United States v. Gatto
986 F.3d 104 · Court of Appeals for the Second Circuit · 2021
Facts
Defendants James Gatto, Merl Code, and Christian Dawkins engaged in a scheme to pay families of top high school basketball recruits (Dennis Smith Jr., Billy Preston, Brian Bowen Jr.) to induce them to attend Adidas-sponsored universities (N.C. State, Kansas, Louisville). These payments violated NCAA rules, rendering the recruits ineligible for athletic competition and financial aid. Defendants concealed these payments by falsifying Adidas invoices, funneling money through AAU teams, and using unregistered phones. The universities required recruits to sign certifications attesting to NCAA compliance, and athletic-based aid was contingent on eligibility. University officials stated they would not have awarded aid if they knew of the ineligibility.
Procedural history
Defendants were charged in a superseding indictment on August 14, 2018, with wire fraud and conspiracy to commit wire fraud. Trial commenced on October 1, 2018, and on October 24, 2018, the jury found the defendants guilty. The district court issued an opinion on January 17, 2019, explaining some evidentiary rulings, and defendants were sentenced in March 2019. This appeal followed the convictions and sentences.
Issue
Was there sufficient evidence to prove that the defendants intended to defraud the universities of property (athletic-based financial aid) by making secret payments to recruits' families, and were the district court's evidentiary rulings and jury instructions proper?
Holding
Yes. The court affirmed the convictions, finding sufficient evidence of intent to defraud the universities of property, and that the district court did not abuse its discretion in evidentiary rulings or err in jury instructions.
Rule
Wire fraud requires (1) a scheme to defraud, (2) money or property as the object of the scheme, and (3) use of wires. Fraudulent intent means intending to harm the victim or contemplating harm, which can be inferred from the scheme itself if injury is the necessary result. The 'object of the scheme' element is met if the victim is deprived of valuable economic information needed to make informed decisions about its assets, even if the defendant does not personally obtain the property. Conscious avoidance (willful blindness) can establish knowledge if a defendant subjectively believes a high probability of a fact and deliberately avoids learning it. A defendant's belief that an agent (e.g., coach) had apparent authority to approve illegal actions is not a defense if the agent was not unconflicted and acting in good faith for the principal's (university's) benefit.
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