1
00:00:03,200 --> 00:00:08,000
Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.

2
00:00:08,720 --> 00:00:11,399
Speaker 2: I think it's extremely important. I think everybody deserves a

3
00:00:11,440 --> 00:00:15,240
Speaker 2: shot and deserves a chance and the opportunity to play sport. Everybody,

4
00:00:15,320 --> 00:00:17,639
Speaker 2: every little kid should have the opportunity to play sport

5
00:00:17,680 --> 00:00:19,120
Speaker 2: because it can really change your life.

6
00:00:19,720 --> 00:00:23,759
Speaker 3: Playing sports has certainly changed Paige Becker's life. The Yukon

7
00:00:23,880 --> 00:00:27,840
Speaker 3: Husky Star has signed deals with Gatorade, StockX Cheg, and

8
00:00:28,000 --> 00:00:32,240
Speaker 3: Kroc since the new NCAA rules that allow college athletes

9
00:00:32,280 --> 00:00:35,279
Speaker 3: to make money off their name, image, and likeness. There

10
00:00:35,280 --> 00:00:37,879
Speaker 3: are plenty of stories about the six figure deals for

11
00:00:38,040 --> 00:00:42,040
Speaker 3: star college athletes with massive social media following, but the

12
00:00:42,120 --> 00:00:45,680
Speaker 3: majority of college students benefiting from the new rules are

13
00:00:45,680 --> 00:00:50,000
Speaker 3: making small, one off agreements without help from expensive lawyers

14
00:00:50,080 --> 00:00:54,320
Speaker 3: or agents, and that's led to exploitation and students getting

15
00:00:54,440 --> 00:01:00,000
Speaker 3: ripped off by disreputable agents, questionable business deals, bad contracts,

16
00:01:00,280 --> 00:01:04,280
Speaker 3: outright scams. Joining me is Nicole Sadik, a reporter with

17
00:01:04,319 --> 00:01:08,440
Speaker 3: Bloomberg Law who's investigated this new era of college sports.

18
00:01:09,240 --> 00:01:12,800
Speaker 3: Tell us what happened to Savannah Shane here when she

19
00:01:13,040 --> 00:01:16,240
Speaker 3: was fresh off a second place team finish at the

20
00:01:16,360 --> 00:01:19,920
Speaker 3: NCAA Gymnastics Championship last year.

21
00:01:20,760 --> 00:01:24,880
Speaker 4: So Savannah Shanehare is a former gymnast at the University

22
00:01:24,880 --> 00:01:29,000
Speaker 4: of Florida and she'd nearly been scammed doing what she

23
00:01:29,080 --> 00:01:32,360
Speaker 4: thought was an nil deal. The long story short is,

24
00:01:32,800 --> 00:01:35,920
Speaker 4: she was asked to participate in a photo shoot where

25
00:01:36,360 --> 00:01:39,800
Speaker 4: she would be modeling a New York brand's clothing. It

26
00:01:39,880 --> 00:01:42,000
Speaker 4: turned out the person who had reached out to her

27
00:01:42,200 --> 00:01:44,640
Speaker 4: was a scammer, and they sent her a fraudulent check.

28
00:01:45,000 --> 00:01:48,160
Speaker 4: And Savannah's story is really just one example of a

29
00:01:48,280 --> 00:01:52,600
Speaker 4: larger issue today with college athletics, which is that nil

30
00:01:52,720 --> 00:01:55,560
Speaker 4: deals or what appeared to be nil deals, can be

31
00:01:55,680 --> 00:01:57,080
Speaker 4: abusive and exploitative.

32
00:01:57,640 --> 00:02:00,680
Speaker 3: That was just an outright scam that happened to but

33
00:02:00,800 --> 00:02:05,520
Speaker 3: there are other kinds of exploitation, like in contracts.

34
00:02:06,160 --> 00:02:09,280
Speaker 4: Absolutely, one of the biggest red flags that I heard

35
00:02:09,320 --> 00:02:13,519
Speaker 4: from some different lawyers that I spoke to is contracts

36
00:02:13,560 --> 00:02:18,320
Speaker 4: where companies are asking students to sign away their intellectual

37
00:02:18,360 --> 00:02:21,880
Speaker 4: property rights. Imagine you are a student athlete and you're

38
00:02:21,919 --> 00:02:25,480
Speaker 4: doing brand promotion on Instagram for you know, let's say

39
00:02:25,480 --> 00:02:28,280
Speaker 4: a shoe brand. You'll post a picture of you wearing

40
00:02:28,320 --> 00:02:31,720
Speaker 4: that shoe, and if you've signed away your intellectual property rights.

41
00:02:31,720 --> 00:02:33,960
Speaker 4: In some cases, that could mean that the company can

42
00:02:34,080 --> 00:02:36,480
Speaker 4: continue to use that photo of you, you know, for

43
00:02:36,520 --> 00:02:39,480
Speaker 4: as long as they want, in perpetuity. And so if

44
00:02:39,520 --> 00:02:42,239
Speaker 4: you were to go pro after college and your market

45
00:02:42,320 --> 00:02:45,079
Speaker 4: value increases, you know, the commission you'd be getting or

46
00:02:45,080 --> 00:02:48,320
Speaker 4: the royalties you'd be getting from that photo wouldn't really

47
00:02:48,360 --> 00:02:50,720
Speaker 4: be equitable to your market value.

