CRISIS DAY AT FIFA: This is the World Cup of fraud, say US authorities
NEW YORK: Loretta Lynch, the United States’ Attorney General, took a sledgehammer to what crumbling walls remained of FIFA’s image and reputation as she outlined the case against senior FIFA officials past and present writes KEIR RADNEDGE.
Lynch was speaking at a news conference in support of an earlier statement from the Justice Department announcing the arrests, intended arrests and indictment of 14 senior football officials and marketing specialists on corruption charges.
After Lynch had spoken, Richard Weber of the Internal Revenue Service’s criminal investigation department added: “This is the World Cup of fraud. Today we are issuing FIFA with a red card.”
While world federation FIFA may claim that the charges centre on allegations of wrongdoing by individuals out of personal greed, Lynch went out of her way to indicate that a conspiracy of corruption between powerful football officials and marketeers was endemic within the worldwide game – going back to the early 1990s.
That covers an era during which Sepp Blatter has been first general secretary and then, from 1998, president of the world federation.
Lynch opened by describing the indictments as opening a window on “bribery and corruption in the world of organised soccer.” by men “who held important responsibilities at every level.”
She explained the commercial rights sales system which led directly into accusations against Trinidad’s Jack Warner and Paraguay’s Nicolas Leoz.
Lynch said: “Beginning in 1991 two generations of soccer officials including the then president of CONCACAF (Warner) and the South American football confederation CONMEBOL (Leoz) used their positions of trust to solicit bribes from sports markeers in exchange for the commercial rights to their tournaments. They did this over and over, year after year, tournament after tournament.”
Not only in the past, either. Such corrupt practices, said Lynch, were being perpetuated in relation to the 2016 Centennial Copa America which is due to be staged in the United States – though whether it will or not may now a matter for review.
‘Lining excutive pockets’
Lynch continued: “What should have been an expression of sporting celebration was used as vehicle to line executive pockets to the tune of $110m, nearly a third of the legitimate cost of the rights to the tournament.”
She went on to link the corruption to 2004 when bidding begin for the hosting of the 2010 World Cup in South Africa, saying: “FIFA executives and others corrupted the process by using bribes to influence the hosting decision.”
Lynch also called into question events leading up to the 2011 FIFA presidential and the sponsorship of the Brazilian national team by the Nike sportswear company (when the CBF president was infamous Ricardo Teixeira, also then a FIFA exco member).
Warner, who was president of CONCACAF for 20 years and an immensely influential powerbroker within FIFA, was targeted by Lynch – though she did not name precisely in her statement but by allusion – for profiting “from $10m in bribes over a 19-year period and amassing a personal fortune from his ill-gotten gains.”
Lynch was also at pains to justify action by the US justice authorities on the grounds that the conspirators had “used US banking and wire facilities in the United States” and profited from soccer’s “growing US market.”
CONCACAF, she said, was “plainly an organisation in crisis”. As she was speaking so FBI agents were undertaking a raid on CONCACAF”s headquarters in Miami Beach.
The allegations against Jeffrey Webb, president of CONCACAF, were described by FBI director James B Comey .
He said the world game had been “hijacked.”
Comey added: “What these officials all had in common was greed . . . Some of the officials held many roles in these organisations: Jeffrey Webb is a vice-president and on the exective committee of FIFA. He also holds the role of president of CONCACAF, he’s also on the executive committee of the Carribean Football Ynion and is president of the Cayman Islands FA.
“He used his position in the various roles to solicit and collect bribes from sports marketing executives who needed his support to get contracts for tournaments.”
Comey added that the entiites at the core of the investigation were CONCACAF and CONMEBOL “but other parts of FIFA are implicated.”
