United States v. Gatto, et al (2d Cir. January 2021)

The Federal Docket

Wire Fraud

In a hundred-page opinion, the Second Circuit affirmed the defendants’ convictions for wire fraud conspiracy based on college basketball recruiting scheme wherein the defendants had made secret cash payments to families of recruits to induce them to play for their universities. The defendants also allegedly falsified forms to certify they were eligible for the NCAA and had not received compensation.

The Government had argued that the victims of the defendants’ scheme to defraud where the universities. At trial, the defendants acknowledged breaking NCAA rules but held this was not a crime, and that the Government had failed to prove that they intended to defraud the universities. In fact, the defendants argued they were trying to help the universities by obtaining them top recruits.

On appeal from their convictions, the Second Circuit affirmed, holding that the defendants knowingly and intentionally engaged in a scheme to defraud the universities of property in the form of “financial aid that they could have given to other students.” Because these students were made ineligible based on their families receiving money, the Court reasoned, the scholarship money paid out to them constituted a “loss” for the university, even as the university profited off the player’s performance.

After an extensive discussion of both the scheme and the nature of the university’s losses, the Court concluded that the defendants, through their intentional misrepresentations, “deprived the Universities of property–athletic-based aid that they could have awarded to students who were eligible to play–by breaking NCAA rules and depriving the Universities of relevant information through fundamentally dishonest means.

Judge Lynch concurred there was sufficient evidence to support the conviction, but argued that the district court’s evidentiary rulings were close calls and that some were harmful error.

Appeal from the Southern District of New York
Opinion by Chen, joined by Engelmayer (by designation from SDNY) and Lynch in part
Lynch concurring in part and dissenting in part

Click here to read the opinion.

Tom Church - Tom is a trial and appellate lawyer focusing on criminal defense and civil trials. Tom is the author of "The Federal Docket" and is a contributor to Mercer Law Review's Annual Survey in the areas of federal sentencing guidelines and criminal law. Tom graduated with honors from the University of Georgia Law School where he served as a research assistant to the faculty in the areas of constitutional law and civil rights litigation. Read Tom's reviews on AVVO. Follow Tom on Linkedin.

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