48
00:02:50,919 --> 00:02:54,200
Speaker 3: So they ask them to sign away their intellectual property

49
00:02:54,280 --> 00:02:55,640
Speaker 3: rights in perpetuity.

50
00:02:55,960 --> 00:02:59,119
Speaker 4: That has been sometimes the case. Of course, not every

51
00:02:59,240 --> 00:03:01,680
Speaker 4: nil deal has had this. This is sort of, you know,

52
00:03:01,800 --> 00:03:04,040
Speaker 4: the biggest red flag, but it certainly happens.

53
00:03:04,480 --> 00:03:06,639
Speaker 3: You got a hold of a couple of these contracts.

54
00:03:06,880 --> 00:03:08,920
Speaker 3: Tell us about the one where the company would take

55
00:03:09,040 --> 00:03:12,880
Speaker 3: forty percent of the revenue of merchandise sales, a rate

56
00:03:13,040 --> 00:03:15,720
Speaker 3: one lawyer described as obscene.

57
00:03:16,120 --> 00:03:20,679
Speaker 4: It was this Texas merchandise company, and in the contract

58
00:03:20,760 --> 00:03:22,840
Speaker 4: it said that the company would keep at least forty

59
00:03:22,880 --> 00:03:26,120
Speaker 4: percent of the revenue from the merchandise sales. That's a

60
00:03:26,360 --> 00:03:30,960
Speaker 4: huge commission. But what's really interesting about this contract is

61
00:03:30,960 --> 00:03:34,000
Speaker 4: that it had another layer to it, which is that

62
00:03:34,040 --> 00:03:37,520
Speaker 4: it locked in that same percentage for any future deals,

63
00:03:37,720 --> 00:03:40,960
Speaker 4: so that essentially made the relationship between the student and

64
00:03:41,000 --> 00:03:44,080
Speaker 4: the company like an athlete and an agent, which is

65
00:03:44,360 --> 00:03:45,080
Speaker 4: another level.

66
00:03:45,360 --> 00:03:47,680
Speaker 3: So tell us about the one that was pitched to

67
00:03:47,720 --> 00:03:48,840
Speaker 3: basketball players.

68
00:03:49,560 --> 00:03:54,160
Speaker 4: This contract was one page, very short and not really descriptive.

69
00:03:54,360 --> 00:03:57,320
Speaker 4: So it didn't state who would own the student's intellectual

70
00:03:57,360 --> 00:04:00,880
Speaker 4: property rights, and it didn't define, you know, what net

71
00:04:00,880 --> 00:04:04,200
Speaker 4: profits would be. And so this company was going to

72
00:04:04,240 --> 00:04:07,920
Speaker 4: be selling something and the students didn't know how much

73
00:04:07,920 --> 00:04:08,840
Speaker 4: money they would be making.

74
00:04:09,080 --> 00:04:11,880
Speaker 3: And lawyers you spoke to said, some of these contracts

75
00:04:11,920 --> 00:04:14,280
Speaker 3: look like they're just pulled off the internet.

76
00:04:14,560 --> 00:04:17,480
Speaker 4: Yes, that's right. And actually even some people I spoke

77
00:04:17,560 --> 00:04:20,719
Speaker 4: to said that they would ask the students themselves to

78
00:04:20,760 --> 00:04:21,560
Speaker 4: write the contract.

79
00:04:22,360 --> 00:04:26,760
Speaker 3: Okay, that's new. Can you compare the requirements to be

80
00:04:26,800 --> 00:04:31,359
Speaker 3: a so called NIL agent with the requirements to be

81
00:04:31,400 --> 00:04:34,719
Speaker 3: a professional football agent in the NFL.

82
00:04:35,279 --> 00:04:38,240
Speaker 4: The agents for these professional football players they have to

83
00:04:38,320 --> 00:04:41,839
Speaker 4: register with the Players Association, they have to pass a

84
00:04:41,920 --> 00:04:45,640
Speaker 4: legal test, and probably the most interesting to me, or

85
00:04:45,680 --> 00:04:47,480
Speaker 4: for this story at least, is that they have to

86
00:04:47,880 --> 00:04:50,640
Speaker 4: put a cap on their commission at three percent, and

87
00:04:50,800 --> 00:04:54,919
Speaker 4: IL agents don't have that commission cap at all. It

88
00:04:55,040 --> 00:04:58,440
Speaker 4: differs state to state based on state laws. But in

89
00:04:58,480 --> 00:05:01,880
Speaker 4: many cases, the most that an NIL or a so

90
00:05:02,000 --> 00:05:05,360
Speaker 4: called NIL agent has to do is just pay a

91
00:05:05,400 --> 00:05:07,599
Speaker 4: fee to the state, pay an application.

92
00:05:07,680 --> 00:05:11,520
Speaker 3: See so we hear about the big figure contracts, you know,

93
00:05:11,720 --> 00:05:18,200
Speaker 3: six figures. Are most of the students getting much smaller deals?

94
00:05:18,920 --> 00:05:21,679
Speaker 4: Yeah, I mean, these six figure deals get the most

95
00:05:21,760 --> 00:05:25,800
Speaker 4: news coverage, but it is not the best representation of reality.

96
00:05:26,200 --> 00:05:28,719
Speaker 4: Most students are making deals in the hundreds of dollars,

97
00:05:28,760 --> 00:05:31,240
Speaker 4: maybe the thousands of dollars. But you have to think

98
00:05:31,240 --> 00:05:36,440
Speaker 4: about it. There's five hundred thousand college athletes in the NCUBLEA,

99
00:05:36,760 --> 00:05:39,599
Speaker 4: and we're really really just getting that top one percent

100
00:05:39,680 --> 00:05:40,800
Speaker 4: in most news stories.