THE FULL US JUSTICE DEPARTMENT STATEMENT:
NEW YORK: This is the full statement issued by the United States Justice Department concerning its investigation into high-level corruption within world football in general and, in particular, football in Latin and north America:
Nine FIFA Officials and Five Corporate Executives Indicted for Racketeering Conspiracy and Corruption
Defendants include two current FIFA vice-presidents and the current and former presidents of the Confederation of North, Central American and Caribbean Association Football (CONCACAF); Seven Defendants Arrested Overseas; Guilty Pleas for Four Individual Defendants and Two Corporate Defendants Also Unsealed
** A 47-count indictment was unsealed early this morning in federal court in Brooklyn, New York, charging 14 defendants with racketeering, wire fraud and money laundering conspiracies, among other offenses, in connection with the defendants’ participation in a 24-year scheme to enrich themselves through the corruption of international soccer. The guilty pleas of four individual defendants and two corporate defendants were also unsealed today.
The defendants charged in the indictment 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.
Jeffrey Webb and Jack Warner – the current and former presidents of CONCACAF, the continental confederation under FIFA headquartered in the United States – are among the soccer officials charged with racketeering and bribery offenses.
The defendants also include U.S. and South American sports marketing executives who are alleged to have systematically paid and agreed to pay well over $150 million in bribes and kickbacks to obtain lucrative media and marketing rights to international soccer tournaments.
The charges were announced by Attorney General Loretta E. Lynch, Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York, Director James B. Comey of the FBI, Assistant Director in Charge Diego W. Rodriguez of the FBI’s New York Field Office, Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) and Special Agent in Charge Erick Martinez of the IRS-CI’s Los Angeles Field Office.
Also earlier this morning, Swiss authorities in Zurich arrested seven of the defendants charged in the indictment, the defendants Jeffrey Webb, Eduardo Li, Julio Rocha, Costas Takkas, Eugenio Figueredo, Rafael Esquivel and José Maria Marin, at the request of the United States. Also this morning, a search warrant is being executed at CONCACAF headquarters in Miami, Florida.
The guilty pleas of the four individual and two corporate defendants that were also unsealed today include the guilty pleas of Charles Blazer, the long-serving former general secretary of CONCACAF and former U.S. representative on the FIFA executive committee; José Hawilla, the owner and founder of the Traffic Group, a multinational sports marketing conglomerate headquartered in Brazil; and two of Hawilla’s companies, Traffic Sports International Inc. and Traffic Sports USA Inc., which is based in Florida.
“The indictment alleges corruption that is rampant, systemic, and deep-rooted both abroad and here in the United States,” said Attorney General Lynch. “It 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.
“And it has profoundly harmed a multitude of victims, from the youth leagues and developing countries that should benefit from the revenue generated by the commercial rights these organizations hold, to the fans at home and throughout the world whose support for the game makes those rights valuable.
“Today’s action makes clear that this Department of Justice intends to end any such corrupt practices, to root out misconduct, and to bring wrongdoers to justice – and we look forward to continuing to work with other countries in this effort.”
Attorney General Lynch extended her grateful appreciation to the authorities of the government of Switzerland, as well as several other international partners, for their outstanding assistance in this investigation.
“Today’s announcement should send a message that enough is enough,” said Acting U.S. Attorney Currie. “After decades of what the indictment alleges to be brazen corruption, organized international soccer needs a new start – a new chance for its governing institutions to provide honest oversight and support of a sport that is beloved across the world, increasingly so here in the United States. Let me be clear: this indictment is not the final chapter in our investigation.”
Acting U.S. Attorney Currie extended his thanks to the agents, analysts and other investigative personnel with the FBI New York Eurasian Joint Organized Crime Squad and the IRS-CI Los Angeles Field Office, as well as their colleagues abroad, for their tremendous effort in this case.
“As charged in the indictment, the defendants fostered a culture of corruption and greed that created an uneven playing field for the biggest sport in the world,” said Director Comey. “Undisclosed and illegal payments, kickbacks, and bribes became a way of doing business at FIFA. I want to commend the investigators and prosecutors around the world who have pursued this case so diligently, for so many years.”
