Adidas hires attorneys to investigate its role in college basketball scandal

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PORTLAND — Adidas said Wednesday it has brought in lawyers from outside the company to launch an internal investigation in the unfolding college basketball scandal that has ensnared two of its officials.

On Tuesday, federal prosecutors charged Adidas sports marketing chief Jim Gatto with conspiring to bribe high school basketball players to play at colleges sponsored by Adidas. Prosecutors charged another employee, Merl Code, identified in federal charging documents as being affiliated with Adidas high school and college basketball programs.

“We became aware yesterday of the allegations and intend to cooperate with the relevant authorities,” Adidas said in a written statement Wednesday. “The employee has been put on administrative leave and the company has engaged outside counsel to conduct a thorough investigation.”

The statement is not clear on which employee is on leave, or whether the company is continuing to pay him. Adidas did not immediately respond to an inquiry seeking additional detail.

Adidas’ North American headquarters are in North Portland, where the company employed 1,200 in 2015. The company declined to say this week how many work there now.

Gatto, Code and Adidas are central figures in an investigation that has also resulted in charges against basketball agents, advisers and assistant coaches.

On Tuesday, the University of Southern California hired former FBI director Louis Freeh to investigate its own role in the scandal. And the University of Louisville put head coach Rick Pitino and the school’s athletic director on leave, pending their firing, after that school was implicated in the case.

Prosecutors allege that Gatto, 47, arranged a $100,000 payment to the family of a high school player in Indiana to steer him to play at the Louisville, which Adidas sponsors. The charges claim Gatto also participated in a $150,000 bribe to persuade a different athlete to attend an Adidas-sponsored university in Florida.

The federal complaint against Gatto and Code identifies Adidas as “Company-1.”

In one section, it describes the difficulty Gatto and Code had arranging the $100,000 payment to a player’s father in July. Code said he might have to “lean on” an unnamed, senior Adidas executive to arrange “off the book” payments.

The complaint says Code and Gatto, “and others at Company-1,” accounted for the unlawful transfer by recording it as an Adidas payment to an outside organization affiliated with Code. Code said that Gatto had identified the payment internally “as a payment to my team, to my organization, so it’s on the books (but) it’s not on the books for what it’s actually for.”