101
00:05:41,400 --> 00:05:46,000
Speaker 3: Is there anyone on campus that students can go to

102
00:05:46,640 --> 00:05:49,040
Speaker 3: for advice when they get these offers.

103
00:05:49,880 --> 00:05:54,320
Speaker 4: One of the struggles that some athletes told me about

104
00:05:54,600 --> 00:05:59,000
Speaker 4: is that the athletics departments are not allowed to provide

105
00:05:59,080 --> 00:06:03,520
Speaker 4: legal advice to the students. That's actually something the NCUBA says,

106
00:06:03,600 --> 00:06:07,640
Speaker 4: is that universities cannot provide legal advice to students. However,

107
00:06:07,720 --> 00:06:10,719
Speaker 4: some schools have found, you know, sort of workarounds to

108
00:06:10,760 --> 00:06:14,000
Speaker 4: this where their law schools, which are not under the

109
00:06:14,120 --> 00:06:18,039
Speaker 4: nc double A, they offer pro bono legal clinics, so

110
00:06:18,120 --> 00:06:20,080
Speaker 4: students can go to them with their questions and their

111
00:06:20,080 --> 00:06:23,039
Speaker 4: concerns about their NIL deals. But again, you know, not

112
00:06:23,200 --> 00:06:26,880
Speaker 4: every university has a law school. Not every student knows

113
00:06:27,000 --> 00:06:30,080
Speaker 4: to go to these pro bono clinics, so for the

114
00:06:30,120 --> 00:06:32,760
Speaker 4: most part, they're on their own, or they're working with

115
00:06:32,960 --> 00:06:35,360
Speaker 4: you know, their parents, or if they can afford it

116
00:06:35,400 --> 00:06:37,520
Speaker 4: and it makes sense for their deals, they're working with

117
00:06:37,720 --> 00:06:39,719
Speaker 4: a lawyer outside of the university.

118
00:06:39,800 --> 00:06:44,400
Speaker 3: Is there anyone on campus that students can go to

119
00:06:45,040 --> 00:06:47,440
Speaker 3: for advice when they get these offers.

120
00:06:48,000 --> 00:06:52,000
Speaker 4: One of the struggles that some athletes told me about

121
00:06:52,279 --> 00:06:56,359
Speaker 4: is that the athletics departments are not allowed to provide

122
00:06:56,480 --> 00:06:59,599
Speaker 4: legal advice to the students. That's actually something the nc

123
00:06:59,680 --> 00:07:03,240
Speaker 4: DOUBLE says. However, some schools have found, you know, sort

124
00:07:03,240 --> 00:07:06,280
Speaker 4: of workarounds to this, where there are law schools which

125
00:07:06,279 --> 00:07:11,120
Speaker 4: are not under the NCUBA, they offer pro bono legal clinics,

126
00:07:11,320 --> 00:07:13,200
Speaker 4: so students can go to them with their questions and

127
00:07:13,240 --> 00:07:15,600
Speaker 4: their concerns about their NIL deals. But you know, not

128
00:07:15,760 --> 00:07:19,200
Speaker 4: every university has a law school. Not every student knows

129
00:07:19,320 --> 00:07:21,960
Speaker 4: to go to these pro bono clinics, so for the

130
00:07:21,960 --> 00:07:24,480
Speaker 4: most part, they're on their own or they're working with

131
00:07:24,560 --> 00:07:26,680
Speaker 4: their parents or if they can afford it and it

132
00:07:26,720 --> 00:07:29,240
Speaker 4: makes sense for their deals, they're working with a lawyer

133
00:07:29,240 --> 00:07:30,440
Speaker 4: outside of the university.

134
00:07:30,760 --> 00:07:35,320
Speaker 3: You talked to an athletics compliance officer at Virginia Commonwealth University.

135
00:07:35,560 --> 00:07:37,760
Speaker 3: Tell us what she is concerned about.

136
00:07:38,520 --> 00:07:43,320
Speaker 4: Well, she is actually, you know, a licensed attorney, and

137
00:07:43,520 --> 00:07:47,760
Speaker 4: so when she hears about or reads the contract that

138
00:07:47,880 --> 00:07:50,880
Speaker 4: students has signed, she can pretty quickly pick up on

139
00:07:51,280 --> 00:07:54,280
Speaker 4: red flags. And unfortunately, she told me that she's not

140
00:07:54,480 --> 00:07:58,760
Speaker 4: allowed to provide legal advice to students about those contracts.

141
00:07:58,880 --> 00:08:01,360
Speaker 4: And she said to me that she thinks sometimes that

142
00:08:01,760 --> 00:08:04,200
Speaker 4: you know, acting in this conservative manner is you know,

143
00:08:04,320 --> 00:08:06,720
Speaker 4: not helping the students to the best of her ability.

144
00:08:07,040 --> 00:08:09,200
Speaker 4: But unfortunately that's what she has to do to be

145
00:08:09,240 --> 00:08:11,320
Speaker 4: in compliance with nc double A policies.

146
00:08:11,680 --> 00:08:14,160
Speaker 3: I guess you can understand that the NCUBA doesn't want

147
00:08:14,200 --> 00:08:18,480
Speaker 3: to open itself for its people up to lawsuits over

148
00:08:18,840 --> 00:08:20,280
Speaker 3: you know, the advice that they give.