“When leaders in an organization resort to cheating the very members that they are supposed to represent, they must be held accountable,” said Chief Weber. “Corruption, tax evasion and money laundering are certainly not the cornerstones of any successful business. Whether you call it soccer or football, the fans, players and sponsors around the world who love this game should not have to worry about officials corrupting their sport. This case isn’t about soccer, it is about fairness and following the law. IRS-CI will continue to investigate financial crimes and follow the money wherever it may lead around the world, leveling the playing field for those who obey the law.”
The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The Enterprise
FIFA is composed of 209 member associations, each representing organized soccer in a particular nation or territory, including the United States and four of its overseas territories. FIFA also recognizes six continental confederations that assist it in governing soccer in different regions of the world. The U.S. Soccer Federation is one of 41 member associations of the confederation known as CONCACAF, which has been headquartered in the United States throughout the period charged in the indictment. The South American confederation, called CONMEBOL, is also a focus of the indictment.
As alleged in the indictment, FIFA and its six continental confederations, together with affiliated regional federations, national member associations and sports marketing companies, constitute an enterprise of legal entities associated in fact for purposes of the federal racketeering laws. The principal – and entirely legitimate – purpose of the enterprise is to regulate and promote the sport of soccer worldwide.
As alleged in the indictment, one key way the enterprise derives revenue is to commercialize the media and marketing rights associated with soccer events and tournaments. The organizing entity that owns those rights – as FIFA and CONCACAF do with respect to the World Cup and Gold Cup, their respective flagship tournaments – sells them to sports marketing companies, often through multi-year contracts covering multiple editions of the tournaments. The sports marketing companies, in turn, sell the rights downstream to TV and radio broadcast networks, major corporate sponsors and other sub-licensees who want to broadcast the matches or promote their brands. The revenue generated from these contracts is substantial: according to FIFA, 70% of its $5.7 billion in total revenues between 2011 and 2014 was attributable to the sale of TV and marketing rights to the 2014 World Cup.
The Racketeering Conspiracy
The indictment alleges that, between 1991 and the present, the defendants and their co-conspirators corrupted the enterprise by engaging in various criminal activities, including fraud, bribery and money laundering. Two generations of soccer officials abused their positions of trust for personal gain, frequently through an alliance with unscrupulous sports marketing executives who shut out competitors and kept highly lucrative contracts for themselves through the systematic payment of bribes and kickbacks. All told, the soccer officials are charged with conspiring to solicit and receive well over $150 million in bribes and kickbacks in exchange for their official support of the sports marketing executives who agreed to make the unlawful payments.
Most of the schemes alleged in the indictment relate to the solicitation and receipt of bribes and kickbacks by soccer officials from sports marketing executives in connection with the commercialization of the media and marketing rights associated with various soccer matches and tournaments, including FIFA World Cup qualifiers in the CONCACAF region, the CONCACAF Gold Cup, the CONCACAF Champions League, the jointly organized CONMEBOL/CONCACAF Copa América Centenario, the CONMEBOL Copa América, the CONMEBOL Copa Libertadores and the Copa do Brasil, which is organized by the Brazilian national soccer federation (CBF). Other alleged schemes relate to the payment and receipt of bribes and kickbacks in connection with the sponsorship of CBF by a major U.S. sportswear company, the selection of the host country for the 2010 World Cup and the 2011 FIFA presidential election.
The Indicted Defendants
As set forth in the indictment, the defendants and their co-conspirators fall generally into three categories: soccer officials acting in a fiduciary capacity within FIFA and one or more of its constituent organizations; sports media and marketing company executives; and businessmen, bankers and other trusted intermediaries who laundered illicit payments.
Nine of the defendants were FIFA officials by operation of the FIFA statutes, as well as officials of one or more other bodies:
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 the defendants 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 of the defendants 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.
The Convicted Individuals and Corporations
The following individuals and corporations previously pleaded guilty under seal:
On July 15, 2013, the defendant 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.
On Oct. 25, 2013, the 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. Daryan Warner forfeited over $1.1 million around the time of his plea and has agreed to pay a second forfeiture money judgment at the time of sentencing.
