Additional counts filed in college basketball scandal; Kansas, N.C. State named this time

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The scandal that rocked college basketball isn’t over — in fact, it’s adding teams.

Kansas and North Carolina State are the latest programs to be implicated in a major corruption scheme uncovered by the FBI and made public last fall. It's a case that threatens to dramatically alter the landscape of college basketball, though it could take years before anything is settled or any major changes take hold.

James Gatto, the longtime sneaker executive arrested in September, also has been hit with additional charges by the U.S. Attorney for the Southern District of New York.

Along with charges of wire fraud, Gatto — as well as fellow Adidas exec Merl Code and former runner Christian Dawkins — faces charges of making payments to the families of six student-athletes in order to influence those athletes’ decisions about where they would attend college. Though not individually named, the six student-athletes attended Louisville, Miami (Fla.), Kansas and N.C. State. All of those universities have major endorsement deals with Adidas, Gatto and Code’s former employer.

Louisville and Miami — which just awarded a two-year contract extension to coach Jim Larranaga, who has denied any involvement or knowledge of the alleged pay-to-play scheme — were indicated as potential participants in previous reports. But Kansas, a powerhouse in men’s college basketball that just made its 15th Final Four appearance, and N.C. State are newcomers to the scandal.

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Tuesday's indictment alleges Gatto helped provide payments through "sham invoices" for recruits to attend N.C. State and Kansas and help ensure those players ultimately signed with the company upon reaching the NBA.

The alleged payments include an attempted $40,000 in 2015 to the father of a recruit who ultimately played for N.C. State and "at least $90,000" beginning in 2016 to the mother of a recruit who signed in Nov. 2016 with Kansas, the FBI said.

The FBI also alleges a scheme in 2017 to attempt to make payments to the legal guardian of another "top-rated high school basketball player" to outbid "another school sponsored by a rival athletic apparel company." That player, unnamed by the FBI, was said to have made a surprise commitment to Kansas on Aug. 30, 2017.

“Earlier today, we learned that the University of Kansas is named as a victim in a federal indictment," university spokesman Joe Monaco said. "The indictment does not suggest any wrongdoing by the university, its coaches or its staff. We will cooperate fully with investigators in this matter. Because this is an active investigation, it is not appropriate for us to comment further at this time.”

The timeline of the allegations involving N.C. State's program would have started during the tenure of former Wolfpack head coach Mark Gottfried, who was fired in February 2017. He was hired last month as the head coach at Cal State-Northridge.

A statement from N.C. State said the school in September 2017 "contacted former basketball coaches asking whether they had any knowledge of or involvement in any activity related to the allegations" of the FBI's investigation.

"Former staff questioned stated they had neither any knowledge nor involvement," the statement said. "N.C. State will continue to fully cooperate with the U.S. Attorney’s Office and keep the NCAA updated throughout this investigation."

The scandal rocked college basketball back in September, sending shock waves through the sport and serving as a warning shot to anyone cheating that soon enough, they would be caught. But the investigation has remained mostly quiet the last few months; March Madness went on as planned and with the exception of former Louisville coach Rick Pitino, no major figures in the game have lost jobs.

In September, when the FBI revealed its investigation publicly for the first time, four assistant coaches were among the 10 men initially arrested. Each of those assistants — Auburn’s Chuck Person, Southern California’s Tony Bland, Arizona’s Emanuel “Book” Richardson and Oklahoma State’s Lamont Evans — has since been fired.

The investigation remains ongoing.

U.S. attorney Robert S. Khuzami wrote that the new indictment included “no new recordings, wires, or applications.”

Based on details included in the original federal complaint unsealed in September, the government previously argued that Gatto, Code and Dawkins concealed payments that could have impacted the eligibility of prospective student-athletes, thereby defrauding the universities bound by NCAA rules.

Tuesday's filing also adds two “substantive” wire fraud counts. In the original indictment, Gatto was charged with conspiracy to commit wire fraud while Code and Dawkins were charged with conspiracy to commit wire fraud and bribery and payment of bribes and gratuities to an agent of a federally funded organization, among other charges.

The trio's trial is set to start Oct. 1.

Lerner writes for The Courier-Journal in Louisville, part of the USA TODAY Network.