149
00:08:20,920 --> 00:08:24,480
Speaker 4: So I spoke to Tim Buckley, who is the senior

150
00:08:24,560 --> 00:08:27,920
Speaker 4: vice president of External Affairs at the nc double A,

151
00:08:28,320 --> 00:08:32,800
Speaker 4: and he emphasized that the organization is a member based organization,

152
00:08:33,440 --> 00:08:37,480
Speaker 4: which means that some universities act as representatives for the

153
00:08:37,520 --> 00:08:41,880
Speaker 4: rest of the membership of the organization, and that these

154
00:08:41,880 --> 00:08:44,640
Speaker 4: are the ones who are making the policies and making

155
00:08:44,679 --> 00:08:48,000
Speaker 4: the bylaws. And so a lawyer that I to said,

156
00:08:48,760 --> 00:08:52,880
Speaker 4: these universities they have a reason for wanting to prevent

157
00:08:53,080 --> 00:08:56,280
Speaker 4: their staff from providing legal advice, which is, like you said,

158
00:08:56,320 --> 00:08:59,760
Speaker 4: it would open them up to liability. Imagine a student

159
00:09:00,160 --> 00:09:04,640
Speaker 4: asking for advice, getting bad advice and then suing the university.

160
00:09:04,960 --> 00:09:06,679
Speaker 4: So it really would open them up to a lot

161
00:09:06,720 --> 00:09:08,320
Speaker 4: of potential lawsuits.

162
00:09:08,640 --> 00:09:10,720
Speaker 3: Is the NCUBA doing anything about this?

163
00:09:11,679 --> 00:09:15,920
Speaker 4: So Tim Buckley, the vice president of External Affairs at NCAA,

164
00:09:16,320 --> 00:09:19,600
Speaker 4: said that there is working group right now working on

165
00:09:19,760 --> 00:09:24,120
Speaker 4: updating the bylaws and the policies related to NIL and

166
00:09:24,160 --> 00:09:29,000
Speaker 4: they're also pushing Congress to come up with a federal solutions.

167
00:09:29,520 --> 00:09:34,840
Speaker 4: The NCAA can't govern every single entity involved in this space.

168
00:09:34,920 --> 00:09:38,800
Speaker 4: They can only really govern the schools and the athletes,

169
00:09:38,960 --> 00:09:41,840
Speaker 4: and so a federal law could help fill in some

170
00:09:41,920 --> 00:09:44,000
Speaker 4: of those gaps. You know, who's going to govern the

171
00:09:44,080 --> 00:09:47,120
Speaker 4: agents and who's going to govern all those other bodies

172
00:09:47,160 --> 00:09:48,560
Speaker 4: that are involved in these deals.

173
00:09:49,160 --> 00:09:54,040
Speaker 3: So some states prohibit students from signing anil agreements that

174
00:09:54,120 --> 00:09:58,440
Speaker 3: outlast their college careers, which sounds very smart. How many

175
00:09:58,440 --> 00:10:01,400
Speaker 3: states have something like that in I'm not.

176
00:10:01,360 --> 00:10:05,480
Speaker 4: Sure I have an exact number, although Texas is a

177
00:10:05,480 --> 00:10:08,559
Speaker 4: big one that does that. But you know, some people

178
00:10:09,080 --> 00:10:12,520
Speaker 4: in the space say the more restrictive laws, as the

179
00:10:12,520 --> 00:10:15,520
Speaker 4: word says, they restrict what students are allowed to do,

180
00:10:15,600 --> 00:10:17,960
Speaker 4: so they're not in favor of that. Other people say

181
00:10:18,000 --> 00:10:20,679
Speaker 4: that these restrictions are important to protect them. So it's

182
00:10:20,760 --> 00:10:23,360
Speaker 4: kind of this debate and it's still up in the air.

183
00:10:23,880 --> 00:10:27,320
Speaker 3: You spoke to former University of New Mexico track star

184
00:10:27,800 --> 00:10:32,080
Speaker 3: Kendall Spencer, and I thought what he said was really intuitive,

185
00:10:32,240 --> 00:10:35,600
Speaker 3: and he compared this to the concussion cases.

186
00:10:36,280 --> 00:10:40,480
Speaker 4: That's right. When I first started investigating this, I had

187
00:10:40,480 --> 00:10:43,360
Speaker 4: a really hard time actually finding athletes who would speak

188
00:10:43,400 --> 00:10:46,680
Speaker 4: to me. And Kendall Spencer said, a lot of these

189
00:10:46,720 --> 00:10:49,280
Speaker 4: students aren't going to come forward until a few years

190
00:10:49,320 --> 00:10:53,400
Speaker 4: down the line, until you know, after they've graduated college,

191
00:10:54,280 --> 00:10:57,199
Speaker 4: for example, they're no longer obligated to the provisions in

192
00:10:57,240 --> 00:11:00,559
Speaker 4: their contract, and when they finally Sue said that we're

193
00:11:00,559 --> 00:11:03,200
Speaker 4: going to start seeing lawsuits, you know, maybe five or

194
00:11:03,240 --> 00:11:05,720
Speaker 4: ten years from now, and so that's really similar to

195
00:11:05,800 --> 00:11:08,920
Speaker 4: the concussion than when you know, that became really prevalent

196
00:11:09,040 --> 00:11:10,559
Speaker 4: only years after No.

