Nike consultant testifies players were paid; shoe company lawyer doesn’t deny it
Nike continues to be linked to the dark underbelly of college basketball recruiting at the trial of attorney Michael AvenattI.
Monday, the fourth day of the trial, a business consultant testified that the Swoosh directed payments to the families and handlers of high school basketball players, and a Nike attorney did not deny the company had made payments to players.
“I’ve never told the government there was no evidence of Nike making payments to players,” Nike attorney Scott Wilson testified Monday.
Wilson had testified on Friday that there is still an “ongoing investigation” of Nike by the Securities and Exchange Commission and that Nike’s internal investigation of corrupt payments to grassroots basketball players was still ongoing.
After Wilson concluded his testimony, consultant Jeff Auerbach of the Los Angeles-based firm Bedford Consulting testified that Nike directed Gary Franklin, the longtime director of the Nike-sponsored Cal Supreme AAU basketball program, to make payments to the families and handlers of Deandre Ayton, Bol Bol and Brandon McCoy, including a $10,000 cash payment to Ayton’s mother Andrea on June 29, 2016.
“Gary had been directed to make cash payments to several players’ families,” Auerbach, Franklin’s friend and advisor, testified.
Auerbach testified that Franklin was also directed to falsify records and “redirect” wire payments and forward them to players’ handlers.
Auerbach specifically identified payments of $10,000 made in 2016 to Andrea Ayton while her son was still in high school and a high-profile player on Cal Supreme. Ayton later enrolled at Hillcrest Prep in Arizona and was a one-and-done player at Arizona under coach Sean Miller, who was an assistant at N.C. State from 1996-2001. The No. 1 pick in the 2018 NBA draft, Ayton now plays for the Phoenix Suns.
Bol went to Findlay Prep in Nevada before playing at Oregon for one year for coach Dana Altman. He was taken in the second round of the 2019 NBA draft by the Miami Heat. McCoy played for UNLV for one season for coach Marvin Menzies before heading to the 2018 NBA draft. He was not drafted and now plays in the G League.
Arizona, Oregon and UNLV are all schools whose athletic programs have contracts with Nike.
Falsified Nike invoice shows payment to handlers, families
On Monday afternoon, Avenatti’s defense team presented a falsified invoice to Nike EYBL (Elite Youth Basketball League) from Cal Supreme dated June 20, 2016. It details payments to the handlers and family members of Ayton and McCoy.
This is how the payments broke down, according to the falsified invoice:
▪ 1. a $28,000 bank wire payment to Melvin McDonald, Deandre Ayton’s handler on 4/4/16
▪ 2. a) $30,000 to McDonald
b) $15,000 to AAU coach Shaun Manning, Brandon McCoy’s handler
c) $10,000 to Andrea Ayton
d) $5,000 for travel expenses related to Ayton’s family
▪ 3. $10,000 cash to Andrea Ayton on 6/29/16
▪ 4. $10,000 check to Shaun Manning, McCoy’s handler on 7/1/16
▪ 5. $2,500 cash to Manning on 7/8/16
▪ 6. $5,000 paíd with Cal Supreme credit cards for Ayton-related travel
Paying players in high school or college is not consistent with the NCAA’s amateurism rules and can result in penalties by the NCAA, including missing games or, in some cases, being declared ineligible for college basketball. (The 7-foot Ayton never missed any time in college as a result of these allegations.)
Documents were shown to the jury detailing $10,000 worth of withdrawals from Cal Supreme’s bank account “that Gary then paid to Andrea Ayton,” Auerbach testified.
Asked by the government if there was ever any explanation given as to what the payments were for, Auerbach testified, “No.”
Nike’s sponsorship of Cal Supreme and ‘corporate bullying’
Auerbach testified that Nike employees Carlton DeBose and Jamal James directed Franklin on Nike’s behalf to make the payments, falsify records and redirect wire payments. He testified that Franklin had enjoyed a successful 15-year relationship with Nike that included an annual sponsorship of Cal Supreme that was officially worth between $72,000-$79,000 depending upon the year, but was actually worth “about $192,000 a year because of all the product and how that totaled up.”
Auerbach said Nike provided the Cal Supreme players with sneakers, backpacks, shoes, sweatsuits and other products, which is customary for Nike’s sponsorship of the 40 teams in the prestigious Nike Elite Youth Basketball League (EYBL).
Text messages between Franklin and DeBose were again shown to the jury in which DeBose asked Franklin to travel to Phoenix in 2016. Auerbach testified the purpose of the trip was to pay Ayton’s mother.
Auerbach testified that in March 2019 he contacted Avenatti on Franklin’s behalf because Franklin felt coerced by DuBose and James. Both men still at work at Nike today, Wilson testified.
Franklin was “under a lot of stress and had endured some corporate bullying there,” Auerbach testified of the Nike culture.
Auerbach testified he had a prior relationship with Nike chairman Phil Knight as well as John Slusher, who “oversees all of Nike’s global sports marketing efforts, including managing relationships with Nike’s top athlete, team, league and federation partners,” according to his bio.
Hiring Michael Avenatti
Auerbach and Franklin decided to hire Avenatti because of his work defending adult film actress Stormy Daniels in her lawsuits against President Donald Trump.
Auerbach testified he thought Avenatti would be the “perfect guy” and hoped he could be “diplomatic” in his dealings with Nike on Franklin’s behalf.
“I told him that Gary had been directed....to carry out certain acts that he was going to lose his sponsorship if he didn’t do it,” Auerbach testified, referring to the payments to the players’ families. For a year, Nike removed Franklin from directing and coaching Cal Supreme because he was not playing ball, Auerbach testified.
Franklin wanted Avenatti to help him maintain his relationship with Nike — with whom Auerbach said he had “no problem” — while getting rid of DeBose and James, who Franklin viewed as “bad actors.”
“Gary wanted to rid the company of bad actors” and “stop them from doing this with other people,” Auerbach testified.
In this case, prosecutors say Avenatti, 48, tried to extort between $15 million and $25 million from Nike last March after he threatened to reveal proof that the sportswear giant was making illicit payments to the players.
‘Nike is not on trial here’
On Friday, Judge Paul G. Gardephe said he did not intend for the trial to explore whether Nike has been involved in corrupt payments to Ayton, Bol and McCoy.
“We are not going to pursue a broad exploration of whether Nike was involved in corruption in amateur athletics because Nike is not on trial here,” Gardephe told defense attorneys when the jury was not present.
This latest trial follows the “Adidas” trial that led to the convictions on wire fraud in October 2018 of former Adidas executive James Gatto, would-be-agent Christian Dawkins and Adidas consultant Merl Code for funneling illegal payments to families of recruits in exchange for attending Adidas-schools Louisville, Kansas and N.C. State.
Auerbach was to continue testifying later Monday, while Franklin is also expected to take the stand during the trial.
This story was originally published February 3, 2020 at 3:19 PM.