When federal prosecutors announced last September the arrests of 10 men as part of an FBI investigation into the college basketball black market, one of the central figures was Brad Augustine, an Orlando, Fla.-area youth basketball program director accused of negotiating deals to steer his best players to preferred colleges, for a price.
Augustine agreed to send one player to Louisville, prosecutors alleged in a criminal complaint, after an undercover FBI agent handed him an envelope full of cash meant for the player's mother. Augustine helped broker a deal to send another player to Miami, as long as an Adidas executive agreed to pay the player's family $150,000, according to prosecutors, who alleged a coach at Miami later identified as Jim Larranaga had knowledge of the negotiations.
A 32-year-old whose previous legal troubles consisted of traffic tickets and toll violations, Augustine faced a potential prison sentence of up to 80 years on charges including wire fraud and wire fraud conspiracy.
But in February, prosecutors dropped all charges against Augustine, without explanation. Two weeks ago, in a court hearing in New York City, one of the lawyers on the case offered a possible reason why: After his arrest, Augustine apparently told federal prosecutors he never intended to pay the players and their families and had kept the little money actually paid out in these deals for himself.
The revelation is the latest sign that some of the allegations that attracted the most public attention last September, when a U.S. Attorney and a top FBI official touted the results of the ongoing probe in a news conference, may be based on recorded conversations of men who falsely represented relationships to top coaches and star recruits in order to get money from Adidas officials. It also demonstrates the central role NCAA rules regarding amateurism play in many of the criminal charges produced from a now two-plus year investigation that has drawn criticism from some legal experts as a waste of federal law enforcement resources.
Earlier this year, federal prosecutors sent a letter to the remaining defendants summarizing some of things Augustine, former director of the Orlando-area 1Family basketball program, told them before they dropped the charges against him. The letter is part of discovery evidence in the case, and is filed under a protective order, barred from public release.
During a March 22 hearing, however, a lawyer representing Jim Gatto — an Adidas executive accused of agreeing to pay $150,000 if Augustine convinced 1Family star Nassir Little to commit to Miami — discussed the letter in open court.
"Mr. Augustine's statement as summarized by the government ... directly contradicts the allegations of the indictment ... with respect to Mr. Little, Mr. Augustine had no intention of taking any money and handing it to Mr. Little," said attorney Michael Schachter, according to a transcript.
"Mr. Augustine says that, in fact, he was not in on the scheme. In fact, there was not going to be any payment that was going to be made to Mr. Little. But effectively he was in his own scheme to rip off Mr. Gatto," said Schachter, who was arguing the judge should force prosecutors to turn over transcripts or FBI agent notes of discussions with Augustine, because they may contain evidence favorable to Gatto and the other defendants.
Federal prosecutors — who disputed other statements made by defense lawyers during the hearing, a transcript shows — did not disagree with how Schachter described their summary of Augustine's testimony. Schachter declined to comment for this story, as did a spokesman for the U.S. Attorney's Office in the Southern District of New York. Augustine and his attorney both declined to comment.
The evidence against Augustine included a sting operation in Las Vegas last July, court documents allege, and wiretapped phone conversations of Gatto, another Adidas official, and an aspiring NBA agent.
Last July, the FBI alleged, Augustine took part in a meeting in a Las Vegas hotel, ostensibly to hash out business deals with aspiring NBA agent Christian Dawkins and two men claiming to be investors in Dawkins' fledgling sports agency. The men posing as investors were actually an undercover FBI agent and a government informant, and the room was wired with video cameras and recording devices.
During the meeting, a complaint alleged, Augustine took an envelope containing $12,700 cash from the undercover agent, as part of a deal in which Augustine would ensure 1Family star Balsa Koprivica — a 7-foot, 17-year-old Serbian considered one of the top recruits in the 2019 class — committed to Louisville. Augustine also agreed to advise Koprivica and his family to hire Dawkins if he became a professional basketball player, prosecutors alleged.
A few weeks later, on Aug. 9, Dawkins was recorded on a wiretapped phone call with Adidas independent contractor Merl Code discussing a deal involving Augustine and another 1Family player. The player was Little, and this time, the school was Miami, an FBI agent alleged. During the call, Dawkins said Augustine had told him Larranaga "knows everything" about the deal, according to a criminal complaint.
A few days later, on another wiretapped call, Code relayed this information to Gatto, his boss at Adidas. Gatto said he already had spoken to Larranaga about the recruit, according to an FBI agent. During another phone conversation later that day, a complaint alleges, Code told Gatto another school sponsored by a rival apparel company was offering $150,000 to get Little. Gatto said he couldn't afford $150,000 in 2017, an FBI agent wrote, but potentially could spend that much in 2018. Gatto asked Code to see if he could negotiate a lower price for Little.
No money ever changed hands on this deal. The next month, the FBI arrested Gatto, Code, Dawkins and Augustine.
Larranaga, Little, and Little's father publicly have denied involvement in any of the negotiations described in court documents. Little ultimately committed to the University of North Carolina.
1Family, in a statement, said Augustine was no longer involved with the team and also denied Koprivica or his mother had any knowledge of anyone negotiating backroom deals for his college commitment on their behalf.
Larranaga has acknowledged talking to Gatto last summer about Little, because he was one of the top players in the Adidas grassroots circuit, but said the conversations were innocuous. Larranaga said he never asked Gatto or anyone at Adidas to pay Little to commit to Miami.
Federal prosecutors have yet to charge any coaches at Louisville or Miami with a crime in connection with allegations that have produced wire fraud charges against the two Adidas officials and Dawkins, the aspiring agent.
Rick Pitino, who lost his job at Louisville days after the arrests last September, also has maintained he had no knowledge of payments for recruits.
Attorneys for both coaches have suggested Augustine and Dawkins falsely boasted of relationships with Pitino and Larranaga, and federal prosecutors printed these claims in court documents without verification or a proper dose of skepticism.
"We've done everything we can to convince the U.S. Attorneys that Coach Larranaga is not involved," said Larranaga's attorney, Stuart Grossman. "It falls on deaf ears. We know we weren't involved in any criminal activity whatsoever, and they won't give us the courtesy of admitting they were wrong."
That federal prosecutors apparently decided to drop charges against Augustine after he told them he hadn't been brokering deals to steer recruits to specific college programs, but instead had kept money for himself, is a reminder of the unusual legal theory at the core of much of the criminal charges produced so far in the FBI probe.
Fraud is a crime that requires a victim. When Augustine was charged with wire fraud, the alleged victims were Miami and Louisville, prosecutors allege, as the schools could have been sanctioned by the NCAA, and sustained financial penalties, if it had come to light some of their players were profiting from their talents.
"So if the money doesn't go to the athlete, the FBI and prosecutors are fine with it?" said Andy Schwarz, an economist and outspoken critic of the NCAA's amateurism rules. "How does that make any sense?"