197
00:11:10,679 --> 00:11:13,600
Speaker 3: We're talking about the problems, But how how has this

198
00:11:14,320 --> 00:11:19,600
Speaker 3: changed the lives of college athletes? Is there a demonstrable change?

199
00:11:20,400 --> 00:11:23,600
Speaker 4: I mean, NIL has really been wonderful for a lot

200
00:11:23,880 --> 00:11:28,160
Speaker 4: of college athletes, because you know, college athletes, they spend

201
00:11:29,080 --> 00:11:31,120
Speaker 4: a crazy amount of their time, you know, in the

202
00:11:31,160 --> 00:11:34,000
Speaker 4: gym or on the field or on the court. And

203
00:11:34,480 --> 00:11:39,160
Speaker 4: before NIL was permitted, they weren't allowed to make any

204
00:11:39,240 --> 00:11:41,360
Speaker 4: money off of the thing they spent most of their

205
00:11:41,400 --> 00:11:44,560
Speaker 4: lives doing. And so now that that's opened up for them,

206
00:11:45,440 --> 00:11:47,840
Speaker 4: you know, they can host training camps and make some

207
00:11:48,000 --> 00:11:51,360
Speaker 4: pocket money off of that. They can endorse brands on

208
00:11:51,440 --> 00:11:54,719
Speaker 4: social media and make some money off of that. And

209
00:11:55,000 --> 00:11:57,880
Speaker 4: you know, when you're in college having you know, five

210
00:11:57,960 --> 00:12:01,040
Speaker 4: hundred dollars in the bank out of bad thing at all.

211
00:12:01,120 --> 00:12:05,000
Speaker 4: So it's definitely been really wonderful for a lot of athletes.

212
00:12:05,040 --> 00:12:07,680
Speaker 4: And the story in no ways is trying to say

213
00:12:07,679 --> 00:12:08,360
Speaker 4: the opposite of that.

214
00:12:08,720 --> 00:12:11,880
Speaker 3: And also tell us about how it's you know, increased

215
00:12:12,120 --> 00:12:15,199
Speaker 3: recognition of some sports and female athletes.

216
00:12:15,640 --> 00:12:18,439
Speaker 4: Absolutely, I mean some of the biggest NIL stars are

217
00:12:18,840 --> 00:12:22,120
Speaker 4: female athletes. It's really put them into the spotlight. It's

218
00:12:22,160 --> 00:12:25,640
Speaker 4: also put some non revenue generating sports in the spotlight.

219
00:12:25,880 --> 00:12:28,000
Speaker 4: And what I mean by that is, you know sports

220
00:12:28,040 --> 00:12:30,760
Speaker 4: that are are not like basketball or football, you know

221
00:12:30,880 --> 00:12:34,080
Speaker 4: gymnastics or wrestling for example. You know, those sports have

222
00:12:34,200 --> 00:12:38,040
Speaker 4: really been elevated because these athletes have become so popular

223
00:12:38,080 --> 00:12:39,559
Speaker 4: on social media.

224
00:12:39,679 --> 00:12:43,079
Speaker 3: After working on this story for so long, do you

225
00:12:43,080 --> 00:12:45,560
Speaker 3: think we're going to hear more about the NIL problems

226
00:12:45,600 --> 00:12:48,960
Speaker 3: related to the students as time goes on, or that

227
00:12:49,000 --> 00:12:51,600
Speaker 3: they'll catch on and you know they'll learn more by

228
00:12:51,600 --> 00:12:52,280
Speaker 3: what they're hearing.

229
00:12:52,720 --> 00:12:56,040
Speaker 4: I definitely think sort of both of what you said.

230
00:12:56,080 --> 00:13:00,240
Speaker 4: I think we will continue to hear, unfortunately, stories of

231
00:13:00,400 --> 00:13:05,720
Speaker 4: student athletes being exploited in these NIL deals, But states

232
00:13:05,760 --> 00:13:09,319
Speaker 4: and also the federal government are very in tune to

233
00:13:09,400 --> 00:13:12,560
Speaker 4: these issues, so I think reforms are coming.

234
00:13:13,160 --> 00:13:13,320
Speaker 2: You know.

235
00:13:13,360 --> 00:13:17,040
Speaker 4: The only thing I'll add is that universities, although they

236
00:13:17,080 --> 00:13:19,839
Speaker 4: can't provide legal advice to the student athletes, a lot

237
00:13:19,840 --> 00:13:23,160
Speaker 4: of them have been working really hard to provide educational

238
00:13:23,200 --> 00:13:28,280
Speaker 4: courses to the students, like financial literacy and life skills workshop,

239
00:13:28,760 --> 00:13:31,520
Speaker 4: you know, to educate them on what types of contracts

240
00:13:31,559 --> 00:13:34,360
Speaker 4: you should and shouldn't sign. So, although you know they're

241
00:13:34,360 --> 00:13:37,120
Speaker 4: not acting as lawyers, they are educating them and I

242
00:13:37,160 --> 00:13:39,240
Speaker 4: think that that is an important piece of the puzzle

243
00:13:39,280 --> 00:13:39,680
Speaker 4: as well.

244
00:13:40,000 --> 00:13:43,559
Speaker 3: A great story, Nicole, and really well researched. Thanks so

245
00:13:43,640 --> 00:13:47,679
Speaker 3: much for joining us. That's Bloomberg Law reporter Nicole Sonic.

