A 47-count indictment was unsealed early Wednesday morning in federal court in Brooklyn, New York, charging 14 defendants with racketeering, wire fraud and money laundering conspiracies for a 24-year corruption scheme at the heart of international soccer.
The guilty pleas of four individual defendants and two corporate defendants were also unsealed Wednesday.
The defendants include high-ranking officials of the Fédération Internationale de Football Association (FIFA), the organization responsible for the regulation and promotion of soccer worldwide, as well as leading officials of other soccer governing bodies that operate under the FIFA umbrella.
Sepp Blatter, FIFA’s president since 1998, wasn’t charged. The 79-year-old was expected to be re-elected easily in a FIFA election set for Friday.
Also early Wednesday, police in Switzerland arrested at least six soccer officials at the request of the United States.
The arrests came as leaders of FIFA were holding their annual meeting near Zurich at the five-star Baur au Lac hotel.
“One FIFA official, Eduardo Li of Costa Rica, was led by the authorities from his room to a side-door exit of the hotel. He was allowed to bring his luggage, which was adorned with FIFA logos,” the New York Times reported.
Jeffrey Webb and Jack Warner — the current and former presidents of CONCACAF, the continental confederation under FIFA headquartered in the United States — were are among the soccer officials the DOJ charged Wednesday morning with racketeering and bribery offenses.
The defendants also include U.S. and South American sports marketing executives. They allegedly paid more than $150 million in bribes and kickbacks to win media and marketing rights to international soccer tournaments.
Two of those pleading guilty in the case are Charles Blazer, the long-serving former general secretary of CONCACAF and former U.S. representative on the FIFA executive committee, and José Hawilla, the owner and founder of the Traffic Group, a multinational sports marketing conglomerate headquartered in Brazil.
Hawilla agreed to forfeit over $151 million, $25 million of which was paid at the time of his plea in December 2014.
Blazer pleaded guilty in 2013 and has so far forfeited over $1.9 million. The guilty pleas were unsealed Wednesday.
Two of Hawilla’s companies, Traffic Sports International Inc. and Florida-based Traffic Sports USA Inc. also pleaded guilty.
On July 15, 2013, Daryll Warner, son of defendant Jack Warner and a former FIFA development officer, waived indictment and pleaded guilty to a two-count information charging him with wire fraud and the structuring of financial transactions.
In October 2013, another defendant, Daryan Warner, waived indictment and pleaded guilty to a three-count information charging him with wire fraud conspiracy, money laundering conspiracy, and the structuring of financial transactions. He forfeited over $1.1 million around the time of his plea.
Nine soccer officials were indicted Wednesday:
Jeffrey Webb: Current FIFA vice president and executive committee member, CONCACAF president, Caribbean Football Union (CFU) executive committee member and Cayman Islands Football Association (CIFA) president.
Eduardo Li: Current FIFA executive committee member-elect, CONCACAF executive committee member and Costa Rican soccer federation (FEDEFUT) president.
Julio Rocha: Current FIFA development officer. Former Central American Football Union (UNCAF) president and Nicaraguan soccer federation (FENIFUT) president.
Costas Takkas: Current attaché to the CONCACAF president. Former CIFA general secretary.
Jack Warner: Former FIFA vice president and executive committee member, CONCACAF president, CFU president and Trinidad and Tobago Football Federation (TTFF) special adviser.
Eugenio Figueredo: Current FIFA vice president and executive committee member. Former CONMEBOL president and Uruguayan soccer federation (AUF) president.
Rafael Esquivel: Current CONMEBOL executive committee member and Venezuelan soccer federation (FVF) president.
José Maria Marin: Current member of the FIFA organizing committee for the Olympic football tournaments. Former CBF president.
Nicolás Leoz: Former FIFA executive committee member and CONMEBOL president.
Four of those indicted were sports marketing executives:
Alejandro Burzaco: Controlling principal of Torneos y Competencias S.A., a sports marketing business based in Argentina, and its affiliates.
Aaron Davidson: President of Traffic Sports USA Inc. (Traffic USA).
Hugo and Mariano Jinkis: Controlling principals of Full Play Group S.A., a sports marketing business based in Argentina, and its affiliates.
And one defendant was in the broadcasting business but allegedly served as an intermediary to facilitate illicit payments between sports marketing executives and soccer officials:
José Margulies: Controlling principal of Valente Corp. and Somerton Ltd.
FIFA consists of 209 member associations, each representing organized soccer in a nation or territory, including the United States and four of its overseas territories.
The U.S. Soccer Federation is one of 41 member associations of the confederation known as CONCACAF.
The South American confederation is called CONMEBOL.
