Adidas’ head of global sports marketing, James Gatto, has been found guilty of fraud by a federal jury in Manhattan following an investigation by the U.S. Department of Justice into the company’s alleged practice of making payments to high school basketball players and their families to encourage the players to attend schools where Adidas is a sponsor, according to a report by The Wall Street Journal.
Gatto was found guilty on three counts: wire fraud and conspiracy to commit wire fraud with regard to the University of Louisville, along with wire fraud with regard to the University of Kansas. A consultant for the brand, Merl Code, was also found guilty of two counts of fraud.
“We cooperated fully with the authorities during the course of the investigation and respect the jury’s verdict,” an Adidas representative said in a statement emailed to Adweek. “We look forward to continuing to work with the NCAA and other stakeholders in a collaborative and constructive manner to improve the environment around college basketball. We have strengthened our internal processes and controls and remain committed to ethical and fair business practices.”
It is unclear whether Gatto will continue to serve as Adidas’ head of global sports marketing following the verdict.
“As soon as we learned about the allegations, we engaged outside counsel to conduct a thorough investigation of our grassroots and college basketball programs, and we put the individual charged on administrative leave,” Adidas’ rep said in the statement. “We ask for your understanding that we will not comment on anyone’s future employment status at this time.”
A representative for Gatto’s lawyer, Casey Donnelly of Willkie Farr and Gallagher, told Adweek she was unavailable for comment.