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United States v. Gatto

United States v. Gatto

United States Court of Appeals for the Second Circuit

March 13, 2020, Argued; January 15, 2021, Decided

Docket Nos. 19-0783-cr; 19-0786-cr; 19-0788-cr

Opinion

 [*109]  Chin, Circuit Judge:

In this case, defendants-appellants James Gatto, Merl Code, and Christian Dawkins ("Defendants") were convicted of engaging in a scheme to defraud three universities by paying tens of thousands of dollars to the families of high school basketball players to induce them to attend the universities, which were sponsored by Adidas, the sports apparel company, and covering up the payments so that the recruits  [*110]  could certify to the universities that they had complied with rules of the National Collegiate Athletic Association (the "NCAA") barring student-athletes and recruits from being paid.

At trial, Defendants admitted that they engaged in the scheme and broke NCAA rules, but argued that what they did was not criminal. On appeal, they contend [**3]  that the government failed to prove that they intended to defraud the universities -- North Carolina State University ("N.C. State"), the University of Kansas ("Kansas"), and the University of Louisville ("Louisville") (collectively, the "Universities") -- and that their intent instead was to help the Universities by bringing them top recruits to ensure winning basketball programs. They contend that, "in the real world, . . . universities engage in an all-out arms race to recruit the best talent, motivated by the tens of millions of dollars that can be earned each year by a successful men's basketball program," Appellants' Br. at 98 (internal quotation marks omitted), and that they "broke NCAA rules out of a genuine desire to see the Universities' basketball teams succeed," Appellants' Br. at 96. They argue that under-the-table payments to student-athletes are widespread in college sports, and that, indeed, many college coaches are aware of and endorse the practice. And they argue, as they did in their opening statements at trial, that "[t]he kids on the court, . . . the ones whose blood, sweat and tears is making this game a billion dollar industry, they are not allowed to earn a [**4]  dime." App'x at 107.

We have no doubt that a successful men's basketball program is a major source of revenue at certain major universities, but we need not be drawn into the debate over the extent to which college sports is a business.2 Instead, our task is to determine whether the government proved beyond a reasonable doubt that Defendants knowingly and intentionally engaged in a scheme, through the use of wires, to defraud the Universities of property, i.e., financial aid that they could have given to other students. We conclude that the government did. We also reject Defendants' arguments that the district court abused its discretion in its evidentiary rulings and committed reversible error in its instructions to the jury. Accordingly, we affirm.

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986 F.3d 104 *; 2021 U.S. App. LEXIS 1146 **; 114 Fed. R. Evid. Serv. (Callaghan) 927; 2021 WL 137250

UNITED STATES OF AMERICA, Appellee, v. JAMES GATTO, aka Jim, MERL CODE, CHRISTIAN DAWKINS, Defendants-Appellants.

Subsequent History: US Supreme Court certiorari denied by Gatto v. United States, 2021 U.S. LEXIS 6277 (U.S., Dec. 13, 2021)

Prior History: ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. Consolidated appeals from judgments of the United States District Court for the Southern District of New York (Kaplan, J.), convicting defendants-appellants of wire fraud and conspiracy to commit wire fraud in violation of 18 U.S.C. §§ 1343, 1349 [**1] . The government alleged that defendants-appellants engaged in a scheme to defraud universities of athletic-based financial aid when they made secret cash payments to the families of college basketball recruits, thereby rendering the recruits ineligible to play for the universities. On appeal, defendants-appellants contend that there was insufficient evidence to sustain their wire fraud convictions. Additionally, they challenge several of the district court's evidentiary rulings as well as portions of its instructions to the jury.

United States v. Gatto, 295 F. Supp. 3d 336, 2018 U.S. Dist. LEXIS 32731, 2018 WL 1136109 (S.D.N.Y., Feb. 28, 2018)

Disposition: AFFIRMED.

CORE TERMS

coaches, recruits, district court, defendants', athletes, wire fraud, violations, probative value, sports, deprived, defraud, basketball, ineligible, student-athletes, convictions, deceive, schools, eligibility, quotation, marks, athletic-based, benefits, teams, conversation, harmless, genuinely, programs, good faith, phone call, amateurism

Criminal Law & Procedure, Standards of Review, Substantial Evidence, Findings of Fact, Evidence, Inferences & Presumptions, Inferences, De Novo Review, Sufficiency of Evidence, Weight & Sufficiency, Fraud, Wire Fraud, Elements, Burdens of Proof, Proof Beyond Reasonable Doubt, Trials, Prosecution, Types of Evidence, Circumstantial Evidence, Verdicts, Admissibility, Circumstantial & Direct Evidence, Appeals, Abuse of Discretion, Procedural Matters, Rulings on Evidence, Abuse of Discretion, Evidence, Harmless & Invited Error, Relevance, Exclusion of Relevant Evidence, Confusion, Prejudice & Waste of Time, Testimony, Expert Witnesses, Qualifications, Daubert Standard, Examination of Witnesses, Cross-Examination, Examination, Cross-Examinations, Scope, Direct Examinations, Jury Instructions, Plain Error, Acts & Mental States, Mens Rea, Willfulness, Jury Instructions, Particular Instructions, Knowledge, Accessories, Aiding & Abetting, Estate, Gift & Trust Law, Wills, Bequests & Devises, Penalties, Business & Corporate Law, Authority to Act, Apparent Authority, Conduct of Parties, Third Party Knowledge, Reliance, Specific Intent, Fraud Against the Government, Mail Fraud