FIFA and CONCACAF own the marketing rights to the World Cup and Gold Cup.
FIFA generated $5.7 billion in total revenues between 2011 and 2014 through the sale of TV and marketing rights to the 2014 World Cup.
The DOJ said that since 1991, the defendants solicited and received well over $150 million in illegal payments for their official support of the sports marketing executives.
U.S. Attorney General Loretta Lynch said the indictment spans “at least two generations of soccer officials who, as alleged, have abused their positions of trust to acquire millions of dollars in bribes and kickbacks.”
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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.
4 Comments
This post is excellent and gives a comprehensive picture (if that is possible with FIFA) of the world of FIFA. What is happening demonstrates that FIFA's so-called Ethics Committee is a farce. That Sepp Blatter who has been in leading positions with FIFA for 34 years is going to be reelected to the Presidency Friday is a guarantee that nothing will change at FIFA. Blatter's predecessor Joao Havelange and his son-in-law (son-in-low?) were already caught (along with a cast of thousands) for cashing in on the granting of marketing rights. Corruption has a long history at FiFA.
In the face of the current indictments, it is shocking, to say the least, that the Ethics Committee, under the leadership of its President, Hans-Joachim Eckert, concluded its investigation with a white wash for FIFA.
Only Michael Garcia, who protested against the way his report was presented to the public, and Alexandra Wragge, who resigned from FIFA's so-called Independent Governance Committee, had the courage to swim against the current. They, and only they, deserve to be praised for their stand.
….. and pleaded guilty to a three-count information charging him with wire fraud conspiracy, money laundering conspiracy, and the structuring of financial transactions.
Im sorry what is illegal in structuring financial transactions?
Structuring, for example, is keeping bank deposits under $10,000 with the intent to evade cash reporting requirements. A structuring count is quite common when money-laundering is also charged.
Here's the structuring statute:
31 U.S. Code § 5324 – Structuring transactions to evade reporting requirement prohibited
a) Domestic Coin and Currency Transactions Involving Financial Institutions.— No person shall, for the purpose of evading the reporting requirements of section 5313 (a) or 5325 or any regulation prescribed under any such section, the reporting or recordkeeping requirements imposed by any order issued under section 5326, or the recordkeeping requirements imposed by any regulation prescribed under section 21 of the Federal Deposit Insurance Act or section 123 ofPublic Law 91–508—
(1) cause or attempt to cause a domestic financial institution to fail to file a report required under section 5313 (a) or 5325 or any regulation prescribed under any such section, to file a report or to maintain a record required by an order issued under section 5326, or to maintain a record required pursuant to any regulation prescribed under section 21 of the Federal Deposit Insurance Act or section 123 ofPublic Law 91–508;
(2) cause or attempt to cause a domestic financial institution to file a report required under section 5313 (a) or 5325 or any regulation prescribed under any such section, to file a report or to maintain a record required by any order issued under section 5326, or to maintain a record required pursuant to any regulation prescribed under section 5326, or to maintain a record required pursuant to any regulation prescribed under section 21 of the Federal Deposit Insurance Act or section 123 ofPublic Law 91–508, that contains a material omission or misstatement of fact; or
(3) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions.
(b) Domestic Coin and Currency Transactions Involving Nonfinancial Trades or Businesses.— No person shall, for the purpose of evading the report requirements of section 5331 or any regulation prescribed under such section—
(1) cause or attempt to cause a nonfinancial trade or business to fail to file a report required under section 5331 or any regulation prescribed under such section;
(2) cause or attempt to cause a nonfinancial trade or business to file a report required under section 5331 or any regulation prescribed under such section that contains a material omission or misstatement of fact; or
(3) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with 1 or more nonfinancial trades or businesses.
(c) International Monetary Instrument Transactions.— No person shall, for the purpose of evading the reporting requirements of section 5316—
(1) fail to file a report required by section 5316, or cause or attempt to cause a person to fail to file such a report;
(2) file or cause or attempt to cause a person to file a report required under section 5316 that contains a material omission or misstatement of fact; or
(3) structure or assist in structuring, or attempt to structure or assist in structuring, any importation or exportation of monetary instruments.
(d) Criminal Penalty.—
(1) In general.— Whoever violates this section shall be fined in accordance with title 18, United States Code, imprisoned for not more than 5 years, or both.
(2) Enhanced penalty for aggravated cases.— Whoever violates this section while violating another law of the United States or as part of a pattern of any illegal activity involving more than $100,000 in a 12-month period shall be fined twice the amount provided in subsection (b)(3) or (c)(3) (as the case may be) of section 3571 of title 18, United States Code, imprisoned for not more than 10 years, or both.
This demonstrates how vast corruption is in global business.
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