On Nov. 25, 2013, the defendant Charles Blazer, the former CONCACAF general secretary and a former FIFA executive committee member, waived indictment and pleaded guilty to a 10-count information charging him with racketeering conspiracy, wire fraud conspiracy, money laundering conspiracy, income tax evasion and failure to file a Report of Foreign Bank and Financial Accounts (FBAR). Blazer forfeited over $1.9 million at the time of his plea and has agreed to pay a second amount to be determined at the time of sentencing.
On Dec. 12, 2014, the defendant José Hawilla, the owner and founder of the Traffic Group, the Brazilian sports marketing conglomerate, waived indictment and pleaded guilty to a four-count information charging him with racketeering conspiracy, wire fraud conspiracy, money laundering conspiracy and obstruction of justice. Hawilla also agreed to forfeit over $151 million, $25 million of which was paid at the time of his plea.
On May 14, 2015, the defendants Traffic Sports USA Inc. and Traffic Sports International Inc. pleaded guilty to wire fraud conspiracy.
All money forfeited by the defendants is being held in reserve to ensure its availability to satisfy any order of restitution entered at sentencing for the benefit of any individuals or entities that qualify as victims of the defendants’ crimes under federal law.
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The indictment unsealed today has been assigned to U.S. District Court Judge Raymond J. Dearie of the Eastern District of New York.
The indicted and convicted individual defendants face maximum terms of incarceration of 20 years for the RICO conspiracy, wire fraud conspiracy, wire fraud, money laundering conspiracy, money laundering and obstruction of justice charges.
In addition, Eugenio Figueredo faces a maximum term of incarceration of 10 years for a charge of naturalization fraud and could have his U.S. citizenship revoked. He also faces a maximum term of incarceration of five years for each tax charge.
Charles Blazer faces a maximum term of incarceration of 10 years for the FBAR charge and five years for the tax evasion charges; and
Daryan and Daryll Warner face maximum terms of incarceration of 10 years for structuring financial transactions to evade currency reporting requirements. Each individual defendant also faces mandatory restitution, forfeiture and a fine.
By the terms of their plea agreements, the corporate defendants face fines of $500,000 and one year of probation.
The government’s investigation is ongoing.
The government’s case is being prosecuted by Assistant U.S. Attorneys Evan M. Norris, Amanda Hector, Darren A. LaVerne, Samuel P. Nitze, Keith D. Edelman and Brian D. Morris of the Eastern District of New York, with assistance provided by the Justice Department’s Office of International Affairs and Organized Crime and Gang Section.
The Indicted Defendants:
ALEJANDRO BURZACO
Age: 50
Nationality: Argentina
AARON DAVIDSON
Age: 44
Nationality: USA
RAFAEL ESQUIVEL
Age: 68
Nationality: Venezuela
EUGENIO FIGUEREDO
Age: 83
Nationality: USA, Uruguay
HUGO JINKIS
Age: 70
Nationality: Argentina
MARIANO JINKIS
Age: 40
Nationality: Argentina
NICOLÁS LEOZ
Age: 86
Nationality: Paraguay
EDUARDO LI
Age: 56
Nationality: Costa Rica
JOSÉ MARGULIES, also known as José Lazaro
Age: 75
Nationality: Brazil
JOSÉ MARIA MARIN
Age: 83
Nationality: Brazil
JULIO ROCHA
Age: 64
Nationality: Nicaragua
COSTAS TAKKAS
Age: 58
Nationality: United Kingdom
JACK WARNER
Age: 72
Nationality: Trinidad and Tobago
JEFFREY WEBB
Age: 50
Nationality: Cayman Islands
The Convicted Defendants:
CHARLES BLAZER
Age: 70
Nationality: USA
JOSÉ HAWILLA
Age: 71
Nationality: Brazil
DARYAN WARNER
Age: 46
Nationality: Trinidad and Tobago, Grenada
DARYLL WARNER
Age: 40
Nationality: USA, Trinidad and Tobago
TRAFFIC SPORTS INTERNATIONAL INC.
Registered: British Virgin Islands
TRAFFIC SPORTS USA INC.
Registered: USA
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