246
00:13:49,080 --> 00:13:52,559
Speaker 5: This is now the third time this office has charged

247
00:13:52,600 --> 00:13:57,000
Speaker 5: Weinstein with a large scale scheme to rip off investors.

248
00:13:57,679 --> 00:14:01,120
Speaker 3: Ellie Weinstein was serving a twenty four year sentence for

249
00:14:01,200 --> 00:14:04,920
Speaker 3: a two hundred million dollar real estate Ponzi scheme when

250
00:14:04,960 --> 00:14:08,600
Speaker 3: Donald Trump commuted his sentence in the final hours of

251
00:14:08,640 --> 00:14:12,360
Speaker 3: his presidency in January of twenty twenty one. But it

252
00:14:12,400 --> 00:14:15,960
Speaker 3: didn't take Weinstein long after his release from prison to

253
00:14:16,040 --> 00:14:19,920
Speaker 3: begin another scam, according to the US Attorney for New Jersey,

254
00:14:19,960 --> 00:14:24,400
Speaker 3: Philip Sellinger, who says Weinstein was still on supervised release

255
00:14:24,720 --> 00:14:29,560
Speaker 3: when he defrauded investors by making false promises involving humanitarian

256
00:14:29,640 --> 00:14:33,280
Speaker 3: supplies destined for Ukraine, another Ponzi scheme.

257
00:14:33,960 --> 00:14:39,520
Speaker 5: Five defendants, including defendant Eleanu Weinstein, have been charged in

258
00:14:39,560 --> 00:14:43,479
Speaker 5: the District of New Jersey by criminal Complaint with conspiring

259
00:14:43,560 --> 00:14:47,280
Speaker 5: to defraud investors out of tens of millions of dollars

260
00:14:47,720 --> 00:14:50,760
Speaker 5: and conspiracy to obstruct the justice.

261
00:14:50,840 --> 00:14:53,920
Speaker 3: Weinstein is now back in jail after bail was denied,

262
00:14:53,960 --> 00:14:56,960
Speaker 3: and he's charged along with four other men, of defrauding

263
00:14:56,960 --> 00:14:59,720
Speaker 3: more than one hundred and fifty investors out of thirty

264
00:14:59,720 --> 00:15:03,800
Speaker 3: five million dollars by falsely promising to invest their money

265
00:15:03,800 --> 00:15:08,200
Speaker 3: in COVID nineteen masks, scarce baby formula, and first aid

266
00:15:08,280 --> 00:15:11,800
Speaker 3: kits bound for Ukraine. Joining me is Bloomberg Legal reporter

267
00:15:11,960 --> 00:15:15,360
Speaker 3: David Voriakis so tell us about the first scheme.

268
00:15:16,080 --> 00:15:19,880
Speaker 1: Ellie Weinstein was convicted in federal court in New Jersey

269
00:15:19,880 --> 00:15:23,960
Speaker 1: a decade ago for a real estate ponzi scheme that

270
00:15:24,120 --> 00:15:30,000
Speaker 1: primarily preyed on Orthodox Jews in the Lakewood, New Jersey area.

271
00:15:30,720 --> 00:15:37,160
Speaker 1: He pleaded guilty eventually and admitted that he stole about

272
00:15:37,160 --> 00:15:42,120
Speaker 1: two hundred million dollars from his victims. While he was

273
00:15:42,160 --> 00:15:45,720
Speaker 1: out on bail on that case, he was also arrested

274
00:15:45,760 --> 00:15:51,800
Speaker 1: in a separate scheme that involved investing in pre IPO

275
00:15:52,000 --> 00:15:55,280
Speaker 1: shares of Facebook, which turned out to be phony.

276
00:15:55,920 --> 00:15:59,840
Speaker 3: Trump commuted his sentence on the last days of his presidency,

277
00:16:00,160 --> 00:16:02,640
Speaker 3: and there was a campaign for his release and a

278
00:16:02,640 --> 00:16:05,760
Speaker 3: lot of the people were from the Orthodox Jewish community,

279
00:16:05,840 --> 00:16:08,000
Speaker 3: which is the community that he stole from.

280
00:16:08,520 --> 00:16:13,080
Speaker 1: That's correct. He got a group of supporters, including some

281
00:16:13,160 --> 00:16:17,440
Speaker 1: of his victims, a group of congressmen, Harvard Law School

282
00:16:17,480 --> 00:16:23,240
Speaker 1: professor Alan Dershowitz, a couple of former US attorneys, and

283
00:16:23,400 --> 00:16:27,520
Speaker 1: other supporters to campaign for his release. The White House

284
00:16:28,280 --> 00:16:32,320
Speaker 1: announced on Trump's last day in office that he was

285
00:16:32,360 --> 00:16:36,160
Speaker 1: among those who were getting commutations. They put out a

286
00:16:36,200 --> 00:16:39,240
Speaker 1: release citing that he was the father of seven children

287
00:16:39,320 --> 00:16:42,680
Speaker 1: and a loving husband, and that he had maintained an

288
00:16:42,720 --> 00:16:47,240
Speaker 1: exemplary prison history, and that he would have the strong

289
00:16:47,320 --> 00:16:51,360
Speaker 1: support from his community and members of his faith. He

290
00:16:51,400 --> 00:16:53,680
Speaker 1: served nearly eight years in prison when.

291
00:16:53,520 --> 00:16:57,480
Speaker 3: He was released, So now tell us about the scheme

292
00:16:57,560 --> 00:17:01,800
Speaker 3: that he's accused of now when it allegedly started.

