Former Clemson University men’s basketball player Merl Code Jr., a Greenville native, was arrested and charged in connection with the scheme to funnel six-figure payments to at least three high school recruits or families in return for directing them to certain universities and to sign with an agent and financial adviser who were also charged in the investigation, according to Joon H. Kim, Acting United States Attorney for the Southern District of New York and Joe Galbraith, Clemson’s Assistant Athletic Director for Communications.
Galbraith said Code is not affiliated with Clemson currently and Clemson is not involved in the investigation.
"Clemson athletics is aware of media reports concerning an investigation and arrests announced by the United States Attorney’s Office related to NCAA basketball," Galbraith said in a statement Tuesday afternoon.
"Included in those reported to be arrested was Merl Code, a Clemson basketball letter winner from 1993-97. While Mr. Code has attended Clemson games in the past as do many of our alumni, we have not been informed of and are not aware of any connection between our men’s basketball program and this investigation."
Lamont Evans, a former assistant coach under Frank Martin at the University of South Carolina, was also charged in the scheme. Evans is currently an assistant at Oklahoma State University.
Kim announced the charges at a press conference in New York at noon on Tuesday and said the defendants had been arrested in multiple locations across the country on Tuesday morning.
In all, four assistant coaches from prominent NCAA Division 1 programs, and six others have been charged. Coaches arrested in addition to Evans are Auburn assistant Chuck Person, Southern California assistant Tony Bland and Arizona assistant Emanuel Richardson, according to the FBI complaint.
Code has been charged with wire fraud conspiracy, wire fraud and money laundering conspiracy, as have James Gatto, director of global sports marketing at Adidas, Dawkins, Sood and Jonathan Brad Augustine, president of The League Initiative and program director of the Adidas-sponsored 1 Family AAU program.
Code is a Southside High School graduate and was a standout point guard at Clemson from 1993-1997. Until recently he was the director of Nike’s elite youth basketball program, according to the complaint. Kim called him a “business affiliate” of another major sportswear company that Gatto also worked for, known to be Adidas.
The complaint says Code worked for Adidas college and high school basketball programs and “participated in organizing some of the payments” to players and their families from Adidas - called Company 1 in the complaint.
The complaint says Code and Gatto “conspired with coaches for universities sponsored by the company to make payments to high school basketball players and/or their families in exchange for commitments by those players to attend and play for the company-sponsored university and to sign with the company upon turning professional.”
In a statement to multiple outlets Tuesday, Adidas addressed questions about Gatto, a high-level employee at the company.
“Today, we became aware that federal investigators arrested an Adidas employee,” the company said. “We are learning more about the situation. We’re unaware of any misconduct and will fully cooperate with authorities to understand more.”
Adidas did not respond Tuesday to a request for comment about Code.
The complaint charged Code, Gatto, Dawkins and Sood with funneling six-figure payments to recruits at the University of Louisville and University of Miami.
In one recorded call about a recruit who committed to Louisville, Code said his "group" had been paid money from Adidas "off the books" but he had complications when he tried to funnel $100,000 to a player's father through Adidas because he didn't have a vendor number for his consulting company, according to the complaint.
In a later call, on July 24, 2017, Code said the payment was being handled by Gatto for Adidas to "an outside organization affiliated with Code" and was putting it on Adidas' books as a "payment to my team, to my organization, so it's on the books, but it's not on the books for what it's actually for."
The complaint says Code and Gatto funneled money from Adidas to the family of a high school player in exchange for the player’s commitment to play basketball at a university sponsored by Adidas, and to retain Dawkins and Sood as representatives and sign with Adidas when he turned professional.
In a second instance involving a 2018 high school recruit and the University of Miami, the complaint says Code and Gatto agreed to pay as much as $150,000 from Adidas to another recruit in exchange for signing with an Adidas-sponsored university and agreeing to sign with Dawkins as an agent when turning pro.
The complaint said the actions defrauded the universities as well, because it would render them ineligible for participation in Division 1 basketball.
“The picture of college basketball painted by the charges is not a pretty one,” Kim said at the news conference. “Coaches at some of the nation’s top programs taking cash bribes, managers and advisers circling blue-chip prospects like coyotes, and employees of a global sportswear company funneling cash to families of high school recruits.
“For the 10 charged men, the madness of college basketball went well beyond the Big Dance in March,” Kim said. “Month after month, the defendants exploited the hoop dreams of student-athletes around the country, allegedly treating them as little more than opportunities to enrich themselves through bribery and fraud schemes.”
Nathanial Cary, The Greenville News