New York sports agents Norby Walters and Lloyd Bloom, backed by the money and muscle of a powerful organized-crime boss, used cash and threats of violence to secure bargaining rights for 44 college athletes, a federal grand jury charged Wednesday.
The eight-count indictment against Walters and Bloom charged that Michael Franzese, reputed to be one of the top bosses in New York`s Colombo organized- crime family, was a silent partner in Walters` firm.
Franzese financed efforts by the agents to induce college athletes to sign over their rights to represent them in professional contract negotiations before their college eligibility expired, according to the charges. He also provided the muscle for Walters in an unsuccessful attempt in 1981 to take over the Jackson Five musical tour, according to the charges.
The long-awaited grand jury and FBI investigation that convulsed the college sports world for the last 18 months produced charges that included extortion, mail fraud, racketeering, obstruction of justice and perjury.
The indictment against Walters and Bloom, who operated World Sports & Entertainment Inc., also seeks forfeiture of the business, as well as $275,000 in earnings.
Also indicted separately was David Lueddeke, a California-based sports agent who allegedly paid $5,000 to Cris Carter, a former Ohio State University football star. Carter was charged with perjury and obstruction of justice, but he is cooperating in the investigation, officials said.
The indictment against Walters and Bloom said Franzese, now serving a 10- year prison sentence for a New York racketeering conviction, invested $50,000 in World Sports & Entertainment and received numerous cash payments of unspecified amounts in return.
In a major breakthrough, the federal government obtained the cooperation of Franzese in its investigation, according to sources familiar with the inquiry. U.S. Atty. Anton Valukas said the investigation was continuing. He also said it would be ”unfair” to suggest that the inquiry focused on point- shaving or fixing of games.
The indictment charged that Walters and Bloom invoked the threat of organized-crime associates in Las Vegas and California to keep athletes in line.
Athletes who balked at signing agreements or later sought to dismiss Walters and Bloom were threatened with physical violence, authorities said. One player was warned that the house of his new agent ”would be blown up,”
said Valukas, who announced the indictment at a news conference in the Kluczynski Federal Building.
If convicted on all counts, Walters and Bloom each face a maximum sentence of 70 years in prison and a $2 million fine.
One of the athletes, Chicago Bears defensive back Maurice Douglass, signed on with Walters and Bloom in December, 1985, but sought to get a new agent in 1986, according to the indictment. Douglass reconsidered after Bloom said that if he switched, ”they would have somebody `break his legs` and that Douglass might not ever make it to the upcoming National Football League draft,” according to the indictment.
Others threatened included Chicago Bears wide receiver Ron Morris, who allegedly was told that people who ”don`t care what they do” would break his legs and destroy his new agent`s home, the indictment said. Morris had no comment Wednesday.
The indictment said University of Texas football player Everett Gay was told by Bloom, through a teammate, that if he tried to switch agents, men from Las Vegas would ”see that Everett Gay doesn`t play football again.”
More Top Picks Routers
M.L. Trope, the Los Angeles attorney for Bloom, said his client met Walters in 1985 while operating a New York catering business. Trope said Bloom ”does not have, nor did he have, any knowledge of the funding of the corporation.”
Trope said his client does not know Franzese.
”He never met Franzese,” Trope said. ”Mr. Bloom wouldn`t hurt a fly.” Bloom and Walters are scheduled to be arraigned Thursday in U.S. District Court in Chicago. Both plan to plead innocent.
The charges, outlined by Valukas and Howard Pearl, an assistant U.S. attorney, describe one of the most expansive frauds in college athletics. As professional sport salaries skyrocketed in recent years, the competition has increased among agents to sign the athletes.
At one time Walters and Bloom had the bargaining rights to 8 of the top 28 draft picks in the 1987 National Football League draft. Eventually all except two abandoned the agents.
The college eligibility of 44 athletes was compromised by the agents, authorities said, including that of Carter, Ronnie Harmon of the University of Iowa; John Clay of the University of Missouri; Paul Palmer of Temple University; Brad Sellers of Ohio State University, now with the Chicago Bulls; and the Bears` Morris, who played at Southern Methodist University.
Harmon was paid more than $54,000 over two years by Walters and Bloom, the indictment said.
The indictment also charged that after Palmer signed a series of contracts with the Kansas City Chiefs football team, he entrusted $145,000 with Bloom to invest in a California ”credit repair” business. Pearl said that ”there is no evidence that Palmer ever got any benefit” from the investment.
Prosecutors said Bloom converted $140,000 of the money to his personal use, including using about $82,000 for the downpayment on the lease of a $160,000 Rolls-Royce Corniche convertible.
Trope denied that Bloom had defrauded Palmer.
Because 43 of the athletes involved in the investigation have agreed to pay back scholarship money, perform varying amounts of community service and testify against Walters and Bloom, they were not charged with any crimes, Valukas said.
The indictment also said that the schools, including the University of Illinois, University of Notre Dame, Michigan State University, Purdue University, University of Michigan, Temple and Miami University of Ohio were defrauded.
Valukas said that starting with Franzese`s $50,000 in seed money, Walters, 58, of New York, and Bloom, 29, of Sherman Oaks, Calif., descended on college athletes and provided them with cash, concert tickets, trips to New York, interest-free loans, cars, the use of limousines, introductions to prominent entertainers, large insurance policies and benefits to family members to persuade them to sign agreements allowing the agents to bargain for them with professional teams.
The indictment charged that the athletes signed the contracts before their athletic eligibility expired, a violation of National Collegiate Athletic Association rules.
Walters and Bloom told athletes the contracts would be postdated to the time when their eligibility had expired to make it appear that the contracts were legal, the indictment charged.
Valukas said Walters and Bloom ”paid the student athletes a signing bonus in cash.”
”They periodically provided additional funds for the student athletes using money orders and wire transfers, frequently in the names of third parties,” Valukas said. ”And they leased cars for student athletes in the names of third parties.”
The athletes were coached on how to conceal the agreements and were told the deals would be kept secret, Valukas added.
A Notre Dame spokesman said the school had warned players about the dangers of dealing with agents, but added: ”It was awfully difficult to monitor every single phone call that a player had, to know what did or did not happen.”
Robert Banks, a former standout defensive tackle for the Notre Dame football team, was alleged to have received $5,000 from Bloom and Walters in May, 1986, four months before the beginning of his final collegiate season. The indictment said Banks` football scholarship was worth $11,477 his senior year.
In a statement released by his attorney, Scott Turow, Banks said: ”I have cooperated fully with the United States attorney`s office in Chicago and the Federal Bureau of Investigation in their investigation of this matter. . . . I deeply regret this matter and any unintended embarrassment it may have caused the University of Notre Dame, my family or the National Football League.”
The indictment against Walters also outlined details of a joint venture in 1981 in which Franzese and Walters tried unsuccessfully to persuade the Jackson Five musical group to allow Walters to become one of the group`s booking agents.
Franzese told the group`s manager, who was not identified in the indictment, that Walters, then operating as Norby Walters & Associates, would ”be involved in the Jackson Five Tour and be their partners or there would be no tour,” the indictment said.