293
00:17:02,080 --> 00:17:07,600
Speaker 1: Prosecutors say that his latest crimes began not long after

294
00:17:07,680 --> 00:17:12,760
Speaker 1: he got out of prison. He used several other conspirators

295
00:17:13,240 --> 00:17:19,880
Speaker 1: to convince people to invest in COVID nineteen mass scarce

296
00:17:20,160 --> 00:17:24,360
Speaker 1: baby formula, and first aid kits bound for Ukraine. They

297
00:17:24,400 --> 00:17:26,760
Speaker 1: say that this time around, there were one hundred investors

298
00:17:26,840 --> 00:17:30,479
Speaker 1: who put up thirty five million dollars. I believe they

299
00:17:30,520 --> 00:17:35,040
Speaker 1: were friends and family of Weinstein and the other conspirators

300
00:17:35,240 --> 00:17:40,280
Speaker 1: in the case, and the government cracked the case, as

301
00:17:40,320 --> 00:17:45,320
Speaker 1: I understand it, because a couple of the conspirators who

302
00:17:45,359 --> 00:17:49,399
Speaker 1: were not charged with crimes secretly recorded him, and he

303
00:17:49,480 --> 00:17:55,240
Speaker 1: made a number of admissions on those tapes, including he

304
00:17:55,400 --> 00:17:59,639
Speaker 1: said I finagled and ponzied and lied to people to

305
00:17:59,720 --> 00:18:03,720
Speaker 1: cover and he told one conspirator that he hit his

306
00:18:03,840 --> 00:18:08,320
Speaker 1: true identity behind the alias of Mike Koenig because he said,

307
00:18:08,400 --> 00:18:10,280
Speaker 1: no one would ever give you a penny if they

308
00:18:10,359 --> 00:18:13,520
Speaker 1: knew who I was, because I have a bad reputation.

309
00:18:14,200 --> 00:18:18,000
Speaker 3: So the US attorney said that these were brazen and

310
00:18:18,080 --> 00:18:22,080
Speaker 3: sophisticated crimes that involved multiple conspirators and drew right from

311
00:18:22,119 --> 00:18:26,160
Speaker 3: Weinstein's playbook of fraud. So was it the same kind

312
00:18:26,200 --> 00:18:28,679
Speaker 3: of things he was doing as he was convicted of

313
00:18:28,760 --> 00:18:30,200
Speaker 3: and a Ponzi scheme too.

314
00:18:30,600 --> 00:18:34,000
Speaker 1: That's what they've alleged that he used an alias and

315
00:18:34,240 --> 00:18:37,960
Speaker 1: he hid behind other people because he didn't want the

316
00:18:38,040 --> 00:18:42,040
Speaker 1: world to know that he was committing these kinds of crimes. Again,

317
00:18:43,320 --> 00:18:48,080
Speaker 1: he convinced people to put up money, and then he

318
00:18:48,200 --> 00:18:51,520
Speaker 1: used the money from later investors to pay earlier investors.

319
00:18:52,240 --> 00:18:55,720
Speaker 3: So allegedly repeating the sins of the past. And what

320
00:18:55,800 --> 00:18:58,080
Speaker 3: about the money he was supposed to pay in restitution.

321
00:18:59,040 --> 00:19:03,600
Speaker 1: He had a restitution order totaling about two hundred and

322
00:19:03,640 --> 00:19:08,520
Speaker 1: thirty million dollars and he had only paid a little

323
00:19:08,520 --> 00:19:11,400
Speaker 1: more than a million dollars of that. He also has

324
00:19:11,440 --> 00:19:14,920
Speaker 1: a series of civil judgments that are not covered by

325
00:19:14,960 --> 00:19:16,680
Speaker 1: his criminal restitution order.

326
00:19:17,520 --> 00:19:21,240
Speaker 3: You mentioned that there were secret recordings in which Weinstein

327
00:19:21,520 --> 00:19:26,399
Speaker 3: made admissions. Does that mean that the FBI has flipped

328
00:19:26,600 --> 00:19:28,000
Speaker 3: one or more people.

329
00:19:28,640 --> 00:19:32,959
Speaker 1: There's clearly people around Weinstein who are cooperating with the

330
00:19:33,040 --> 00:19:34,600
Speaker 1: FBI in this investigation.

331
00:19:35,440 --> 00:19:39,240
Speaker 3: One of the people you talked to said that Weinstein's

332
00:19:39,280 --> 00:19:41,080
Speaker 3: conduct is unique.

333
00:19:41,560 --> 00:19:45,760
Speaker 1: Well, the special Agent in charge of the New Jersey

334
00:19:45,840 --> 00:19:49,640
Speaker 1: office said, it's a very rare day that we announced

335
00:19:49,760 --> 00:19:53,360
Speaker 1: we've arrested a man who's already been arrested, convicted, sentenced

336
00:19:53,359 --> 00:19:56,280
Speaker 1: to prison, and then received a presidential commutation.

337
00:19:57,000 --> 00:20:00,960
Speaker 3: I take it it's the commutation part that makes this different,

338
00:20:00,960 --> 00:20:04,880
Speaker 3: because people come in and out of prison unfortunately all

339
00:20:04,920 --> 00:20:05,399
Speaker 3: the time.

340
00:20:06,200 --> 00:20:09,720
Speaker 1: Right because presumably when his sentence was commuted, this was

341
00:20:09,760 --> 00:20:11,880
Speaker 1: on the promise that he would never do this kind

342
00:20:11,960 --> 00:20:13,480
Speaker 1: of criminal activity again.

