping witnesses, testimony, and evidence from the SDNY trial.
All three cases present the same core “Adidas-as-booster” issue described above. And they also
share other important aspects, including questions about whether and to what extent a variety of
non-testimonial items related to the SDNY trial (e.g., indictments that are inconsistent with the
evidence at trial) can be used in infractions proceedings. The factual and legal overlap between
the SDNY matters has long been apparent; the COI noted in its September 19, 2019 letter that
the Louisville, NC State, and Kansas cases “derive from potentially overlapping or related conduct
and actors.” See Exhibit 3, p. 1.

5 The enforcement staff has asserted that the Membership has known for years that corporate entities might be
representatives of an institution’s athletics interests. See Exhibit 2, p. 6, fn 6. The COI made a similar argument in
its NC State referral petition. Exhibit 4, pp. 5-6. This elides the actual issue. Like individuals, corporations
unquestionably can become “boosters,” but only if they engage in certain legislatively defined conduct and the institution
knew or should have known of that conduct. The enforcement staff’s current theory is that by definition any sponsorship
agreement fits two of the criteria for being a booster since payments are made and apparel, equipment, or other
products is supplied, with the institution’s knowledge.
6 For example, Code helped run Adidas-sponsored teams that participated in NCAA-certified events for many years at

Nike and then Adidas. As a result, he would have had ongoing communications with prospective student-athletes. The
same would be true for innumerable employees and contractors of all of the apparel companies. Among the many
provisions that this contact would violate under the enforcement staff’s theories are Bylaws 13.01.2, 13.02.4, 13.02.7,
13.02.17, 13.02.19, 13.1.1.1.2, 13.1.2.1, 13.1.2.4, 13.1.3.5.1, 13.1.6.2.2, and 13.1.6.2.2.1.

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The same letter noted that it is important to “ensure that resolution of one case does not
subsequently contradict others.” See Id. And that is plainly correct – treating like facts and like
issues the same promotes institutional credibility and the core NCAA values of fairness and
consistency. The COI made similar points in its NC State and Kansas referral petitions. See
Exhibit 4, p. 3; Exhibit 6, pp. 2, 7-8. For that reason, allowing Louisville’s case to proceed before
the COI would create precisely the risk of contradiction and inconsistency that the COI flagged
more than a year ago. There is every possibility that the COI could sustain the enforcement staff’s
allegations regarding Louisville’s responsibility for the Adidas scheme, and that the IARP could
determine that materially identical sponsorship agreements and materially identical conduct by
Code and Gatto could not be attributed to NC State and Kansas. Timing problems also abound:
for example, if the COI rules on Louisville’s case only to later be “contradicted” on core points by
the IARP, that would raise significant concerns, both among the Membership and otherwise,
about the Collegiate Model. Referring Louisville’s case to the same forum hearing the NC State
and Kansas matters would eliminate these potential conflicts and inconsistencies and promote
the Association’s interests.

(3) Bylaw 19.11.3.1.1-(g): “Increased” Stakes

The stakes involved in this case are “increased” across the board – for Louisville, for the
Association’s leadership, for the Membership, and for current and prospective student-athletes.

The stakes for the institution – including the potential for significant penalties if violations are found
as alleged – are at the highest level. This case is alleged as a Level I–Aggravated case for the
University, which is the most severe violation that the enforcement staff can charge. Should
violations be found as alleged, the penalties will have a significant financial and reputational
impact on the University and involved parties. For example, under the NCAA’s penalty matrix, a
Level I-Aggravated finding can result in up to a five-year postseason ban, the loss of 25% of the
program’s scholarships, 100% of the recruiting visits, and a fine of 5% of the budget for the
University’s men’s basketball program. The stakes are further increased because Louisville is
one of the premier men’s basketball programs in the country, having won multiple national
championships, and is among the very top programs in wins, NCAA tournament appearances,
and NCAA Final Four appearances. Based on similar facts, the COI has previously concluded
that “few cases have so much at stake.” See Exhibit 6, p. 9.

