Federal prosecutors have launched an investigation into USA Swimming, alleging that the organization covered up and discredited sexual abuse claims, concealed assets and improperly received hundreds of thousands of dollars in rebates from its insurance company, according to the Wall Street Journal.

The investigation, which is being led by the U.S. Attorney’s Office in Manhattan and the FBI, is “particularly interested” in the money trail between USA Swimming and its now defunct insurance company.

The insurance company, investigators believe, was used as a possible avenue for self-dealing and misstatements in tax filings. Per the report, investigators believe the organization moved money to its philanthropic foundation to conceal its assets. The foundation had just under $5 million in 2008, and then $18.3 million in 2017. Five million was transferred to it in 2011.

They are also investigating whether athletes felt pressured to perform sex acts on coaches in exchange for competition spots. USA Swimming has not yet been contacted by federal authorities regarding the investigation.

“[USA Swimming] supports any government investigation that goes toward protecting athletes,” a USA Swimming spokeswoman told the Wall Street Journal, adding that they are “confident in the integrity of its finances and tax filings.”

Covering up, discrediting abuse allegations

According to the report, an “extrajudicial system within USA Swimming” existed for years that covered up and discredited numerous abuse allegations.

Accusers were required to submit a formal complaint, and could not do so anonymously. The organization then had an executive who would determine if there was enough evidence to proceed. If there was, they then hired an external investigator to conduct interviews. A lawyer would then reach out to the accusers, claiming to be impartial however actually represented USA Swimming, per the report.

“The system is designed to stop you from wanting to report,” a person briefed on the investigation told the Wall Street Journal.

By minimizing or limiting sexual-abuse allegations, USA Swimming then had to pay fewer financial settlements and insurance claims. In the event of litigation in a sexual abuse case, per the report, USA Swimming would pay its legal bills through its insurance company. Any money not spent by the company was returned to USA Swimming.

That system is no longer in place.

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