The U.S. Justice Department’s prosecution for bribery of college basketball recruits led to plea deals for four college coaches (Lamont Evans, Book Richardson, Tony Bland and Chuck Person), clothing executive Rashan Michel and investment advisor Munish Sood. It also produced wire fraud and conspiracy convictions—recently upheld by the U.S. Court of Appeals for the Second Circuit—of former Adidas executive James Gatto, former Adidas consultant Merl Code and client recruiter Christian Dawkins.
While the criminal law stage is likely over (unless the U.S. Supreme Court reviews and reverses the convictions), other legal fallout continues.
On Friday, the U.S. Securities and Exchange Commission published an order instituting cease-and-desist proceedings against Rosedale Asset Management, previously known as Princeton Advisory Wealth Management (PWN) and at one time owned and run by Sood.
The order captures the SEC accepting a settlement offer by Rosedale (PWN) and offers new details on how the bribery scheme played out. It instructs that, while under the control of Sood, PWN committed several violations of the Investment Advisers Act of 1940 by misleading prospective clients who were “past, present and prospective” college basketball players. At least five players who are now pro signed advisory agreements with PWN; none is identified, though Indiana Pacers forward Brian Bowen was directly linked during the prosecution stage.
The order details the illegal wire exchanges that occurred between February 2016 and September 2017. Sood, the order explains, “made at least 20 payments totaling more than $96,000” to basketball agents and related figures.
These payments were bargained-for-exchanges in which Sood paid an individual to accomplish one of two goals: (1) persuade recruits to retain PWN after they joined the NBA or (2) introduce the recruits to Sood, who would then pay them in hopes that they’d pledge to hire PWN upon turning pro.
To illustrate, in April 2016, Sood made eight payments to an agent that totaled $24,500. In return, the agent referred several recruits—all of whom are now in the NBA—to Sood. While under the control of Sood, PWN violated the Investment Advisers Act by failing to tell the recruits there were “facilitating referral payments” that brought them to Sood.
An additional hearing will determine civil penalties. Sood, 48, avoided jail time through his plea deal. He pleaded guilty to charges for conspiracy to commit bribery and honest services fraud, wire fraud conspiracy and bribery of an agent of a federally funded organization. Sood was ordered to pay a fine of $25,000 and restitution of $28,261. As is typical in a federal plea deal, Sood also agreed to serve as a cooperating witness for the Justice Department, meaning he testified against other defendants and shared records to aid prosecutors. He divested his stake in PWN in 2017.