The stakes for the Association as a whole are also high. As the COI also noted in the Kansas
matter, the cases arising out of the SDNY trial have “increased public interest” and “called into
question the health of men’s college basketball and its recruiting landscape.” See Exhibit 6, p.
10. That level of public scrutiny, and the potential impacts on the Collegiate Model, further
counsels in favor of referral to the Independent Resolution Process.

The stakes are also high for the entire Division I Membership, all or nearly all of which have
apparel and equipment sponsorships, and many other types of commercial sponsorships as well.
Those arrangements provide much-needed funding for athletics programs and student-athletes.
Under the enforcement staff’s theory, the Membership would be per se responsible for the acts
of their sponsors (and their sponsors’ employees and consultants), even absent any institutional
or managerial control over or knowledge of those acts. Whether institutions could safely bear or
mitigate that risk, or would have to withdraw from those commercial arrangements (and deal with
the budgetary fallout), would be an open and meaningful question for the Membership.

Finally, the stakes are high for innumerable current and prospective student-athletes who have
received apparel and equipment and expense reimbursements or payments from apparel and

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equipment companies while they were prospects. Each of these actions would presumptively
render current and prospective student-athletes ineligible. The consequences of that widespread
ineligibility would be unimaginable.7

(4) Bylaw 19.11.3.1.1-(e): Scope, Scale and Factual Complexities

Referral is also appropriate because this case is complex in several respects.

The NOA asserts a Level I allegation with five distinct subparts, each of which is alleged to be a
violation, and three Level II violations, one of which has four subparts, against the University. The
alleged violations include impermissible recruiting inducements, impermissible benefits, a breach
of the head coach responsibility legislation, and a failure to monitor. These allegations are based
primarily on the enforcement staff’s interpretation of evidence, pleadings, and statements made
by counsel during the SDNY trial. The record in this case includes thousands of pages of both
trial testimony and interview transcripts and numerous documents including spreadsheets with
tens of thousands of data points. The NOA cites 197 separate transcripts and documents as
“factual information.” The overall case record includes nearly 165,000 files. As the COI noted in
its referral petitions in the NC State and Kansas matters, the SDNY cases are the very type of
complex cases for which the IARP was created. See Exhibit 4, p. 1; Exhibit 6, p. 1.

In addition to the scope and scale of the case, the application of certain NCAA bylaws, some of
which are new [e.g., Bylaws 19.7.8.3.1 and 19.11.5.8.3.1 (Importation of Facts)], raises
complications that could impact the resolution of this case. For example, the NCAA enforcement
staff cites the SDNY criminal complaint and superseding indictment several times in its Reply.
See Exhibit 2, pp. 2, 12, 13. The Reply then asserts that there is no issue about applying the
relevant bylaws to import those “facts” because the staff has “simply imported facts and evidence
admitted into the [federal court] proceeding.” See Exhibit 2, p. 19. The criminal complaint and
superseding indictment are, of course, merely pleadings by parties who are not involved in this
infractions matter and which were never admitted into evidence at the trial; whether statements
contained in such documents are proper “evidence” for present purposes is a complex and novel
issue that deserves independent consideration.

(5) COI’s Premature Ruling on Disputed Issue and Other Procedural Anomalies

Referral to an independent process is also appropriate because the COI appears to have
prejudged several of the key issues discussed above.

First, in its NC State referral petition, the COI tipped its hand about the “Adidas-as-booster” issue.
Specifically, the COI’s petition criticized NC State for challenging “the enforcement staff’s
classification of [A]didas and Gassnola as boosters,” which the COI claimed was “based on
longstanding interpretive guidance relied upon by the NCAA membership.” See Exhibit 4, p. 6,
fn 6. The COI did not identify any such “longstanding interpretive guidance.” Worse still, read in
context, the COI’s criticism of NC State effectively adopted the enforcement staff’s position, and
rendered a premature ruling on this key issue. The result is that Louisville is left with serious
doubt that it will receive a fair hearing on this central point.

Second, in its NC State and Kansas referral petitions, the COI discussed at length its interpretation
of how the new importation of facts legislation (Bylaws 19.7.8.3.1 and 19.11.5.8.3.1) should apply

7 Even if institutions withdrew from their sponsorships, the NCAA presumably would take the position that the institutions
remain responsible indefinitely for the unknown and unwanted acts of their former sponsors. See Bylaw 13.05.15.1.