343
00:20:14,359 --> 00:20:17,880
Speaker 3: And according to these new allegations. He started this new

344
00:20:17,960 --> 00:20:22,399
Speaker 3: scheme shortly after he was released. So prosecutors have charged

345
00:20:22,480 --> 00:20:26,480
Speaker 3: him and the four others with wire fraud, conspiracy, and

346
00:20:26,600 --> 00:20:30,960
Speaker 3: conspiracy to obstruct justice, and the Securities and Exchange Commission

347
00:20:30,960 --> 00:20:32,400
Speaker 3: has also filed a lawsuit.

348
00:20:33,040 --> 00:20:38,719
Speaker 1: Right they sued essentially the same cast of characters, saying

349
00:20:38,800 --> 00:20:45,560
Speaker 1: that he committed securities fraud. Presumably that civil regulatory action

350
00:20:45,640 --> 00:20:49,840
Speaker 1: would take a back seat to the criminal prosecution while

351
00:20:49,880 --> 00:20:50,639
Speaker 1: it's ongoing.

352
00:20:51,359 --> 00:20:55,959
Speaker 3: And tell us how the SEC's enforcement director knows Weinstein.

353
00:20:56,680 --> 00:21:01,760
Speaker 1: Gavier Greywall worked on the first Einstein prosecution. He was

354
00:21:01,800 --> 00:21:08,159
Speaker 1: one of three prosecutors, and so he knows Weinstein quite well.

355
00:21:08,440 --> 00:21:12,080
Speaker 1: He knows the facts of his criminal history well.

356
00:21:12,920 --> 00:21:15,760
Speaker 3: And tell us what happened as far as bail.

357
00:21:16,280 --> 00:21:19,920
Speaker 1: Weinstein made an initial appearance in federal court in Trenton

358
00:21:20,080 --> 00:21:24,800
Speaker 1: last week and he was denied bail. He's being held

359
00:21:25,600 --> 00:21:29,760
Speaker 1: without bail until his lawyers can make a bail package,

360
00:21:29,760 --> 00:21:33,119
Speaker 1: and then it's up to a judge to determine whether

361
00:21:34,320 --> 00:21:38,280
Speaker 1: the conditions of bail are adequate to ensure his future appearance.

362
00:21:39,000 --> 00:21:42,960
Speaker 3: Did Weinstein go to trial for the first Ponzi scheme?

363
00:21:43,920 --> 00:21:49,000
Speaker 1: He pleaded guilty. There was extensive pre trial motions, but

364
00:21:49,359 --> 00:21:52,080
Speaker 1: he ended up not going before a jury.

365
00:21:53,200 --> 00:21:56,120
Speaker 3: And does this look like it might be a similar

366
00:21:56,160 --> 00:21:59,520
Speaker 3: situation with the amount of evidence they have already against him,

367
00:22:00,080 --> 00:22:04,120
Speaker 3: secretly recorded tapes and perhaps a witness who flipped.

368
00:22:04,400 --> 00:22:07,159
Speaker 1: Well, like any criminal defendant, he has the right to

369
00:22:07,160 --> 00:22:13,040
Speaker 1: go to trial and confront his accusers. That's his constitutional right.

370
00:22:13,600 --> 00:22:16,280
Speaker 1: He may decide that he's going to attack the evidence

371
00:22:16,520 --> 00:22:23,360
Speaker 1: and attack the underlying recordings. We'll just have to see

372
00:22:23,400 --> 00:22:25,120
Speaker 1: how it plays out and.

373
00:22:25,119 --> 00:22:27,200
Speaker 3: How much time is Weinstein facing here.

374
00:22:27,560 --> 00:22:31,280
Speaker 1: Weinstein faces twenty years in prison on the most serious count,

375
00:22:31,320 --> 00:22:36,159
Speaker 1: but prosecutors have said that the investigation is ongoing, so

376
00:22:36,200 --> 00:22:40,399
Speaker 1: there could be additional charges coming. He's been arrested on

377
00:22:40,480 --> 00:22:43,720
Speaker 1: an FBI complaint and they may go to a grand

378
00:22:43,800 --> 00:22:45,639
Speaker 1: jury and try to get an indictment.

379
00:22:46,040 --> 00:22:48,639
Speaker 3: I know you'll continue to follow this case. Thanks so

380
00:22:48,720 --> 00:22:51,240
Speaker 3: much for being on the show, David. That's Bloomberg Legal

381
00:22:51,240 --> 00:22:54,240
Speaker 3: reporter David Voriakis, and that's it for this edition of

382
00:22:54,280 --> 00:22:56,920
Speaker 3: The Bloomberg Law Show. Remember you can always get the

383
00:22:57,000 --> 00:23:00,280
Speaker 3: latest legal news on our Bloomberg Law podcast. You can

384
00:23:00,280 --> 00:23:04,480
Speaker 3: find them on Apple Podcasts, Spotify, and at www dot

385
00:23:04,480 --> 00:23:08,679
Speaker 3: bloomberg dot com, slash podcast Slash Law, and remember to

386
00:23:08,720 --> 00:23:11,760
Speaker 3: tune into The Bloomberg Law Show every weeknight at ten

387
00:23:11,840 --> 00:23:15,560
Speaker 3: pm Wall Street Time. I'm June Grosso and you're listening

388
00:23:15,680 --> 00:23:16,359
Speaker 3: to Bloomberg