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to evidence, legal arguments by counsel, opening and closing statements, sentencing
submissions, and plea agreements in the SDNY proceedings. See Exhibit 4, pp. 4-6; Exhibit 6,
pp. 5-6. This, too, was improper. The COI effectively resolved the meaning and effect of the new
bylaw to novel circumstances without ever selecting a hearing panel, much less conducting a
hearing. Louisville, like NC State and Kansas, has challenged the applicability of the new bylaw
to a number of items upon which the enforcement staff is relying, but the COI has signaled this
challenge will fall on deaf ears.

Third, even prior to the issues identified above, there were procedural anomalies in this case.

• On May 22, 2019, well before the enforcement staff’s investigation had been completed,
the NCAA vice president of governance informed an ESPN reporter following a meeting
of the Knight Commission on Intercollegiate Athletics (the “Knight Commission”) that
Notices of Allegations “will be coming.” See Exhibit 9. This was disconcerting on several
levels. It is unclear what basis any NCAA executive had to share details about open SDNY
infractions investigations with the Knight Commission. More worrisome, the current COI
chair designee who oversees the Louisville case is a sitting member of the Knight
Commission and co-chaired the meeting. See Exhibit 9.

• On June 12, 2019 – again well before the Louisville investigation or any of the other
investigations had been completed – the NCAA vice president for regulatory affairs
informed CBS Sports that high-profile programs would receive Notices of Allegations in
early July and was quoted as stating, “The main thing is that we’re up and ready. We’re
moving forward and you’ll see consequences.” See Exhibit 10. These statements by
high-ranking NCAA officers prejudging the case are troublesome since the Louisville and
other investigations were ongoing and key interviews had yet to be conducted.

• The COI chair designee has also issued several directives related to all SDNY infractions
cases that called into question the COI’s objectivity and willingness to adhere to the
governing legislation.8

Taken together, these developments raise serious concerns that the COI can fairly adjudicate the
University’s case and further support referral. Cf. Bylaw 19.11.3.1.1-(d) (noting that “[a]ctual or
perceived misconduct by the involved parties” may be pertinent to the Committee’s referral
decision).

CONCLUSION

For the foregoing reasons, the University respectfully requests that the Committee refer this
matter to the IARP.9

8 The COI appears to have acted outside of its legislated authority in several instances in this case. The COI is
authorized by the Membership to perform two primary functions–find facts and conclude whether those facts constitute
one or more violations of NCAA bylaws. See Bylaw 19.3.6-(a) and 19.3.6-(b). The COI is not empowered by the
Membership to direct the enforcement staff’s investigations, mandate how and when an NOA should be issued, or
suggest what should or should not be included in any potential NOA. See Bylaw 19.3.6. The chair designee’s letter
that stayed this case informed the enforcement staff how it should present evidence in “SDNY cases” so the COI could
“best position” those cases for resolution; that letter also purported to direct parties to stipulate to certain facts. See
Exhibit 3. These directives were outside of the scope of the COI’s legislated authority, and not appropriate. See Bylaw
19.3.6.
9 In requesting referral to the IARP, the University does not waive any right it has to challenge the outcome of this

infractions matter in the appropriate forum.

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 EXHIBITS

Ex. 1 Enforcement Staff NOA to Louisville

Ex. 2 Enforcement Staff Written Reply

Ex. 3 September 19, 2019, Cartwright Letter regarding SDNY Cases

Ex. 4 February 14, 2020, COI Petition regarding NC State

Ex. 5 May 18, 2020, Press Release regarding NC State Referral to IARP

Ex. 6 May 18, 2020, COI Petition regarding KU

Ex. 7 July 1, 2020, Press Release regarding KU Referral to IARP

Ex. 8 Louisville Response to NOA

Ex. 9 May 22, 2019, ESPN Article regarding SDNY Cases & Knight Commission

Ex. 10 June 12, 2019, CBS Sports Article regarding High Profile Programs/NOAs

EX
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